# Unlimited Company — Section 2(92)
## Definition
An unlimited company is a company NOT having any limit on the liability of its members.
## Key Features
### 1. Cessation of Liability
- A member's liability ceases when they cease to be a member.
### 2. Extent of Liability
- The maximum liability of members could extend to their entire personal property to meet the debts and obligations of the company.
### 3. Liability Flow
- Members are NOT liable directly to creditors of the company (unlike partners in a firm).
- Liability is only towards the company.
- While the company is a going concern: members owe nothing directly.
- On winding up: only the Liquidator can ask members to contribute to the assets of the company.
## Comparison with Other Classifications
| Aspect | Limited by Shares | Limited by Guarantee | Unlimited |
|---|---|---|---|
| Cap on liability | Yes (unpaid on shares) | Yes (guaranteed amount) | None |
| Liability extends to personal property | No | No | Yes |
| Cessation on exit | Yes | Yes | Yes |
## Why Rare in Practice
Unlimited companies are uncommon because:
- Members face unlimited exposure
- Defeats the basic purpose of corporate form (which is to limit risk)
- Usually formed for specific niche purposes (e.g., professional practice firms, holding structures)
## Memory Aid
'Limited like a partnership, but routed through the company' — members pay to the company (via liquidator), not directly to creditors.