{"id":7014,"date":"2020-01-01T12:06:32","date_gmt":"2020-01-01T12:06:32","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=7014"},"modified":"2024-09-18T09:44:49","modified_gmt":"2024-09-18T08:44:49","slug":"unlimited-company","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/unlimited-company\/","title":{"rendered":"What is an unlimited company?"},"content":{"rendered":"
\n Last updated: 18 Sep 2024<\/strong>\n <\/div>\n \n

Unlimited companies are registered at Companies House and share many attributes of private limited companies, such as having members\/shareholders and directors. However, the defining aspect of an unlimited company is that its shareholders are jointly and severally liable for the company\u2019s debts in the event that it becomes insolvent.<\/p>\n Never miss another confirmation statement deadline - for only \u00a359.99 per year<\/span><\/a>\n \n

The fact that there is no limit on the liability of shareholders to personally contribute towards any monetary shortfall on winding up generally makes unlimited companies a less attractive choice of company formation when compared to limited companies. However, there are certain benefits to unlimited companies, which we will discuss below.<\/p>\n

What is the difference between a limited company and an unlimited company?<\/h3>\n

The vast majority of companies in the UK are limited companies. According to Companies House statistics for 2018 – 2019<\/a>, there were only 4,291 private unlimited companies in 2019, as compared to over 4 million private limited companies. That being said, there are some significant exceptions to the rule, including the private family owned bank, C. Hoare & Co<\/a>. which prides itself on its unlimited status:<\/p>\n

\u201cWe continue to be owned entirely by the Hoare family on an unlimited liability basis with no external financing. As a result, we have a highly conservative attitude to risk which is monitored closely and managed within strict limits.<\/em>\u201d<\/p>\n

A limited company is defined under section 3 (1) of the Companies Act<\/a>: \u201cA company is a \u2018limited company\u2019 if the liability of its members is limited by its constitution. It may be limited by shares or limited by guarantee.<\/em>\u201d<\/p>\n

The \u2018liability\u2019 in either case refers to the legal requirement for the members\/shareholders to personally cover any monetary shortfall relating to company debts in case of insolvency. Limiting this liability, i.e., forming a limited company, essentially prevents creditors from pursuing company debts from shareholders personally (beyond the stake in their shareholding).<\/p>\n

The choice of \u2018limited by shares or limited by guarantee\u2019 means:<\/p>\n