Company Limited by Guarantee Incorporation

A private company limited by guarantee does not have shares or shareholders but members who guarantee a certain amount towards the company’s liabilities in the event of insolvency. Members do not contribute capital unless the company is winding up.

It shares many features with private companies limited by shares, including legal independence, and the ability to own assets, and employ staff.

This structure is commonly used by charities, non-profits, public sector bodies, and organizations that don’t require significant capital or intend to reinvest profits.

While it can run profit-making businesses, a company limited by shares is typically more suitable for such ventures due to its financial flexibility.

A company limited by guarantee differs from a company limited by shares primarily in terms of ownership and liability. In a company limited by guarantee, there are no shareholders; instead, it has members who guarantee a specific amount to be paid if the company is wound up.

These companies are typically used for non-profit or charitable purposes, and members do not contribute capital unless the company faces insolvency.

In contrast, a company limited by shares has shareholders who own the company by holding shares. Shareholders invest capital into the business and may receive dividends from profits. Their liability is limited to the amount unpaid on their shares, meaning they risk losing only what they've invested.

Company guarantors are individuals (or corporate bodies) who agree to become members of a limited by guarantee company, promising to pay a fixed sum of money (a ‘guarantee’) in the event that the company cannot pay its debts, and making important decision about how the company is run.

Generally, guarantors do not take any profit, because surplus income is instead used for the good of the company and its non-profit or charitable aims.

Almost anyone can be a company guarantor (member), including individuals, groups of people, and other companies and organizations.

There are no restrictions based on age or qualifications unless you include such provisions in the articles of association. However, anyone who becomes a member must, of course, be able to fulfill the financial and decision-making obligations of a company guarantor.

Unless the company’s articles of association state to the contrary, you must have a minimum of one member (guarantor) and one director to set up a limited-by-guarantee company, and there is no upper limit. The same person can hold both positions, or you can appoint different people to each role.

A company guarantor can also be a director of the same company, on condition that the individual is at least 16 years old and is not subject to the restrictions of director disqualification, bankruptcy, or a Debt Relief Order.

The main reason to set up a company limited by guarantee is to provide financial protection to people who run a charity, community project, or some other form of non-profit venture.

By operating through a company, members have limited personal liability for the debts of the enterprise. Additionally, some funding bodies and charity regulators require charities and non-profits to be registered as a company.

To set up a limited-by-guarantee company, you need to file an application to incorporate at CAC. You can do this online through SPlashDict, using our tailor-made Limited by Guarantee package.

As an accredited CAC agent, our experienced team is on hand to provide help and advice throughout the registration process and beyond.

Your application will be reviewed by us before electronic submission to CAC, reducing the risk of rejection. Once approved, you will receive copies of your new company documents and you can begin trading at any point thereafter.

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.