Advantages of Company Form of Business

Document Sample
Advantages of Company Form of Business Powered By Docstoc
					ADVANTAGES OF COMPANY FORM OF BUSINESS

Company form of Organisation Partnership / Proprietorship
a. Limited Liability

has

following

advantages

over

A Company exists as a separate legal entity from the personal life of its shareholders and Directors. Company and persons who own and manage it are separate entities and both functions separately. Liability for repayment of debts and lawsuits incurred by the Company lies on it and not with the persons who own and manage it. Registering a business form as company adds up an additional layer of protection to its shareholders in terms of business liability. b. Perpetual Succession Company has perpetual succession. Irrespective of the changes in the persons who own and manage the Company, the Company continues to be the same entity with the same privileges, immunities, estates and possessions. The Company shall continue to exist till its winding up in accordance with the provisions of the relevant law. c. Transferability of Ownership / Interest The shares and interest of any member/shareholder in the Company is a movable property and is easily transferable in the manner provided by the Articles of Association. In other forms of business, the transfer of interest is not easily possible. Therefore, it is easier to obtain or transfer the membership of a Company. d. Separate Property As a legal entity, Company is capable of owning its funds and other properties. The Company will be the owner of all the property vested with it. The company can control, manage and dispose the same ob its behalf. The property of Company is not the property of its shareholders. e. Taxation As compared to other forms of business organization, company form of organisation is always benefited with lower tax rate, better taxable benefits in terms of tax holidays in specific area of operation, subject to terms and conditions.

CompaniesInn.com India Private Limited

Advantages - Company

f. Financing the operation Sole proprietorship or Partnership forms of business, faces the major difficulty in financing its operation. A Company can raise the required funds by issuing its shares to the public or raise funds through accepting deposits. Being governed by stringent provisions of law, company form of organisation enjoys better creditworthiness with financial institutions. So it is easier to obtain debt financing by the companies from Banks and other financial institutions. g. Capacity to sue Being a legal person, in the eyes of law, a Company can sue in its name and be sued by others. The persons who own / manage the company are not directly liable for the acts and deeds of the company unless there is a violation / misuse of their fiduciary position with the Company. h. Governance and disclosure norms In India, Company form of organisations is governed by the Companies Act, 1956. A Company has to follow various regulatory procedures during the course of its operations ands are subject to comply with stringent disclosure norms. Good governance and transparent disclosure of operations, adds value to the business of the company and thus benefiting the true owners of the company, its Shareholders.

CompaniesInn.com India Private Limited 463, 13th Cross, 10th Main, Wilson Garden, Bangalore – 560 027 INDIA E mail : info@companiesinn.com Web Site : www.companiesinn.com Tel/Fax: +91 80 4219 4109 Mobile : +91 99457 54280

CompaniesInn.com India Private Limited

Advantages - Company


				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:2374
posted:3/2/2009
language:English
pages:2
Description: Advantages of Company Form of Business