Define: Company Limited By Guarantee

A company limited by guarantee is a type of legal structure commonly used by non-profit organisations, charities, and social enterprises. Unlike a company limited by shares, it does not have shareholders or share capital. Instead, it has members who act as guarantors and agree to contribute a predetermined amount towards the company’s debts in the event of its winding up.

The main difference between the two is the absence of share capital in a company limited by guarantee. Instead of shareholders, it has members who guarantee to contribute a specific amount towards the company’s liabilities. Additionally, a company limited by guarantee is typically formed for non-profit purposes, while a company limited by shares is primarily for profit-making activities.

No, a company limited by guarantee cannot distribute profits to its members. Any surplus funds generated by the company must be reinvested into its activities or used for charitable purposes. This restriction ensures that the company’s primary objective remains its non-profit mission.

A company limited by guarantee must have a minimum of one member. However, it is common for such companies to have multiple members, especially if they are established for charitable or non-profit purposes.

Yes, a company limited by guarantee can have directors. The directors are responsible for managing the company’s affairs and ensuring compliance with legal obligations. However, unlike a company limited by shares, the directors of a company limited by guarantee are usually unpaid volunteers.

A company limited by guarantee must file annual financial statements with the relevant regulatory authority, such as Companies House in the UK. These statements provide an overview of the company’s financial position and activities during the reporting period. Additionally, the company may be required to submit other reports or disclosures depending on its specific activities and jurisdiction.

Yes, a company limited by guarantee can be dissolved or wound up. This typically occurs when the company’s objectives have been achieved, or it is no longer financially viable to continue its operations. The winding-up process involves settling the company’s debts, distributing its remaining assets to other non-profit organisations, and formally closing the company.

Yes, a company limited by guarantee can own property and enter into contracts. It has legal personality separate from its members, allowing it to acquire assets, enter into agreements, and be held liable for its obligations. However, the members of the company are not personally liable for the company’s debts beyond their guaranteed amount.

Yes, a company limited by guarantee can change its name. However, this requires following the legal procedures set out in the company’s governing documents and complying with any relevant regulations or requirements of the jurisdiction where the company is registered.