What is an Unlimited Company?
An Unlimited Company (UC) is a company incorporated with or without a share capital where the liability of the members is not limited: that is, its members have a joint, several and unlimited obligation to meet any insufficiency in the assets of the company to enable the settlement of any outstanding liability in the event of the company’s formal liquidation. Similarly, to a general partnership, the members of a UC have unlimited liability; unlike a general partnership, the UC is a separate legal person capable of owning assets in its own name.
Features of an Unlimited Company
Unlimited Company (UC) 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. Thus, its members or shareholders have joint, several and non-limited obligations 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.
The joint, several and non-limited liability of the members or shareholders of the 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, any creditors or security holders of the company may have recourse. This applies only to the assets of the company, not those of its members or shareholders.
Additional optional features:
- Unlimited capacity
- Restricted purpose
- An unlimited or limited duration
Possible uses of an Unlimited Company
RAK ICC unlimited companies are flexible and administratively simple corporate vehicles that can be used for a number of purposes. A UC may be used to avoid the need for shareholder guarantees to support the credit of the UC. For example, where a UC is dealing with a sole customer, it requires recourse to the shareholders of the UC.
- Liability pass-through the company in a corporate group
- International tax planning vehicle