FAQs

What is a private company limited by guarantee?

It is a private limited company that has guarantors (individuals) rather than shareholders, which makes it suitable when trying to form voluntary organisations. The company has members who agree to pay a fixed amount of capital as a fee, known as the guarantee (usually a nominal amount e.g. £1) which goes towards the company's debts if it goes into liquidation. The 'Guarantee', has the ability to achieve charitable status (unlike a CIC which cannot), only if profits are not distributed to its members.

Is a Company Limited by Guarantee suitable for me?

If you are looking to form a UK company that operates as a not-for-profit organisation and wish to keep the benefits of a UK Limited Company with limited financial liability then this should be an option for you. This particularly benefits those companies that operate subscription models, clubs, membership organisations or co-operatives.

What can I use a Company Limited by Guarantee for?

Charities, community projects, societies, co-operatives, clubs, membership organisations all benefit from the use of a UK Limited Company by Guarantee. Any company wishing to remain not-for-profit may also benefit from this.

What can I not use a Company Limited by Guarantee for?

You cannot use a Company Limited by Guarantee if the members wish to extract profits in the form of dividends. The purpose of the guarantor is to provide a level of protection if the company were to go into administration. The members may be held personally liable and any Capital (the guarantee) would cover any company debts.

What is different about a Guarantee Company?

The operating and maintenance of a UK Limited Company by Guarantee is much the same as a standard UK Limited Company by Shares, your accountant will still have to file annual returns and it will still be recorded on the Companies House registrar. The main difference that sets it apart is that it has no share capital or any shareholders, only members who are in control of it.