The decision to incorporate a company arises when there are benefits arising out of incorporation in relation to other forms of ownership, proprietorship, partnership, etc. If the benefits are not commensurate with the investments and the efforts involved, it may need a…
ement, Tax planning, Notional values in the eyes of the public, advantages & disadvantages and Identity phenomenon, etc. The discussions about the advantages and disadvantages of incorporation would be very meaningful with background analysis of the other factors governing incorporation.
The World Bank has launched a new online discussion on ‘Business Registration.’ … ‘Over the past two years many OECD countries have greatly improved their regulatory burdens with regards to business incorporation.’ (World Bank Private Sector Development Blog, 2010). Needless to say, the importance of incorporation and the need for minimizing the burden of red tape culture in this respect, for the encouragement of private sector has been recognized throughout the world. However, its utility to a particular business enterprise is governed by the factors referred above.
The size of the venture, nature of the business and the purpose of the enterprise are the important factors in deciding the suitable form of ownership. For example, in the case of a venture capital company, where the risk element is inherent in the business, the promoters would like to go for incorporation for the obvious reasons. The investors with the risk taking ability and propensity to speculate would invest in the venture capital business, taking chance with regard to the viability of the project, where the risk reward ratio is very high. For big projects with long gestation periods, from the angle of capital formation, credit facilities, employee strength, etc. incorporation of the business is necessary. Raising funds through initial public offerings of stock is easier for the big projects. Now fundraising is the world phenomenon with an array of instruments such a Global Depository Receipts (GDR), American Depository Receipts (ADR), etc.
does not arise. Therefore long term capital appreciation is the feature of the growth oriented companies, and the continuity is ...
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