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

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