Solution:

Merits of Company Organization:

• The company form of business ownership has become very popular in modem business on account of its several advantages :

1. Limited liability:

• Shareholders of a company are liable only to the extent of the face value of shares held by them. Their private property cannot be attached to pay the debts of the company.

• Thus, the risk is limited and known. This encourages people to invest their money in corporate securities and, therefore, contributing to the growth of the company's form of ownership.

2. Large financial resources:

• The company form of ownership enables the collection of huge financial resources.

• The capital of a company is divided into shares of small denominations so that people with small means can also buy them.

• The benefits of limited liability and the transferability of shares attract investors. Different types of securities may be issued to attract various types of investors. There is no limit on the number of members in a public company.

3. Public confidence:

• A public company enjoys the confidence of the public because its activities are regulated by the Government under the Companies Act.

• Its affairs are known to the public through the publication of accounts and reports. It can always keep itself in tune with the needs and aspirations of people through continuous research and development.

4. Diffused risk:

• The risk of loss in a company is spread over a large number of members. Therefore, the risk of an individual investor is reduced.

5. Continuity:

• A company enjoys uninterrupted business life. As a body corporate, it continues to exist even if all its members die or desert it.

• On account of its stable nature, a company is best suited for such types of businesses that require long periods to mature and develop.

6. Public confidence:

• A public company enjoys the confidence of the public because its activities are regulated by the Government under the Companies Act.

• Its affairs are known to the public through the publication of accounts and reports. It can always keep itself in tune with the needs and aspirations of people through continuous research and development.

7. Transferability of Shares:

• A member of a public limited company can freely transfer his shares without the consent of other members. Shares of public companies are generally listed on a stock exchange so that people can easily buy and sell them.

• The facility of transfer of shares invests in the company is liquid and encourages investment of public savings into the corporate sector.

8. Professional management:

• Due to its large financial resources and continuity, a company can avail of the services of expert professional managers.

• Employment of professional managers having managerial skills and little financial stake results in higher efficiency and more adventurous management.

• Benefits of specialization and bold management can be secured.

9. Scope for growth and expansion:

• There is considerable scope for the expansion of business in a company.

• On account of its vast financial and managerial resources and limited liability, the company form has immense growth potential.

• With continuous expansion and growth, a company can reap variously economies of large-scale operations, which help to improve efficiency and reduce costs.

10. Social benefits:

• The company organization helps to mobilize savings of the community and invest them in industry. It facilities the growth of financial institutions and employs a large number of persons.

• It provides huge revenues to the Government through direct and indirect taxes.