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disadvantage of incorporation

Shafiya Shafu (16 Points)

13 August 2017

could anyone please explain what is disadvantage of incorporation ?

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7 Replies

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 13 August 2017

The main disadvantage of incorporating as a companies is the compliance burden and huge penalties for non compliance.

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Shafiya Shafu (16 Points)
Replied 13 August 2017

thank u sir

Shafiya Shafu (16 Points)
Replied 13 August 2017

but I am preparing for LL.M entrance exam so this question has 4 options those are as follows
1) Limited liability
2) perpetual succession
3) Lifting the corporate veil
4) ability to sue and be sued

so suggest me correct option

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 13 August 2017

It is very difficult to give a straight forward answer because it depends on situation. Certainly perpetual succession is not an advantage but it is just a feature of a company. Limited liability is an advantage from the investor point of view, but investor includes directors also. If they commit any fraud, the court can lift the corporate veil. Ability to be sued and to sue is one of the characteristic of the company. Every above situation is completely hypothetical and a straight answer may not be possible. Further I cannot see any of the above as a disadvantage in any sense.