Dell Private Limited. Image credit freshhotjobs.com

Dell Private Limited. Image credit freshhotjobs.com

ZIMSEC O Level Commerce Notes: Business Organisations: 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.

To access more topics go to the Commerce Notes page.


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