There is separation of ownership and management in Joint Stock Company.
Justify the following statement :
There is separation of ownership and management in Joint Stock Company.
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1. The shareholders are the owners of the company. The company is managed by the Board of Directors who are elected representatives of the shareholders.
2. There is separation of ownership and management because of the following reasons:
(a) Scattered membership
(b) Large membership
(c) Disinterested shareholder
(d) Heterogenous members
(e) Separate legal entity.
3. Thus, ownership is in the hands of shareholders and the management is with the Board of Directors who are paid employees of the company.
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