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imported>Doug Williamson |
imported>Doug Williamson |
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| In a limited liability company the liability of the members is restricted to a predefined amount.
| | A covenant requiring a party to refrain from taking certain actions. |
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| In the case of a company ''limited by shares'' the members' liability is restricted to the amount, if any, unpaid on the shares they hold.
| | For example, a borrower's covenant not to grant security over assets in favour of other lenders. |
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| Almost all commercial companies are of this type.
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| In a company ''limited by guarantee'' the liability of the members is restricted to a predefined amount which the members guarantee to contribute (on the event of any winding up of the company).
| | == See also == |
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| Often abbreviated to 'limited company'.
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| The purpose is to encourage enterprise by reducing the risk of personal bankruptcy.
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| Balancing the benefits of limited liability for the members, the company itself must prepare and file financial and other information at the companies registry, to enable creditors and others to access data relevant to the creditworthiness of the organisation.
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| == See also ==
| | * [[Affirmative covenant]] |
| * [[Bankruptcy]]
| | * [[Covenant]] |
| * [[Companies registry]]
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| * [[Creditors]]
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| * [[Creditworthiness]]
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| * [[Financial reporting]]
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| * [[Guarantee]]
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| * [[Limited liability]]
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| * [[Limited liability partnership]]
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| * [[Member]]
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| * [[Public limited company]]
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| * [[Share]] | |
| * [[Unlimited company]] | |
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| [[Category:Accounting,_tax_and_regulation]] | | [[Category:Bank_Lending]] |
| [[Category:The_business_context]] | | [[Category:Debt_Capital_Markets]] |
| | [[Category:Legal_Documentation]] |
| | [[Category:Regulation_and_Law]] |
Revision as of 16:51, 4 December 2013
A covenant requiring a party to refrain from taking certain actions.
For example, a borrower's covenant not to grant security over assets in favour of other lenders.
See also
