1. Difficulty of formation: It is often difficult and expensive to form a company. A number of documents have to be prepared and filed with the Registrar of companies. It is equally time-consuming to obtain approvals of the filed documents from the Registrar.
2. Excessive government controls: A company has to function within the law and provisions of the company’s Act. It has to submit periodical reports; audit and publication of accounts is a must.
3. Delays in decisions: Too many levels of management in a company results in red -tape and bureaucracy. A lot of time is wasted in calling and holding meetings before passing resolutions.
4. Conflict of interest: Shareholders may claim ownership of the company by virtue of their capital-stake in the firm, a position that is challenged by the board of directors who oversee the day-to-day running of the business.
5. Lack of secrecy: Under the Company ’ s Act, a company is required to disclose and publish a variety of information on its working, thereby making it difficult to keep such information confidential.
Kavungya answered the question on April 24, 2019 at 05:47
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