Company limited by shares has limited liability

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Reference no: EM132234118

A shareholder of a company limited by shares has limited liability. This means that the shareholder is not liable for the acts and omissions of the company. The liability of the shareholder is limited to the nominal value of its shares. This is because the company has a separate legal personality to the shareholders and, therefore, a separate and distinct liability to any individuals involved in the company. The corporate veil may only be lifted (or pierced) by the courts to impose personal liability on shareholders in exceptional circumstances.

1. Companies limited by shares: Companies limited by shares are the most common and may be a public company or a private company, where the liability of members of a company is limited to amount unpaid on the shares.

2. Companies limited by guarantee: In this type of companies liability of members of a company is limited to a fixed amount which members undertake to contribute to the assets of company in the event of its being would up.

3. Unlimited companies: Unlimited companies are those companies without limited liability. Section 3 specifically provides that any 7 or more persons (2 or more in case of a private company) may form an incorporated company, with or without limited liability.

Reference no: EM132234118

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