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An unlimited company or private unlimited company is a hybrid company (corporation) incorporated with or without a share capital (and similar to its limited company counterpart) but where the legal liability of the members or shareholders is not limited: that is, its members or shareholders have a joint and several non-limited obligation to meet any insufficiency in the assets of the company to enable settlement of any outstanding financial liability in the event of the company's formal liquidation.

Characteristics

The joint and several non-limited liability of the members or shareholders of such an unlimited company to meet any insufficiency in the assets of the company (to settle its outstanding liabilities if any exist) applies only upon the formal liquidation of the company. Therefore, prior to any such formal liquidation of the company, any creditors or security holders of the company may have recourse only to the assets of the company, not those of its members or shareholders.

Until such an event occurs (formal liquidation), an unlimited company is similar to its counterpart—the limited company, in which its members or shareholders have no direct liability to the creditors or security holders of the company during its normal course of business or existence.

Unlimited companies are found in the United Kingdom, Ireland, Hong Kong, Pakistan, Nigeria, India, Australia, New Zealand and other jurisdictions where the company law is derived from English law. They can also be found in Germany, France, Macao, Czech Republic and in three jurisdictions in Canada (Alberta, British Columbia, and Nova Scotia), where they are called unlimited liability corporations. In the United Kingdom, the "private unlimited company" is formed or incorporated by registration under the Companies Act 2006,[1] of which there are a few thousand such companies on the register, similar in volume to the public limited company, but in contrast to the millions of private limited companies registered.[2]

An unlimited company has the benefit and status of incorporation, the same as its limited company counterpart. Situations for which an unlimited company will be preferred to an alternative business model or its limited company counterpart include these:

Once formed or incorporated, an unlimited company can, in some jurisdictions, also re-register and designate itself to limited company status at any time with few formalities, the same also extending to a limited company, which may at any time re-register and designate itself to unlimited company status.

Examples

United Kingdom

An unlimited company in most jurisdictions is not required under company law to add or state the word Unlimited or its abbreviations (Unltd., Ultd., UC or ULC) at the ending of its legal company name, making its formation status not easily recognisable without first reviewing its certificate of incorporation or government registry status. As of March 2022, 10,890 unlimited companies were incorporated in the UK and listed in the publicly available Companies House database.[4]

Notable examples in the United Kingdom include the following:

The directors of an unlimited company are not generally required to file annual accounts.[8]

Republic of Ireland

In the Republic of Ireland, local subsidiaries of a number of American companies have registered as private unlimited companies, enabling them to shield their finances from public disclosure, media and competitor analysis.[9][10] Janssen Pharmaceutical, a subsidiary of its US parent company Johnson & Johnson, re-registered as an unlimited company to avoid the requirement to file annual financial accounts at the Companies Registration Office (CRO) of Ireland, thereby effectively also protecting a portion of Johnson & Johnson's financial information.[9] A number of Irish European Union subsidiaries of Apple Inc. did the same, such as Apple Sales International and Apple Retail Europe,[11][12] as have a number of other Irish European Union subsidiaries of American companies, such as Etsy, Google, Dropbox, LinkedIn and Airbnb Ireland UC.[10]

Other regions

Some other global trading companies such as Mobil Producing Nigeria Unlimited (a subsidiary of Exxon Mobil) and Texaco Overseas (Nigeria) Petroleum Company Unlimited (part of the merged Chevron and Texaco petroleum conglomerates) exist in Nigeria, amongst others. In the USA, another example is the American Express Company, which once was a publicly traded unlimited liability company, re-incorporating itself with limited liability company status only in 1965.

References

  1. ^ Section 3, restating section 1(2) of the Companies Act 1985: "Where there is no limit on the liability of the company's members, a company is an "unlimited company".
  2. ^ "Companies House (United Kingdom). Yearly statistics on company incorporations and dissolutions, and the total size of the register: Companies register activities 2016-17 spreadsheet".
  3. ^ "Filing your company's accounts". GOV.UK.
  4. ^ "Search results - Advanced company search - Find and update company information - GOV.UK". find-and-update.company-information.service.gov.uk. Retrieved 2022-03-11.
  5. ^ As of 4 October 2013 re-registered to "private limited company" status, and the company name changed to Jaguar Land Rover Holdings Limited
  6. ^ "COUTTS & COMPANY overview - Find and update company information - GOV.UK". find-and-update.company-information.service.gov.uk.
  7. ^ "THE OFFICE OF DAVID CAMERON overview - Find and update company information - GOV.UK". find-and-update.company-information.service.gov.uk.
  8. ^ Companies Act 2006, section 448
  9. ^ a b Carswell, Simon (16 August 2008). "Janssen move keeps financial affairs private". The Irish Times. Archived from the original on 23 April 2011. Retrieved 28 November 2016.
  10. ^ a b "Artisan goods marketplace Etsy taps secret Irish tax haven". The Irish Times. 14 August 2015. Retrieved 30 September 2017.
  11. ^ "Apple firm re-registers as unlimited company". ThePost.ie. The Sunday Business Post. 16 July 2006. Archived from the original on 24 September 2008. Retrieved 3 October 2008.
  12. ^ "Apple paid $36m tax on $7.11bn profits at Irish unit". The Irish Times. 7 March 2014. Retrieved 30 September 2017.