Unlimited Liability Corporation - ULC

DEFINITION of 'Unlimited Liability Corporation - ULC'

A corporate structure that permits a company to be incorporated and flow all profits and losses to shareholders. An unlimited liability corporation (ULC) shelters shareholders from liability in most circumstances except upon liquidation of the company. Shareholders or past shareholders that disposed of their shares less than one year before liquidation become liable for the debts of the company.

BREAKING DOWN 'Unlimited Liability Corporation - ULC'

The ULC has become a useful vehicle for the acquisition of a Canadian business by a U.S. investor, due to preferential tax treatment. The U.S. Internal Revenue Code states that the ULC is disregarded for U.S. tax purposes, as profits and losses flow through to shareholders.

RELATED TERMS
  1. Limited Liability

    A type of liability that does not exceed the amount invested ...
  2. Total Liabilities

    The aggregate of all debts an individual or company is liable ...
  3. Unlimited Liability

    A type of business where owners share joint and several responsibility ...
  4. Shareholders' Agreement

    An arrangement among a company's shareholders describing how ...
  5. Limited Company - LC

    A form of incorporation that limits the amount of liability undertaken ...
  6. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
Related Articles
  1. Term

    What is the Shareholder Equity Ratio?

    The shareholder equity ratio shows how much money shareholders will receive if a company has to liquidate its assets.
  2. Investing Basics

    Who is a Shareholder?

    A shareholder is a person, company or other entity that owns at least one share of a company’s stock.
  3. Investing Basics

    Knowing Your Rights As A Shareholder

    We delve into common stock owners' privileges and how to be vigilant in monitoring a company.
  4. Investing Basics

    What Does Negative Shareholder Equity On A Balance Sheet Mean?

    Negative shareholder equity on a company’s balance sheet is a red flag that should prompt potential investors to take a closer look before committing their money.
  5. Professionals

    Current Liability Basics

    CFA Level 1 - Current Liability Basics. Learn the basic types of liabilities, including definitions for current and long-term liabilities, warranties, taxes and vacation-pay.
  6. Professionals

    Types Of Businesses

    This section includes exam topics regarding various types of business entities and their filing requirements.
  7. Economics

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.
  8. Investing

    What's a Liability?

    A liability is a debt. It is an obligation that arises during the course of business and represents a third-party claim on the company's assets. A liability can arise in a number of different ...
  9. Economics

    Explaining Incorporation

    Incorporation is the process of legally becoming an entity that is separate from its owners.
  10. Entrepreneurship

    What is Unlimited Liability?

    Unlimited liability means that the owners of a business are liable for the entire amount of debt and obligations of that business.
RELATED FAQS
  1. What are some characteristics of ordinary shares?

    Read about some of the primary characteristics of ordinary shares, also known as common shares, including voting rights and ... Read Answer >>
  2. What does negative shareholder equity on a balance sheet mean?

    Negative shareholder equity could show up on a company's balance sheet for a number of reasons, all of which should serve ... Read Answer >>
  3. What risks does a business owner face under a business structure with unlimited liability?

    Understand the types or risk a business owner faces under a business structure with unlimited liability. Learn why a business ... Read Answer >>
  4. What does it signify about the state of a company if it has unusually high shareholders' ...

    Understand the meaning and calculation of shareholder equity and what a high level of shareholder equity signifies about ... Read Answer >>
  5. How do you calculate shareholder equity?

    Find out more about shareholders' equity, what shareholders' equity measures and how to calculate a company's shareholders' ... Read Answer >>
  6. What are some examples of current liabilities?

    Examine some common examples of current liabilities a company may owe within a year or less in order to accurately assess ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center