An unlimited company or private unlimited company is a hybrid
company (
corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...
) incorporated with or without a share capital (and similar to its
limited company
In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. In a company limited by shares, the lia ...
counterpart) but where the
legal liability
In law, liable means "responsible or answerable in law; legally obligated". Legal liability concerns both civil law and criminal law and can arise from various areas of law, such as contracts, torts, taxes, or fines given by government agenc ...
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
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
,
Ireland
Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, North Atlantic Ocean, in Northwestern Europe, north-western Europe. It is separated from Great Britain to its east by the North Channel (Grea ...
,
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China (abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delta i ...
,
Pakistan
Pakistan ( ur, ), officially the Islamic Republic of Pakistan ( ur, , label=none), is a country in South Asia. It is the world's fifth-most populous country, with a population of almost 243 million people, and has the world's second-lar ...
,
Nigeria
Nigeria ( ), , ig, Naìjíríyà, yo, Nàìjíríà, pcm, Naijá , ff, Naajeeriya, kcg, Naijeriya officially the Federal Republic of Nigeria, is a country in West Africa. It is situated between the Sahel to the north and the Gulf o ...
,
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
,
Australia,
New Zealand
New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island count ...
and other
jurisdiction
Jurisdiction (from Latin 'law' + 'declaration') is the legal term for the legal authority granted to a legal entity to enact justice. In federations like the United States, areas of jurisdiction apply to local, state, and federal levels.
J ...
s where the
company law is derived from
English law. They can also be found in
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
,
France
France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of overseas regions and territories in the Americas and the Atlantic, Pacific and Indian Oceans. Its metropolitan area ...
,
Macao
Macau or Macao (; ; ; ), officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a po ...
,
Czech Republic
The Czech Republic, or simply Czechia, is a landlocked country in Central Europe. Historically known as Bohemia, it is bordered by Austria to the south, Germany to the west, Poland to the northeast, and Slovakia to the southeast. The ...
and in three jurisdictions in
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
(
Alberta
Alberta ( ) is one of the thirteen provinces and territories of Canada. It is part of Western Canada and is one of the three prairie provinces. Alberta is bordered by British Columbia to the west, Saskatchewan to the east, the Northwest Ter ...
,
British Columbia
British Columbia (commonly abbreviated as BC) is the westernmost province of Canada, situated between the Pacific Ocean and the Rocky Mountains. It has a diverse geography, with rugged landscapes that include rocky coastlines, sandy beaches, ...
, and
Nova Scotia
Nova Scotia ( ; ; ) is one of the thirteen provinces and territories of Canada. It is one of the three Maritime provinces and one of the four Atlantic provinces. Nova Scotia is Latin for "New Scotland".
Most of the population are native Eng ...
), where they are called
unlimited liability corporation An unlimited liability corporation (ULC) within Canadian corporate law is a Canadian corporation designation, wherein shareholders are liable up to unlimited amounts for any liability, act or default of the corporation. By comparison, in most corp ...
s. In the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
, the "private unlimited company" is formed or incorporated by registration under the
Companies Act 2006
The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law.
The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...
, of which there are a few thousand such companies on the register, similar in volume to the
public limited company
A public limited company (legally abbreviated to PLC or plc) is a type of public company under United Kingdom company law, some Commonwealth jurisdictions, and the Republic of Ireland. It is a limited liability company whose shares may be fre ...
, but in contrast to the millions of
private limited companies
A private limited company is any type of business entity in "private" ownership used in many jurisdictions, in contrast to a publicly listed company, with some differences from country to country. Examples include the '' LLC'' in the United Sta ...
registered.
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:
* secrecy concerning financial affairs is desired, effectively shielding and protecting its financial affairs from public, media and
competitor analysis
Competitive analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities an ...
, making them non-public information, including shareholder
dividend
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-i ...
payments: a United Kingdom unlimited company, unlike its limited company counterpart, is by the very nature of its legal liability generally not required to publish or make public its company
financial statements
Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity.
Relevant financial information is presented in a structured manner and in a form which is easy to un ...
(file its annual financial accounts at
Companies House
Companies House is the executive agency of the company registrars of the United Kingdom, falling under the remit of the Department for Business, Energy and Industrial Strategy. All forms of companies (as permitted by the Companies Act) are in ...
).
* the company is active or trading in an area where limited liability is not acceptable, vital or practical, but
perpetual succession
In company law, perpetual succession is the continuation of a corporation's or other organization's existence despite the death, bankruptcy, insanity, change in membership or an exit from the business of any owner or member, or any transfer of st ...
is important.
* extending, in general, a greater assurance and confidence to
creditors and trade
financial transactions, in contrast to its limited company counterpart.
* there is a low risk of insolvency for creditors.
* the company or its trading activities has or generates sufficient capital, funds or financing without need to approach general lenders such as high-street retail banks.
* developing more advantageous company and business capital strategies in an ever-increasing irreversible trend of bank
disintermediation by companies and their management.
* a focused higher standard of
board of directors and
executive management behaviour (or probity) and
business model
A business model describes how an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, soci ...
for
risk management.
* a
flow-through entity
A flow-through entity (FTE) is a legal entity where income "flows through" to investors or owners; that is, the income of the entity is treated as the income of the investors or owners. Flow-through entities are also known as pass-through entities ...
is required for United States federal tax purposes, under the
entity classification rules.
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. , 10,890 unlimited companies were incorporated in the UK and listed in the publicly available
Companies House
Companies House is the executive agency of the company registrars of the United Kingdom, falling under the remit of the Department for Business, Energy and Industrial Strategy. All forms of companies (as permitted by the Companies Act) are in ...
database.
Notable examples in the United Kingdom include the following:
* the UK
subsidiary of the international retail clothing group
C&A (UK company number 00524665)
*
Land Rover
Land Rover is a British brand of predominantly four-wheel drive, off-road capable vehicles, owned by multinational car manufacturer Jaguar Land Rover (JLR), since 2008 a subsidiary of India's Tata Motors. JLR currently builds Land Rovers ...
(UK company number 04019301), formerly an unlimited company until 4 October 2013
* GlaxoSmithKline Services Unlimited (UK company number 01047315) part of
GlaxoSmithKline plc
*
The Equitable Life Assurance Society
The Equitable Life Assurance Society (Equitable Life), founded in 1762, is a life insurance company in the United Kingdom. The world's oldest mutual insurer, it pioneered age-based premiums based on mortality rate, laying "the framework for sc ...
(UK company number 00037038)
*
Credit Suisse International (UK company number 02500199), the United Kingdom investment banking arm of Credit Suisse
* the publishing company of British author
Ian McEwan (UK company number 07473219)
*
C. Hoare & Co (UK company number 00240822), England's oldest privately owned bank
*
Coutts & Co (UK company number 00036695), a private bank incorporated in 1692 and now part of
NatWest Group
NatWest Group plc is a British banking and insurance holding company, based in Edinburgh, Scotland. The group operates a wide variety of banking brands offering personal and business banking, private banking, investment banking, insurance and ...
* The Office of David Cameron (UK company number 10421190), a company for the business affairs of the former UK Prime Minister
David Cameron, was incorporated in 2016 as a private limited company but has been an unlimited company since 15 April 2020.)
The directors of an unlimited company are not generally required to file annual accounts.
Republic of Ireland
In the
Republic of Ireland
Ireland ( ga, Éire ), also known as the Republic of Ireland (), is a country in north-western Europe consisting of 26 of the 32 Counties of Ireland, counties of the island of Ireland. The capital and largest city is Dublin, on the eastern ...
, 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
Competitive analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities an ...
.
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.
A number of Irish
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
subsidiaries of
Apple Inc.
Apple Inc. is an American multinational technology company headquartered in Cupertino, California, United States. Apple is the largest technology company by revenue (totaling in 2021) and, as of June 2022, is the world's biggest company ...
did the same, such as Apple Sales International and Apple Retail Europe,
as have a number of other Irish European Union subsidiaries of American companies, such as
Etsy
Etsy, Inc. is an American e-commerce company focused on handmade or vintage items and craft supplies. These items fall under a wide range of categories, including jewelry, bags, clothing, home décor and furniture, toys, art, as well as craft ...
,
Google
Google LLC () is an American Multinational corporation, multinational technology company focusing on Search Engine, search engine technology, online advertising, cloud computing, software, computer software, quantum computing, e-commerce, ar ...
,
Dropbox
Dropbox is a file hosting service operated by the American company Dropbox, Inc., headquartered in San Francisco, California, U.S. that offers cloud storage, file synchronization, personal cloud, and client software. Dropbox was founded in 2007 ...
,
LinkedIn
LinkedIn () is an American business and employment-oriented online service that operates via websites and mobile apps. Launched on May 5, 2003, the platform is primarily used for professional networking and career development, and allows job se ...
and
Airbnb
Airbnb, Inc. ( ), based in San Francisco, California, operates an online marketplace focused on short-term homestays and experiences. The company acts as a broker and charges a commission from each booking. The company was founded in 2008 b ...
Ireland UC.
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
Chevron (often relating to V-shaped patterns) may refer to:
Science and technology
* Chevron (aerospace), sawtooth patterns on some jet engines
* Chevron (anatomy), a bone
* '' Eulithis testata'', a moth
* Chevron (geology), a fold in rock ...
and
Texaco
Texaco, Inc. ("The Texas Company") is an American oil brand owned and operated by Chevron Corporation. Its flagship product is its fuel "Texaco with Techron". It also owned the Havoline motor oil brand. Texaco was an independent company unt ...
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
{{reflist
Types of business entity