The Advantages and Disadvantages of a Private Limited Company

• A Private Limited Company has several advantages and disadvantages:

Advantages

• The shareholders have limited liability.
• There is continuity after the death of a member.
• Are not required to publish their private accounts.
• More capital can be raised.
• There is more scope for expansion.
• Because sell of shares is limited there is no risk of hostile takeovers or loss of control.

Disadvantages

• Decision making is much more complex and convoluted.
• Cannot sell their shares publicly so the amount of capital that can be raised is limited.
• Shareholders cannot freely sell their shares without consulting with other shareholders.
• Have to share profit among shareholders
• The procedure to form these is more complex.
• There is the possibility of double taxation

To access more topics go to the O Level Business Notes page.