Limited Liability companies are a form of organizations where there is a legal existence for the entity which separated from owners of the business. Owners of a limited liability firm are called shareholders as they contribute to the capital by means of purchasing shares. Minimum number of people required to open up a limited liability company differs from country to country where as the maximum number of contributers is generally unlimited. In a limited liability company there is a concept called Veil of Incorporation where it gives a legal existence to the firm separating it from the owners of the the company. Since the legal identity is present it gives rise to perpetual succession where the company proceeds its business even though owners leave the business. Additionally due to legal existence shareholder’s liability towards debts incurred by company is limited to share capital even though company as a legal entity is unlimitedly liable to pay its debts. Since there are many owners of the firm management team is appointed to manage the business where it gives rise to Stewardship Function of Board of Directors.
Limited Liability companies have following advantages:
Limited Liability companies have following disadvantages: