Advantages and Disadvantages of Private Limited Companies

Advantages

• Operate as separate legal entities meaning:
• they can sue and be sued in their own name.
• Can make contracts in their own name.
• Shareholders enjoy limited liability.
• Can raise more capital by selling shares.
• There is continuity after the death of the owner.
• The founding members can retain control of the company without threat from takeovers.
• Financial statements are private and not published.

Disadvantages

• There are a lot of legal formalities that have to be followed.
• Shares cannot be sold on the Zimbabwe Stock Exchange.
• Accounts must be audited yearly and it is expensive to employ an auditor.
• A copy of its accounts have to be submitted to the registrar of companies.
• The transfer of shares is limited.

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