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The risk of owner managed companies
abusing their rights by forming a limited company has increased. Company
formation sometimes placing a heavy burden on creditors and the persons who work
for the organisation. The limited liability benefits which companies afford to
their owners is the primary reason for this.
There is deemed to be a risk that the
trading of the company could be financed through unsuspecting creditors and
other lenders. If the finance needs to be repaid and the company is unable to
comply, these persons would have no recourse against the company's directors
unless there was a case for claiming willful fraud.
In redressing the balance and
attempting to protect the company's creditors, some of the traditional
advantages which company formation offered are now reduced following the implementation
of certain safeguards.
It has been suggested that company
formation should be further regulated so that not everyone could incorporate a
company at will.
Further News and Articles
1. Forming A Company Just Became Easier
2. Statutory Requirements For New Companies
3. Non Profit Organisations
4. Company Directors and Secretaries
5. Annual Returns
6. Accounts and Accounting Reference Dates
7. Company Auditors
8. Share Capital and Prospectuses
9. Late Filing Penalties
10. The Costs and Benefits of Company Registration
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