What Is A Limited Company? Explain Its Advantages And Disadvantages?


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Private limited company:

-2 to 5 shareholders
- Shares often privately held by the founding members, friends, relatives, and employees.
- shares cannot be transferred on the open market. Eg, stock exchange and existing shareholders may only sell their shares with the agreement of other shareholders.

- shareholders have limited liability
- separate legal personality
- continuity in the even of the death of a shareholder
- original owner is still often able to retain control.
- able to raise capital from sale of shares to family, friends and employees.
- greater status than an unincorporated business.

- legal formalities involved in establishing the business.
- capital cannot be raised by sale of shares to the general public
-quite difficult for shareholders to sell shares
- end of year accounts must be sent to companies house- available for public inspection there

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