Specifically:
(1) Reduce investment risk. In a one-person limited liability company, investors can avoid bankruptcy because of the failure of their capital contribution by determining the business risk through the limited liability criterion. That is to say, the enterprise operated in this way can protect its creditors to a certain extent, and at the same time, it can make the sole investor use the limited liability criterion to avoid business risks to the maximum extent and maximize economic power.
(2) Enhance the competitiveness of the company. One-person limited liability companies are becoming more and more flexible and convenient in business philosophy and mechanism, such as canceling the cumbersome procedures of shareholders' meeting and board of directors. It can make shareholders directly participate in the company's business operation and make corresponding resolutions flexibly and nimbly. Therefore, it is helpful to improve work motivation and enhance the company's market competitiveness.
(3) Keep enterprise secrets. For enterprises, there are always some business secrets that need to be protected. The standard of one-person limited liability company can make the business secrets of enterprises rarely exposed to the outside world, and shareholders can effectively take measures to protect these inventions, proprietary technologies and even major business strategies, which is of great benefit to the development of enterprises.
2. Disadvantages
Mainly used for:
(1) is not conducive to the development of the company. Due to the uniqueness of shareholders in a one-person limited liability company, the company's fund-raising ability will be limited. Moreover, because the organization of one-person companies is often not perfect, the public may lack trust in such companies. Therefore, it is not conducive to the development and growth of the company.
(2) Lack of checks and balances. The uniqueness of shareholders in a one-person limited liability company makes it difficult for the traditional corporate governance structure to play its role. The traditional corporate governance structure-shareholders' meeting, board of directors and board of supervisors is a system of checks and balances, and its key point is to adjust the relationship between equity and ownership, and between shareholders and directors. However, in a one-person limited liability company, due to the simplification of shareholders, it is difficult to achieve practical results.