Before starting any business, it is important for an entrepreneur to analyze both aspects of that business i.e. its advantages and disadvantages. A businessman who doesn’t inspect the pros and cons of the business which he is going to opt for is not considered professional at all, because he does not even take care of such basic things.
Now moving on to our main topic, if you are going to start a Joint-Stock Company, then you must have complete knowledge of its side effects. So below given are the advantages and disadvantages of Join-Stock Company, give them a detailed review and then decide if it suits you well or not.
The Good Side
It is the luckiest one when it comes to resource availability. Because it has no limitation regarding the shareholders, so you can add new shareholders anytime you want. Hence if your company is facing any financial downfall, this advantage can be your greatest help because of the huge availability of resources.
As this business is based on a limited liability company, therefore you get many other benefits due to this fact. For example, the partners are not personally responsible for the debts and dues of the company.
The company holds absolutely no restrictions regarding the transfer or selling of shares which means you can sell your shares at any time and to anyone you want.
Long Term Stability
The life of a joint-stock company is not even a little bit affected by that of shareholders, which means it is totally dependent. So in case a shareholder dies or becomes bankrupt, there is not gonna be any change in the existence of the company. Hence it is a completely stable company.
The joint-stock businesses are highly scalable. They can expand and grow to a great extent. The more investors and funding it will receive, the large it will spread.
It carries a great social advantage. As we already mentioned that the higher funding it will receive, the wider it will expand and when this happens, it needs extra employees to work for it, thus offering employments to hundreds of deserving’s.
As such companies include lots of shareholders, therefore the total rate of risk is equally divided to each shareholder, and hence the maximum risk rate towards every shareholder decreases.
The Bad Side
The formation and development of such companies are quite difficult and time-consuming. The reason is, such companies require a lot of paperwork. Along with this, companies also need a vast amount of investors to invest. Therefore, the company is formed after a really long era of hardworking.
Decision-Making can be Hard
As the organization consists of hundreds of shareholders which means that there is not a sole decision-maker, instead a vast number of administrators are waiting in line and all the decisions are made by the board of directors. This makes the whole process of decision making quite a time consuming and delaying.
Not Environmentally Friendly
Such companies are not environmentally friendly at all as they include a large scope of operations involving factories and industries which are the major causes of ingestion, insanitation, and pollution, thus they make the environment dangerous for living beings.
Absence of Privacy and Secrecy
Such companies are a major thumbs down when it comes to protect the privacy or to maintain the secrets because again, you are not a sole proprietor of the company, therefore every matter is discussed under the observation of the board of directors. Hence, you cannot keep any business secrets to yourself as everything will open up during the meetings.