FID Trust International

This form of company (often referred to as an `Unlimited Company`) is a quite rare type of company formation.

Every member of an Unlimited Company is, in the event of its winding up, jointly and severally liable for all the obligations of the company (Insolvency Act 1986 sections 74 and 75) and is therefore in this respect in the same position as a partner in a partnership.

The reasons for wanting to incorporate such a company might be to benefit from the manner in which shares can be distributed and the continuance of the business should one owner retire or become deceased.

No limit on liabilities.

This type of company may or may not have a share capital and there is no limit to the members’ liability. Because there is no limitation on members’ liability, the company has to disclose less information than other types of companies.

Unlimited companies formed under the Companies Act 2006 are nonetheless advised to take into account the following points when drawing up their articles of association:

  1. There should not be a provision within the articles for the liability of the members to be limited; and
  2. Consideration should be given to the inclusion of an article containing power for an unlimited company by special resolution to increase or consolidate share capital, subdivide or cancel shares.

REASONS FOR A FORMATION OF AN UNLIMITED LIABILITY COMPANY BY SOLE-TRADERS

Sole-Traders do not have a limit on their liabilities.

For Sole-Traders, who make every decision on their own, can pass all his / her belongings to a next of kin just by a will – this type of formation (bear in mind that a member of the family (or nominee) can take a position of a company secretary), can give to his/her business some great opportunities, including:

  1. Pay less tax than an employee for a given level of income.
  2. Taxed from start for only 10% and 20% for small companies.
  3. Capital can be accumulated within low tax environment.
  4. An extremely tax efficient way of saving.
  5. No National Insurance payable on dividends.
  6. Special benefits: cars, medical insurance, mobile phones, up to second home or yacht.
  7. PAYE (Income Tax) and Employers and Employees’ National Insurance will typically be deducted when your accountant processes your payroll.
  8. You may also reclaim any expenses you may have incurred from the company at regular intervals (e.g. stamps, training, PC equipment, etc.). Those caught by IR35 are allowed to claim a five percent ‘expenses allowance’.
  9. If you work through a limited company and aren’t affected by IR35 rules, the bulk of your income will be in the form of dividends which you will withdraw from your company account.
  10. At the end of your company’s financial year (typically 12 months after incorporation), your accountant will arrange your company accounts. You will then be liable to pay corporation tax on all company profits for the previous 12 months (i.e. turnover minus expenses, salary, executive pension, etc.). This is payable nine months after your year-end.
  11. Prestige.
  12. Possibility for transferring of the company to any person by issuing shares or giving the director power.

REASONS FOR FORMATION OF AN UNLIMITED LIABILITY COMPANY BY LIMITED (GENERAL) PARTNERSHIPS

It is not easy to operate when you have only two types of partners: partner and ‘sleeping partner’. Basically, any partnership is an unlimited liability company which operates with just one difference – their financial situation and other circumstances are not available for the public as they are not obligated by law. On the other hand, partners cannot account this list of possibilities, which include:

  1. To sell their part of business without any obligations to the other partners (by enforcing it through shares agreement).
  2. Cannot have an independent directorate that controls the finance.
  3. Cannot give their share in the business to their family without partners’ acceptance.
  4. And many other reasons for which we can explain to you on the basis of your personal circumstances.

Please contact us by telephone 0207 439 3400 (0044 207 439 3400 – International) or E-mail if you wish to incorporate Private Unlimited Company.