Limited company and Limited liability: Difference between pages

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Abbreviation for Limited liability company.
The restriction of an investor's potential losses, usually to the amount invested.  


Without the privilege of limitation, investors would have unlimited liability for a company's debts.


In a limited liability company the liability of the members is restricted to a predefined amount.


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.  
The option of limited liability is one of the important advantages of incorporation.


Almost all commercial companies are of this type.
Less commonly in the commercial context, but often used for social or public interest bodies, a company member's liability may alternatively be limited to an amount guaranteed by the member.




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).
The purpose is to encourage enterprise by reducing the risk of personal bankruptcy.
 
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.
 
 
Another form of limited liability structure is a limited liability partnership.




== See also ==
== See also ==
* [[Limited liability]]
* [[Bankruptcy]]
* [[Public limited company]]
* [[Capital conservation]]
* [[Unlimited company]]
* [[Companies registry]]
* [[Company]]
* [[Creditors]]
* [[Creditworthiness]]
* [[General partner]]
* [[Guarantee]]
* [[Incorporation]]
* [[Joint and several liability]]
* [[Legal personality]]
* [[Liability]]
* [[Limited company]]
* [[Limited liability partnership]]
* [[Limited partner]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Corporate_finance]]
[[Category:Compliance_and_audit]]
[[Category:Compliance_and_audit]]

Revision as of 15:20, 23 June 2022

The restriction of an investor's potential losses, usually to the amount invested.

Without the privilege of limitation, investors would have unlimited liability for a company's debts.


The option of limited liability is one of the important advantages of incorporation.

Less commonly in the commercial context, but often used for social or public interest bodies, a company member's liability may alternatively be limited to an amount guaranteed by the member.


The purpose is to encourage enterprise by reducing the risk of personal bankruptcy.

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.


Another form of limited liability structure is a limited liability partnership.


See also