Limited liability company

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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.

Almost all commercial companies are of this type.


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).


Often abbreviated to 'limited 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.


See also