3 Advantages of Limited Company

　A private limited company registered with the Companies Registry has the following advantages :
　 1. Limited liability - The liability of the shareholders for the company is limited to the amount of their respective shareholdings. Their responsibility is limited to the amount of investment for purchasing the shares of the company. In case the company is unable to settle its debts, it may be wound up by the shareholders, creditors or the court so that all the assets owned by the company will be realised to pay off the debts incurred by the company. Should there be insufficient assets to pay off the debts, that is still what the creditors can get. The shareholders of the company have no responsibility to settle the balance.

　 2.　Perpetual Succession - Any change of shareholders will not affect the existence of the company. A company has a two-tier structure. The company is owned by its shareholders but managed by the directors of the company. If a shareholder is in need of money or is no longer interested in the business, he can sell his shares by transferring his shares to another person. This does not affect the operation of the company. Certainly, in practice, for small private limited company, the shareholders are often the directors of the company so that a transfer of shares may also affect the management personnel.

　 3.　Finance - A company may obtain finance by creating a floating charge, which means that a company can charge all its assets, including its plant, machinery, tools, stocks of goods for sale and money in accounts as security to the bank for a loan granted to the company. However, even those properties have been charged to the bank as security, the company can still buy, sell, replace and otherwise deal with the assets in the normal course of business without getting approval from the bank.

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