The advantages of changing ownership by the whole people into a limited company are: it can enhance the business vitality of enterprises and improve the labor enthusiasm of employees.
Its disadvantages: it will cause the loss and waste of state-owned assets and reduce the state's control over enterprises or companies.
Ownership by the whole people means that all the capital of the enterprise is invested by the state, and the production and operation plan of the enterprise is mastered by the competent department of the enterprise.
Ownership by the whole people is the state-owned economy. The state promotes the restructuring of state-owned enterprises, which is to change state-owned enterprises into limited companies. The main benefits are: establishing a modern enterprise system and implementing a corporate governance structure are conducive to scientific management, improving efficiency, making enterprises self-financing, compacting the responsibility of management, and promoting the development and growth of state-owned enterprises. At the same time, taking limited liability and implementing bankruptcy system according to law can protect the legitimate rights and interests of creditors.
The main drawback is that enterprises disclose financial statements and operating conditions to the public according to law, which may reveal relevant secrets. Generally speaking, the advantages outweigh the disadvantages!
Legal basis:
company law
Article 6
To establish a company, it shall apply to the company registration authority for registration of establishment according to law. Those that meet the conditions for establishment as stipulated in this Law shall be registered as limited liability companies or joint stock limited companies respectively by the company registration authority; Those who do not meet the conditions for establishment as stipulated in this Law shall not be registered as a limited liability company or a joint stock limited company.
Where laws and administrative regulations stipulate that the establishment of a company must be approved, the approval procedures shall be handled according to law before the company is registered.
The public may apply to the company registration authority to inquire about the registered items of the company, and the company registration authority shall provide inquiry services.