What is meant by company form of organization?

Rocket 356: Today there are different types of business organisations in world like

1. Sole Proprietorship firm

2. Partnership Firm

These firm's are nor suitable for large scale business because they have certain disadvantages like:

1. Limited Resources

2. Limited Managerial Skills

3. Unlimited Liability i.e the accountability rests totally on the owners's shoulders

4. The organisation's depend on the life and stability of the proprietor

Large scale businesses require

1. Large amount of resources

2. Specialised managerial skills

3. Limited liability, i.e this is useful for Owner's of the companies because any loss incurred by the company will be distributed among shareholders

4. There is no effect on the working of the organisation even if all the members of the company die

These requirement's are met in a company form of organisation. After a firm register's itself as a company form of organisation it can freely sell its shares to 50 people in case of a private limited company and to any number of people in case of a public limited company.

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