Every day, companies are being formed around the world for a variety of reasons. Incorporation produces a corporate entity which is separate from its owners, with its own legal rights and obligations. A company can enter into contracts, buy, sell and own goods and other property, incur liabilities, as well as initiate or be the recipient of legal action. There are distinct advantages in choosing incorporation over other models of business ownership such as sole proprietorships or partnerships. Where international transactions are involved, consideration of the use of an incorporation jurisdiction which provides clear laws, maintains high international standards accepted by investors, with professionals to support the jurisdiction and tax neutrality will also be highly important.
Key Advantages of Incorporation
A company has many more options at its disposal when it comes to raising capital. These range from debt capital such as bank loans, lines of credit and bonds, to equity capital such as private share issues and public offerings. As a rule, banks are more disposed towards corporate borrowers; the better a company’s governance and business performance, the higher its chances of securing favourable loans. Further, the relative ease and efficiency with which ownership of a company can be transferred – namely through a transfer of its shares – make corporations an attractive vehicle to individual and institutional investors.
Another notable advantage of forming a company over a sole proprietorship or a partnership is the company’s perpetual survival. A company’s lifespan is not confined to that of any particular individual or individuals; it can continue indefinitely unless and until it merges with another, accomplishes its pre-set objectives, or goes into liquidation.
Because of the company’s independent legal identity and existence, this means a company’s owners or shareholders are protected from personal liability for the company’s debts and obligations. The shareholders liability is restricted to the maximum amount of capital they have contributed to the company, as evidenced by the shares they hold. Furthermore in the event of litigation, the personal assets of the company’s shareholders are safeguarded from any legal judgement rendered against the company by virtue of the recognition that a company is a separate legal entity.
Incorporation thus offers a sound vehicle for owners to operate and develop a business, as well as for investors to participate in international trade and finance.
Progressive Solutions to take you Further
Backed by five decades of experience, our team provides quality service in the following areas:
Corporate Services provides incorporation and formation, directorship, company administration and secretarial, registered office, and liquidation services.
Trust Services undertakes a broad range of trust administration services for private clients, corporations, and charitable entities established in Bermuda, the BVI and the Cayman Islands.
Accounting & Management Services provides a full range of accounting, banking, payroll and management services in support of exempted and locally incorporated companies, partnerships, individuals and trusts in Bermuda.
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Our purpose is to help clients pursue the right legal, financial and commercial paths. To help you make the right choices for your individual needs. Contact one of our professionals today or learn more about our jurisdictions.