"In a joint stock company, the liability of the members are unlimited". Justify statement for or against and give a reason.

Against the statement.

In a joint stock company, the liability of the members is generally limited, not unlimited. Since a company has a separate legal entity, its members cannot be held personally liable for the debts of the company. The liability of every member is limited to the nominal value of the shares bought by him or to the amount of guarantee given by him.

For instance, if a member has 50 shares of ₹10 each, his liability is limited to ₹500. Even if the assets of the company are insufficient to satisfy the claims of the creditors, no member can be called to pay anything more than what is due from him. The personal property of shareholders cannot be attached even if the company is unable to meet its creditors' claims.

However, there is one exception — if the members of a company so desire, they may form a company with unlimited liability.