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What are the advantages of a company limited by shares?
A company limited by shares is a business structure in which the shareholders own the company and are totally responsible for the amount of money involved in it. Here are some of the advantages of a company limited by shares.
Limited liability:One of the main advantages of a company by shared controlled by shares is that it offers its shareholders limited risk protection. This means that shareholders are only accountable for the debts and obligations that the company faces up to the value of their share capital.
Easier to raise capital: Companies limited by shares can more readily raise capital by issuing shares to investors. Shareholders can invest any amount of money they choose, and the funds are used to expand the business.
Perpetual existence: A company limited by shares has perpetual succession, which means that it may survive even if its shareholders change over time.
Separate legal entity: A company limited by shares is a legal entity separate from its shareholders. This implies it has the legal ability to engage into contracts, file lawsuits, and hold property as an independent right..
Credibility: The words “Limited” or “Ltd.” after the company name can give credibility and professionalism to the business which is especially true when communicating with consumers, suppliers, and other stakeholders.
Flexibility: A company limited by shares is a flexible business structure because it allows for numerous different kinds of shares with different voting rights and dividend entitlements. This can be beneficial in recruiting various sorts of investors.
Transferability of ownership: Shares in a company limited by shares can be readily owned and sold, allowing for ownership transfer without disrupting business activities.
Tax benefits: A company limited by shares may be eligible for certain tax benefits, such as lower tax rates or tax deductions, depending on the nation and jurisdiction.