Unlimited companies

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Unlimited companies
  • What is an unlimited company?
  • Why incorporate as an unlimited company?
  • Privacy
  • Flexible capital maintenance rules
  • How to incorporate an unlimited company
  • Running an unlimited company

Unlimited companies

What is an unlimited company?

An unlimited company is a private company whose members are not limited in their liability to contribute to the obligations of the company on winding up. An unlimited company cannot be a public company.

An unlimited company may or may not have a share capital. If it does have a share capital, the shares will be used to provide working capital and to measure each members' rights in the company, but it will not act as a limit on the liability of the members.

Why incorporate as an unlimited company?

The members of unlimited companies do not benefit from one of the deemed key advantages of incorporating a company (as opposed to trading as self employed or as a partnership): limited liability. This means that if the company were to be wound up, the members themselves would be responsible for the debts, obligations and liabilities of the company remaining after the assets of the company had been exhausted.

For this reason, unlimited companies are not very common. Companies House statistics for 2019 show that out of approximately 4.2 million bodies on the public register in England, Wales and Scotland, only some 4,300 were private unlimited companies. By way of comparison, almost 3.9 million of those registered bodies are private limited companies.

However, there are still two key reasons why people might opt to use

Related documents:

Popular documents