A practical comparison of limited liability, general partnership and private shareholding companies.
Why legal form matters
The company's legal form determines the owners' exposure to debt, decision-making rules, capital requirements and the ease of admitting future investors.
Common structures
A limited liability company is widely used because a member's liability is generally limited to their contribution. In a general partnership, partners may be jointly liable from their personal assets, making it more suitable for some smaller professional ventures.
A private shareholding company offers greater flexibility in capital structure and share classes and may suit ventures planning future investment rounds.
Constitutional documents
Careful drafting of constitutional documents and shareholders' agreements helps prevent disputes over profit distribution, exit, governance, dispute resolution and non-compete obligations.
This article is for general information only and does not constitute legal advice for any specific matter.
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