Introduction to Legal Safeguards
Several legal safeguards present to protect individuals and businesses contemplating dealing along with a limited company. These involve the need to indicate limited liability status in the name of the company. To do this, an alert is issued to prospective suppliers and lenders.
An additional safeguard is the restrictions placed on the ability of shareholders to withdraw their equity from the company. These limitations are designed to stop shareholders from protecting their own investment and, consequently, leaving lenders and suppliers in an exposed position.
At last, limited companies are needed to generate annual financial statements (statements of financial position, income statements, and statements of cash flows) and provide these publicly available. The meaning of this is that anyone interested can gain an impression of the financial performance and position of the company.
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