Company limited by guarantee

In British company law, a company limited by guarantee is an alternative type of corporation used primarily for non-profit organisations that require legal personality. A guarantee company does not have a share capital, but has members who are guarantors instead of shareholders. The guarantors give an undertaking to contribute a nominal amount (typically £1) towards the winding up of the company in the event of a shortfall upon cessation of business. It cannot distribute its profits to its members, and is therefore eligible to apply for charitable status if necessary.

Related Topics:
British - Company law - Corporation - Non-profit - Legal personality - Guarantee - Capital - Shareholder - Nominal - Business - Profit - Charitable

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Common uses of guarantee companies include clubs, membership organisations (including students' unions, sports associations, workers' co-operatives, other social enterprises, non-governmental associations and charities (such as Oxfam).

Related Topics:
Club - Students' unions - Co-operatives - Social enterprise - Non-governmental association - Oxfam

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When incorporating multi-stakeholder organisations, this form is sometimes preferred over the industrial and provident society because company law allows multiple classes of member with separate voting constituencies.

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