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Business law and practice. [2011/2012] by Alexis Mavrikakis; College of Law (England and Wales); et al

By Alexis Mavrikakis; College of Law (England and Wales); et al

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This will be The Different Types of Business 9 set out in the company’s constitution (ie its rules of operation). The amount the members have to pay will be limited to the amount they have agreed to pay for their shares in the company and no more than this. So, if the assets of Fluffy are sold off and do not raise sufficient money to settle the company’s debts then the members will not have to pay any more than they agreed to in buying shares, ie ownership of the company. This shortfall means that the suppliers will lose money.

See Chapters 21 to 29 for further information on the taxation of companies. There are a number of different types of company which may be formed, and we consider them in turn below. 8 Unlimited company A company may be either a limited company or an unlimited company. An unlimited company is defined in s 3(4) of the CA 2006 as a company which does not have any limit on the liability of its members. The members of a company are its owners. If the owners wish to run their business through an unlimited company then they will be required to use not only the company’s assets but also, if necessary, their own personal assets to pay off the company’s debts.

4 above in relation to sole traders and partnerships. Unlimited companies are very rare in practice. One example is Land Rover, the car manufacturer, which is a private unlimited company owned by the massive Indian conglomerate, Tata. One key advantage to this type of company is that the company’s finances do not have to be made public. More usually, entrepreneurs who wish to run their businesses with unlimited liability for the business’s debts do so as a sole trader or partnership, and therefore we do not specifically consider unlimited companies any further in this book.

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