How Do Private Limited Companies Raise Capital?

Assignment

How do private limited companies raise capital?

Company holds all ownership shares as much as they have announced. All shares are able to be sold out to raise capital in the business.

What does the term ‘limited’ denote in limited company?

Limited means some of all shareholders should be limited to buy more shares. They will get the same rate by portion when company gain or loss profit.

Who decides who will manage the company?

Shareholder who holds the most share will be the biggest voice in the company because they get more votes when dealing with decision.

What are advantages/disadvantages of a private limited company?

Disadvantages - Growth may be limited because maximum shareholders allowed are only 50.

The shares in a private limited company cannot be sold or transferred to anyone else without the agreement of other shareholders.

Advantages - Limited Liability: It means that if the company experience financial distress because of normal business activity, the personal assets of shareholders will not be at risk of being seized by creditors.

Continuity of existence: business not affected by the status of the owner.

Minimum number of shareholders need to start the business are only2.

More capital can be raised as the maximum number of shareholders allowed is 50.

Scope of expansion is higher because easy to raise capital from financial institutions and the advantage of limited liability.

Explain about the director liabilities?

Directors of limited liability companies are personally liable for the debts of a company if trading continues after there is no longer any reasonable prospect of avoiding bankruptcy. Directors must make an early decision on whether the business should cease to trade. Failure to do so may result in the directors having to contribute personally to the company's losses and be heavily investigated.

Business Law