Limited liability and no liability are both ways of setting up companies. The terms limited liability and no liability refer to the accountability of the company owners.
A limited liability company is one in which the owners have limited personal liability for the debts and liabilities of the company, according to an IRS definition. A no liability company, on the other hand, refers to a structure, usually associated with Australian companies, in which shareholder owners of a company who have paid part of the amount due on their share capital are not liable for payment of the amount outstanding if the company asks them to, according to the Australia and New Zealand Banking Group (ANZ).
Owners of a limited liability company could be corporations, individuals, foreign entities or other limited liability companies, according to the IRS. All these owners have a limited personal exposure to the debts of the limited liability company. In a no liability company, the shareholders who don’t pay up the amounts due on their share capital when the company calls for it lose the money they have already paid, according to ANZ.
A limited liability company offers management flexibility and some tax advantages, the IRS notes. In a no liability company, if the company sells a shareholder’s shares for nonpayment of the balance due on call, any money the company realizes from the sale over and above the cost of the shares is returned to the shareholder, according to ANZ.