Classification of companies based on Liability

Companies limited by shares

• •Limited by the memorandum to amount unpaid on shares
• •Can be called upon any time
• •It raises funds for business from its members

Companies limited by Guarantee

• •Limited to amount guaranteed to be paid in case company winds up
• •Can be called upon only after commencement of winding up
• •It does not raise funds for business from members
• •Raises funds through fees, charges, donations, etc.

Unlimited Companies

• •No limit on the liability of members
• •Liability ceases when a person ceases to be a member
• •In the event of winding up debts of the company shall be met from private property of members