Page 182 - DMGT407Corporate and Business Laws

Unit 6: Partnership Act and Limited Liability Act

2. Where in the course of winding up, it appears that any business of the company has been Notes
carried on with intent to defraud creditors; the Court may declare the persons who were
knowingly parties to the transaction personally liable without limitation of liability for
all or any of the debts or other liabilities of the company (s.542).
The liability of members of a registered company may be limited or unlimited (s.12). It may be
limited by shares, or by guarantee or by both (i.e., shares and guarantee).
A company limited by shares is a registered company having the liability of its members
limited by its memorandum of association to the amount, if any, unpaid on the shares respectively
held by them. The amount remaining unpaid on the shares can be called up at any time - during
the lifetime of the company or at the time of winding up. However, a shareholder cannot be
called upon to pay more than the amount remaining unpaid on his shares. His personal assets
cannot be called upon for the payment of the liabilities of the company, if nothing remains to be
paid on the shares purchased by him. Such a company is also known as a ‘Share Company.’
A company limited by guarantee is one having the liability of its members limited by the
memorandum to such amount as the members may respectively undertake by the memorandum
to contribute to the assets of the company in the event of its being wound up. Such a company is
also known as ‘guarantee company’. The liability of the members of a guarantee company is
limited by a stipulated sum mentioned in the memorandum. The guaranteed amount can be
called up by the company from the members only at the time of winding up if the liabilities of
the company exceed its assets.

Notes The name of an LLC must contain the words “Limited Liability Company” or the
abbreviation “LLC”; the name of a member or manager; must not be the same as or
similar to the name of any corporation, limited partnership, business, trust or LLC,
registered, formed or organised under the laws of Anguilla or reserved under this or any
other Act; and must not be a name prohibited – by any other law in force in Anguilla, or
by regulations made by the Governor under section 87.

Limited Liability Partnership

A limited liability partnership is a partnership in which some or all partners have limited
liability. It exhibits elements of partnerships and corporations. In an LLP one partner is not
responsible or liable for another partner’s misconduct or negligence. In an LLP, some partners
have a form of limited liability similar to that of the shareholders of a corporation. LLP must
also have at least one “general partner” with unlimited liability. Unlike corporate shareholders,
the partners have the right to manage the business directly.
As opposed to that, corporate shareholders have to elect a board of directors under the laws of
various state charters. The board organizes itself and hires corporate officers who then have as
“corporate” individuals the legal responsibility to manage the corporation in the corporation’s
best interest. An LLP also contains a different level of tax liability than a corporation.
Limited liability partnerships are distinct from limited partnerships in some countries, which
may allow all LLP partners to have limited liability, while a limited partnership may require at
least one unlimited partner and allow others to assume the role of a passive and limited liability
investor. As a result, in these countries the LLP is more suited for businesses where all investors
wish to take an active role in management.

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