2.6 EFFECTS OF INCORPORATION
- Separate legal entity
Upon incorporation, the company becomes a separate legal entity distinct from its shareholders or owners.
- Limited liability
Shareholders or owners of the company are typically not personally liable for the company’s debts or obligations beyond their investment in the company.
- Perpetual existence
Incorporation grants the company perpetual existence, meaning it can continue to exist even if the original shareholders or owners change or pass away.
- Transferability of Shares
Incorporation allows for the transferability of shares, providing flexibility in the ownership structure of the company.
- Capital generation
It allows for the issuance and sale of shares, enabling the company to raise funds from investors and shareholders..
- Taxation and financial advantages
Incorporation may provide certain tax advantages and financial benefits, depending on the jurisdiction and specific regulations. Companies may be subject to different tax rates, deductions, or incentives compared to other business forms.