Unlimited Company Registration

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Unlimited Company

An unlimited company is very much similar to a private limited company by shares. As per provision of companies act 2006, it must be registered with companies house and includes memorandum of association and articles of association. Director is the person who is responsible for the day to day activities of the unlimited company on behalf of shareholders.

After doing unlimited company registration, you need to provide various details to companies house including details about the key persons of the unlimited company i.e. People with significant control and an annual confirmation statement. In case of unlimited company, the shareholders or members has unlimited liability. In case of insolvency or winding up of the company, each member of unlimited company will be held responsible for paying the debts of the company. If there is any shortage of money in paying debts, shareholders are called to contribute the remaining debt amount. This type of business form is most commonly chosen when the owners are not interested in filing the financial information of the company to the registrar. The biggest benefit of incorporating an unlimited company is exemption in filing the annual accounts to company’s house. There are currently 4668 unlimited companies (as per data on 30th August 2017) which are registered under companies house.

Minimum Requirements to set up a Unlimited Company

• At least one individual director
• Memorandum & articles of association
• Proposed company name
• Details about registered office address situated in UK.
• No minimum capital requirement
• Details of PSC’s (People with significant control)
• Details of members or shareholders.

All the details are analyzed by companys house and then certificate of incorporation is issued to the unlimited company.

Advantages of Unlimited Company

In similarity to limited companies, unlimited companies share many advantages of limited companies. The advantages of unlimited companies are as follows –

• CONFIDENTIALITY – Unlike limited companies, unlimited companies in UK not normally files annual accounts to company’s house but still directors perform his or her responsibility of preparing the financial statements of the company. In order to avail this exemption in a relevant tax year, the company must not have been –
  1. A subsidiary undertaking of a limited company
  2. A parent company of a limited company
  3. Involved in sectors like banking, insurance etc.
  4. Involved in a Scottish partnership where other parties included limited companies.

  When the accounts are not filed to the company’s house, the financial information of the company will not be displayed on the public records and remains hidden. In such case, competitors does not able to see the financial information of the company and can’t take advantage of it whereas unlimited company can still analyze the financial information of their competitors such as private limited company, public limited company etc. and gain competitive advantage over them. In the same way, dividends paid by the company to the shareholders are also not displayed publicly.

• MANAGEMENT QUALITY – As you know, unlimited company has unlimited liability and every shareholder or member is held responsible for paying the debts of the company. This effect the unlimited company and encourage them to do careful risk management before anything goes wrong and you pay the debts of the company to the creditors out of your personal assets. It results in lower risk endeavors due to continuous check on the process.
• CREDITOR’S CONFIDENCE – Creditor’s feel more confidence in lending money to unlimited company as the owner follows good risk management practices. Shareholders have the full responsibility to pay debts of the company in the event of insolvency. With their own assets at risk, it is considered that they will borrow the money only, if they are having the confidence to repay.
• MORE FLEXIBLE SHARE CAPITAL OPTIONS – It is easy for an unlimited company to return capital to its shareholders. Restriction in this area is only applicable to limited companies as defined in companies act, 2006.
  In case you are employing a group structure, the flexibility is very useful and gives you the options to move capital between the entities in a group.