Companies Act 2014 section 1255

Making of distributions unrestricted in the case of unlimited companies

Section 1255 establishes that unlimited companies are exempt from the statutory and common law restrictions that normally govern how companies may distribute their assets to members.

• Unlimited companies are not bound by the distribution rules set out in Chapter 7 of Part 3 of the Companies Act 2014.
• No general rule of law restricting distributions out of a company's assets applies to an unlimited company.
• This means an unlimited company may make distributions without needing to ensure they come only from distributable profits.
• The exemption reflects the fact that members of an unlimited company have unlimited personal liability for the company's debts, removing the need to protect creditors through restrictions on distributions.