Company Limited by Guarantee Incorporation

A private company limited by guarantee is a type of company, which does not have any shares or shareholders. Instead, it has members who provide a guarantee in relation to the capital of the company.

Whilst the company is a going concern, the members do not contribute any capital to the company in their role as members.

However, upon an insolvent winding up, the members may have to make a contribution to the liabilities of the company up to the maximum of a predetermined amount specified in the Articles of Association. This is usually a relatively small sum.

The majority of the features of a company limited by guarantee are the same as those of a private company limited by shares. It has an independent legal capacity. Accordingly, it can enter into contracts in its own right, own property, and other assets, and employ individuals.

The key difference is that a Company Limited by Guarantee does not have share capital or shareholders. Instead, it has guarantors who are only liable for a nominal amount if the company is wound up.

In contrast, a Company Limited by Shares has shareholders who own shares and receive dividends.

(a) Independent legal capacity.

(b) No share capital.

(c) No liability for members to contribute capital while the company is a going concern.

(d) Upon an insolvent winding up, the member’s liability is limited to a predetermined sum.

(e) The company may be able to exclude the word ‘limited’ from its name. 

Companies limited by guarantee are often used by charities, other non-profit organizations (such as sports clubs, workers co-operatives, and membership organizations), property management companies, public sector bodies (set up by central or local government to manage all or part of their functions), trade associations and research bodies.

They are commonly used where the organisation:

(a) does not need a significant amount of capital,

(b) does not intend to distribute the profits but will instead re-invest them in the organisation to promote the organisation’s objectives, and

(c) wishes to have the benefit of limited financial liability (for example, when entering into contracts) and a clear structure for running and managing the organization.

A company limited by guarantee may be set up to run a profit-making business in which the guarantors will keep the profits. However, the structure of a company limited by shares is likely to be more suitable for this purpose as it is more flexible from a financial perspective (for example, with regards to raising finance) and will be more familiar to third parties (for example,  banks). 

A private company limited by guarantee is owned by its members. Any legal person (for example, individuals, companies, or LLPs) may be a member. Where the Articles of Association permit, a minor may be a member.

A company limited by guarantee must have at least one member. 

A company limited by guarantee must have at least one director.

The first directors of a company limited by guarantee are those specified in the company formation documents when it is incorporated.

The Articles of Association will contain provisions relating to directors including any rules relating to such matters as their appointment, termination and payment.

If the Attorney General does not respond within 30 days, the promoters must place a notice in three national newspapers inviting public objections. If no objections are raised, the company can proceed with the incorporation process.

No. However, they may choose to do so. 

In order to complete an Application form to register a company limited by guarantee, SplashDict will require the following information:

(a) Directors - The names and addresses of the director(s). The application must include their countries of residence, nationality, date of birth, addresses, and occupations.

(b) Guarantors  / Members - The names and addresses of guarantor(s).

(c) Company secretary - The names and addresses of any company secretary.

(d) People with Significant Control over the company (PSCs) - The names and addresses of any PSCs and information regarding the nature and extent of their control.

(e) Company name - The name must not be the same as or similar to the name of a company already on the Companies Register. In addition, it should not be misleading or offensive.

(f) Registered office – The formally registered office address of the company for correspondence and legal documents.

(g) Statement of guarantee - The amount of the guarantee given by each member of the company.

(f) Objectives and Nature of Business - Specify whether it is established for charitable, educational, social, cultural, or other non-profit objectives.

(g) Memorandum and Articles of Association - Document outlining the company's objectives, rules, governance structure, and operational procedures. 

All limited companies must have a Memorandum of Association.

The Memorandum of Association of a company limited by guarantee is now a very simple document. In relation to new companies, it now usually only states the name of the company, the name of the subscriber to the memorandum of association (or, where there is more than one, each of them), a statement that they agree to become a member of the company and the date.

In older companies, the Memorandum of Association is likely to be longer. In particular, it is likely to contain a series of provisions setting out the objects of the company and related powers to manage it and short statements as to the capital of the company and the liability of its members. Equivalent provisions are now contained in the Articles of Association of new companies. 

All limited companies must have Articles of Association.

The Articles of Association of a company limited by guarantee contain a range of provisions relating to the running and management of the company. This may include, provisions relating to directors’ powers and responsibilities, decision-making by directors, the appointment of directors, becoming and ceasing to be a member, the organization of general meetings, voting at general meetings, administrative arrangements, and directors’ indemnity and insurance.