Unlimited Companies, Nova Scotia Companies Act, NSULCs, tax efficient, shareholders, liability, legislation, bankruptcy, debt
Unlimited Companies incorporated under the Nova Scotia Companies Act (NSULCs) have, in recent decades, become recognized as tax efficient forms of business organizations. NSULCs differ from conventional business corporations in that their shareholders are exposed to liability for corporate obligations under the enabling legislation. This paper attempts to provide an analysis of the precise nature of unlimited liability faced by shareholders in such entities in response to recent bankruptcy litigation in the U.S. that raised the issue of the relationship between a shareholder's liability for a debt of the firm under the enabling legislation and under a contractual guarantee provided by the shareholder for the same debt. It is argued that the enabling legislation does not create a separate and independent claim against the shareholder and a contractual guarantee for a debt of the firm acts as a substitute for enforcing liability against the shareholder.
Mohamed F. Khimji, "Shareholder Liability in Nova Scotia Unlimited Companies" (2014) 37:2 Dal LJ 787.