Turks and Caicos: Types of Company
Limited Life Company
The Limited Life Company (LLC) was designed to combine the benefits of a partnership with the advantages of a corporate entity. The legislation was drafted primarily to comply with the United States Internal Revenue Service criteria for treating the entity as a partnership for tax purposes meaning that profits and losses are treated as attributable to the shareholders rather than the company itself. The demand for LLCs comes primarily from the United States where they are known as limited liability companies.
The LLC has the following characteristics
- The memorandum of association of the company must limit the life of the company to a period of 50 years which may by a special resolution be extended to 150 years;
- Automatic dissolution of the company will occur upon one of several events specified under the law; it is possible to override these provisions by providing otherwise in the articles of association;
- The LLC may be managed by its members or by a designated manager (thus the corporate characteristic of centralised management is absent; instead management of the LLC more closely resembles management of the common law partnership;
- The law expressly contemplates the cessation of membership upon the occurrence of prescribed events e.g. death, bankruptcy or transfer of ownership where the same is specified or prohibited in the Articles;
- The Articles may be drafted so as to prohibit or restrict the transfer of any shares or interest in the company and may provide for the consequent cessation of membership;
- The law allows for a variety of capital structures and for members to have different levels of liability on winding up.
- The company must describe itself as a Limited Life Company.