By incorporating a partnership, it becomes a company limited by shares and certain
advantages accrue there from:
(i) Limited Liability: members liability for debts and other obligations is limited by shares.
They are not liable to pay more.
(ii) Perpetual succession: the death of a member or members of the corporation has
no effect on its existence. This encourages investment.
(iii) Owning of property: the property of a corporation does not belong to its member.The
company has capacity to invest to promote its profitability.
(iv) Suing or being sued: members are not bound to sue to remedy wrongs done to
the company and cannot generally be sued for the wrongs of the company.
(v) Capacity to contract: the fact that a company can enter into contractual
relationships means that it can engage in commercial transactions for the benefit of its
members and society.
(vi) Wide capital base: compared to other forms of business associations
registered companies have the widest capital base by reason of the wide spectrum of
membership.
(vii)Qualified management: companies are managed by directors elected by
members.Members have the opportunity to elect qualified persons as managers.
(viii) Transferability of shares: under the Provision of the Companies Act the shares
orother interest of any member shall be movable property transferable in manner
provided by the articles. Company shares are transferable, thus membership keep on
changing from time to time and the company could take advantage of the
entrepreneurial skills of new members.
(ix) Borrowing by floating charge: a registered company is free to utilize the facility
offloating charge to borrow. This is an equitable charge securing a debenture on the
assets of a going concern but which remain dormant until crystallization. A floating
charge:
(i) Enables companies with no fixed assets to borrow.
(ii) Enhances the borrowing capacity of companies with fixed assets.
(iii) Enables companies to use future assets as security.
(iv) Does not interfere with the ordinary business of the company.
maurice.mutuku answered the question on May 3, 2018 at 11:59
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