Commercial Applications
A company faces criticism for taking too long to make decisions due to bureaucratic delays. Which disadvantage of joint stock companies is highlighted here?
- Lack of motivation
- Delay in decision-making
- Conflict of interests
- Unhealthy speculation
Answer
Delay in decision-making
Reason — Delay in decision-making is a major disadvantage of joint stock companies. Red tape and bureaucracy do not permit quick decisions and prompt action. There is little scope for personal initiative and a sense of responsibility. Paid employees like to play safe and tend to shift responsibility. This lack of flexibility of operations causes delays in important business decisions.
Related Questions
The number of members in a private company are :
- Minimum = 5, Maximum = 100
- Minimum = 2, Maximum = 200
- Minimum = 7, Maximum = No limit
- None of these
Why is the principle of limited liability important for shareholders in a joint stock company?
- It allows shareholders to transfer shares freely.
- It restricts the financial loss of shareholders to the unpaid value of shares.
- It ensures shareholders participate in daily management.
- It makes shareholders responsible for company debts.
A shareholder in a public company transfers all their shares to a competitor, leading to significant changes in company control. The board of directors raises concerns about the implications. What feature of public companies allows such an event to occur?
- Transferability of shares
- Perpetual succession
- Limited liability
- Common seal
Directors in a joint stock company are personally liable for all debts incurred by the company.
- True
- False