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Limited by Guarantee Company

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Limited by Guarantee

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A guarantee company has members, rather than shareholders, whose liability is limited by an amount, normally less than a £1, guaranteed by each member, which becomes due in the event of the company being wound up. The Memorandum includes a non-profit distribution clause and these companies are usually formed by professional, trade or research associations. After incorporation the company can be registered with the Charity Commission.

Why set up a company limited by guarantee?

Most guarantee companies are widely used for non-profit making functions like raising money or promoting services of the company, they are routinely used for charities, community projects, societies, clubs and other similar bodies. Organisations that are registered with the Charity Commission or intend to apply for registration must be guarantee companies.

Key features and benefits

  • Limited by guarantee company has no shareholders unlike a company, but must have one or more members.
  • Similar to a limited company, the guarantee company benefit from limited liability, the liability is limited to the amount of the guarantee set out in the company's articles.
  • Members of guarantee company are protected from any personal liability for the company's debts
  • A company limited by guarantee is much like an ordinary private company limited by shares promoting transparency and credibility to the company.
  • Legal requirements for a non-profit company

  • The Company must be registered at Companies House (Registrar of Companies in the UK) and must fills its accounts & annual return each year.
  • Minimum 1 guarantor and 1 director is required to incorporate it and the same person can held both positions.
  • A UK address to be use as registered office address is needed which will be made available on the public register.
  • A Memorandum of Association needs to be included during the application along with the company's objects, liability guarantees and a clause of non-profit distribution.
  • You take care of your business. WE TAKE CARE OF THE COMPANY!