An unlimited company is a company whose members have no cap on what they may have to contribute to its assets if it is wound up. In return for accepting that exposure, many unlimited companies do not have to deliver their accounts to Companies House under section 448 of the Companies Act 2006, which is the main reason the structure is chosen. The exemption is narrow, though, and it falls away for banks, insurers and companies that sit inside groups of limited companies.

What exactly is an unlimited company?

Section 3 of the Companies Act 2006 sorts companies by the liability of their members. A company is limited by shares where liability stops at any amount unpaid on the shares, limited by guarantee where it stops at the amount members undertake to contribute on a winding up, and under section 3(4) it is an unlimited company “if there is no limit on the liability of its members”. The application to register any company must state whether members’ liability is to be limited and, if so, how (section 9(2)(c)).

Companies House guidance describes the private unlimited company as one that “may or may not have a share capital”, with no limit to the liability of each member. It is always a private company, because section 4(2) only allows a company limited by shares, or limited by guarantee with a share capital, to be a public company. The naming rule in section 59, which requires a private limited company’s name to end with “limited” or “ltd.”, applies only to limited companies.

The everyday mechanics are otherwise familiar. An unlimited company has directors with the usual statutory duties, keeps statutory registers, files a confirmation statement and pays corporation tax like any other body corporate. For the basic comparison with the ordinary trading vehicle, see our guide to the private company limited by shares.

How far does the members’ liability actually go?

The liability bites in a winding up. Section 74(1) of the Insolvency Act 1986 makes every present and past member liable to contribute to the company’s assets to any amount sufficient to pay its debts and liabilities and the expenses of the winding up. For an unlimited company there is no cap of the kind section 74(2)(d) gives to shareholders of a company limited by shares.

Former members are protected in three ways under section 74(2):

  • a past member is not liable if they ceased to be a member one year or more before the winding up began;
  • a past member is not liable for debts contracted after they left;
  • a past member is only called on if the existing members cannot meet the contributions required of them.

So selling your shares does not end the exposure immediately. For a year after leaving, you remain in the frame for debts the company ran up while you were a member.

When is an unlimited company exempt from filing accounts?

Section 448(1) says the directors of an unlimited company are not required to deliver accounts and reports to the registrar for a financial year if certain conditions are met. Under section 448(2), at no time during the relevant accounting reference period may the company have been, to its knowledge:

  • a subsidiary undertaking of an undertaking which was then limited;
  • subject to rights exercisable by or on behalf of two or more limited undertakings which, if exercisable by one of them, would have made it a subsidiary undertaking; or
  • a parent company of an undertaking which was then limited.

Section 448(3) then removes the exemption altogether where the company is a banking or insurance company (or the parent of a banking or insurance group), or where each of its members is a limited company, an unlimited company whose members are all limited companies, or a Scottish partnership whose members (or general partners) are limited companies. Comparable undertakings formed outside the UK count in the same way, so an overseas limited parent does not get round the rule. The Companies House accounts guidance summarises the same conditions in its section on unlimited companies.

What does an exempt unlimited company still have to do?

The exemption is from delivery, not preparation. Section 394 requires the directors of every company to prepare individual accounts for each financial year, and the members are entitled to them in the usual way. Section 448(4) adjusts the publication rules, so that any non statutory accounts the company publishes must say that it is exempt from the requirement to deliver statutory accounts.

Other obligations carry on as normal:

  • the company is a “company” for corporation tax, which section 1121 of the Corporation Tax Act 2010 defines as any body corporate, so the tax return and the accounts supporting it still go to HMRC;
  • the confirmation statement is still due each year;
  • on allotments, Companies House guidance says an unlimited company only needs to tell it when it allots a new class of shares, using form SH09;
  • the company must register its own articles, because the default model articles in section 20 only apply to limited companies, and Companies House confirms there are no model articles for unlimited companies.

Why do some businesses choose unlimited liability?

The first reason is privacy. A company that meets section 448 keeps its balance sheet and profit figures off the public register, which a small company filing filleted accounts cannot fully achieve.

The second is capital flexibility. The statutory routes for reducing share capital in section 641 and for buying back shares in section 690 are both framed for “a limited company having a share capital”. Companies House guidance suggests that the members of an unlimited company consider including an article giving power, by special resolution, to increase or consolidate share capital, subdivide or cancel shares, or reduce share capital and any share premium account. Returning capital can therefore be simpler than the solvency statement or court process described in our guide to reducing share capital.

The price is personal exposure. In practice the structure suits owners who are comfortable standing behind the company’s debts, often because the company carries little trading risk, and it cannot deliver the filing exemption where the members are themselves limited companies.

How is an unlimited company formed or created by conversion?

A new unlimited company is registered on paper. The Companies House fees schedule lists registration of an unlimited company in accordance with section 14 at £124. The articles must not provide for members’ liability to be limited, and Companies House suggests taking professional advice before incorporating one.

An existing private limited company can become unlimited under section 102, but only if all the members assent and it has not previously been re registered as limited. An unlimited company can become limited by special resolution under section 105, but not if it was itself previously re registered as unlimited. The result is that a company can only switch once: a limited company that goes unlimited cannot return to limited liability by re registration, and a company formed unlimited that becomes limited cannot go back. The procedure, forms and the liability tail on the way back are covered in our guide to re registering a company.

How might the filing exemption work in practice?

Illustration only. Two individuals own all the shares in an unlimited company that holds a small portfolio of investments. It has no subsidiaries and neither shareholder is a company. For its year ended 31 March, it meets every condition in section 448(2) and (3), so the directors prepare accounts for the members and HMRC but deliver nothing to Companies House.

In the following year the company buys all the shares in a private limited company. From that moment it is the parent of a limited undertaking. Because section 448(2) looks at the whole accounting reference period (“at no time during”), the exemption is lost for that financial year, and the directors must deliver accounts in the normal way and within the normal deadline.

What mistakes come up most often?

  • Treating the exemption as permanent. It is tested period by period, and a single acquisition, a new corporate shareholder or a change of control can end it.
  • Forgetting the conversion tail. Under section 77 of the Insolvency Act 1986, if a formerly unlimited company is re registered as limited and goes into winding up within three years, those who were members at the time of re registration remain liable without limit for debts contracted before it.
  • Assuming a share sale ends the risk. The one year rule in section 74(2)(a) keeps a departing member exposed for earlier debts.
  • Relying on model articles. There are none for unlimited companies, so bespoke articles are needed, including any capital reduction power.
  • Confusing filing with preparing. Accounts must still be prepared under section 394 and supplied to HMRC.

For how the other main company forms compare, see our guides to the company limited by guarantee and the articles of association.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.