Business Opinion: The gentle trickle of private limited companies transforming themselves into unlimited entities is in danger of becoming something of a flood. The most recent high profile company to go down this route is Aer Arann, the fast-growing regional airline owned by Padraig O'Ceidigh.

He follows a number of well-known and wealthy individuals who have taken their companies private in recent years including - in no particular order - Seán Mulryan of Ballymore Properties, the Kelleher family of Blarney Woollen Mills, the Barrys of the eponymous Cork-based tea company, and the Reihills of Tedcastle Holdings.

The explanation for this rash of corporate transformations appears to be privacy. Unlimited liability companies are not required to file accounts with the Companies Registration Office, while limited liability companies must do so by law.

This has become an issue for a number of reasons. The first is the enforcement by the Director of Corporate Enforcement and the Companies Office of the deadlines for making statutory returns. Companies now routinely face being struck off or fined if they do file on time.

This has meant that the information contained in the filings, particularly the annual returns and accounts, is both timely and relevant, with accounts often being filed within a few months of the year end, instead of a couple of years.

The second factor is the computerisation of the Companies Registration Office (CRO) and the associated proliferation of companies offering access to CRO filings on line at relatively low cost.

Instead of spending several days down at the CRO seeing what is available on a company, only to find that there might be nothing, you can now set up a system by which you are e-mailed as soon as a particular document is filed by a particular company.

It has of course been a boon for the media, which has been able to follow the activities of large private companies in a way that hitherto was impossible. But, equally, such information is of value to competitors and other parties, who might not have a company's best interests at heart.

The only way to avoid such scrutiny appears to be to convert from being a limited company to an unlimited one and thus avoid the requirement to file audited accounts along with the annual return. But of course doing so means that the shareholders and directors give up the protection of limited status and can thus be held personally liable for the company's debts.

Thus, going down the unlimited route seems to be quite a big risk to take, merely to avoid some unwelcome scrutiny. In fact it smacks of over-reaction, given that many companies only file stripped-down accounts giving the most basic information.

But, as ever, things are not quite what they seem. Many companies going down the private unlimited route are actually performing something of a double act, whereby they are transforming the Irish business into an unlimited entity, but also making it a subsidiary of a limited entity in another jurisdiction outside the European Union that does not require audited accounts to be filed in exchange for the protections of limited status.

In theory - although this has never been really tested in the Irish courts - if the unlimited Irish entity goes belly up, the shareholders are protected via one or possibly two limited liability "buffer" companies in non-EU jurisdictions.

One of the first to appear to tumble to this was Glen Dimplex, arguably the grandaddy of the big unlimited private companies, although Dunnes Stores can also make a claim for the title. Back in 1997, ownership of the unlimited Irish electrical products company, owned by Martin Naughton, was transferred to a company called Kilkee Investments Ltd. The only Irish thing about Kilkee is its name and address. The company was actually registered in the Isle of Man, although the Glen Dimplex filings give its address as their Dublin head office.

It's all very clever and no doubt thwarting the media provides a certain satisfaction to the owners of such companies. There is, however, a serious issue, which is that one of the very basic premises on which business is conducted is being circumvented. Large businesses that are operating here are in effect availing of limited liability - albeit indirectly - but not paying the price, ie the disclosure of information about their financial health to other stakeholders.

If that was good for business, we would never have bothered with the concept of limited liability to begin with.