Private Equity Interview Question:

Describe unlimited company?

Submitted by: Murtaza

An unlimited company or private unlimited company is a hybrid company (corporation) incorporated either with or without a share capital (and similar to its limited company counterpart) but where the legal liability of the members or shareholders is not limited, that is, its members or shareholders have a joint, several and non-limited obligation to meet any insufficiency in the assets of the company to enable settlement of any outstanding financial liability in the event of the company's formal liquidation. The joint, several and non-limited liability of the members or shareholders of the company to meet any insufficiency in the assets of the company (to settle its outstanding liabilities if any exist) only applies upon the formal liquidation of the company. Therefore, prior to any such formal liquidation of the company, any creditors or security holders of the company may only have recourse to the assets of the company and not to those of its members or shareholders.
Submitted by: Murtaza