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  1. Associations and Enterprises | Week 1
    3 Topics
  2. Co-operative Societies I | Week 2
    3 Topics
  3. Co-operative Societies II | Week 3
    3 Topics
    2 Quizzes
  4. Public Enterprises | Week 4
    5 Topics
    1 Quiz
  5. Limited Liability Companies | Week 5
    4 Topics
  6. Formation of Limited Liability Companies | Week 6
    1 Topic
  7. Limited Liability Companies III | Week 7
    3 Topics
    3 Quizzes
  8. Trade Associations and Other Enterprises | Week 8
    1 Topic
  9. Chamber of Commerce | Week 9
    1 Topic
  10. Other Forms of Trade Association | Week 10
    1 Topic
    1 Quiz

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Lesson 7, Topic 2
In Progress

Advantages and Disadvantages of Limited Liability Companies

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Advantages of Limited Liability Companies:

The advantages of limited liability companies are:

1. The liability of the shareholders is limited to the amount contributed to the business as capital.

2. A Large number of people are involved and therefore a reasonable amount is contributed by the shareholders as capital to run the business.

3. The registration with the registrar of companies makes the company a legal entity which has the power to sue and be sued with its own name.

4. It enjoys perpetual existence: The death or withdrawal of any shareholder may not bring an end to the business.

5. Shareholders are permitted to transfer their shares to another without consulting other shareholders if he is in need of money or not content with the system of the company.

Disadvantages of Limited Liability Companies:

The disadvantages of limited liability companies are:

1. Decision-making takes time and this affects the company.

2. Enormous capital is required for the formation of a limited liability company.

3. It cannot operate outside its line of business as stated in the Memorandum of Association.

4. It pays heavy tax which is deducted from the company’s profit.

5. The procedure and formalities required for its formation are very tedious and time-consuming.

6. There may be records of inefficiency in the management of the business.


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