A Company Limited by Guarantee is a specific legal structure used mainly by non-profit organisations like social clubs, student unions, worker's co-operatives, sports associations and registered charities. A Guarantee Company status is sought when non profit entities seek to create a distinct legal identity which will increase their scope of their operations. Incorporating a non-profit organisation into a Guarantee Company allows it to participate in things like:
The formation of a Company Limited by Guarantee does not involve the pooling of shared capital. The shareholders instead act as guarantors, agreeing to pay a nominal sum in the event of the company being wound-up. The amount of money guaranteed by members can be as low as £1, but must be stated in the company's Memorandum & Articles of Association.
No member of a Guarantee Company can lay claim to any assets of the company, but they do have a say in the decision making and direction of the company. Shareholders of a non-profit Guarantee Company usually appoint one or more directors, sometimes called trustees, to take charge of company operations. The trustees are given the responsibility of creating and implementing company policies, and also enjoy the same limited liability protections as the guarantors. A non-profit organisation run as a Guarantee Company may frequently change its shareholders, but will normally retain its trustees for the duration of the company's life.
One of the most important things required when registering a Guarantee Company is the company's constitution, or Memorandum & Articles of Association. These articles should clearly set out the goals of the company and how it should be run. Things like the guarantee amount for individual members, the number of members, the voting rights of members, and the powers granted to trustees must be clearly outlined in the Articles of Association. If the company is intended to be run as a registered charity then the Articles of Association must also be deemed acceptable by the Charity Commission for England and Wales.
Midford Accountants Ltd. offer a complete Company Limited by Guarantee registration service that includes everything required to incorporate your charity or club at very affordable rates. We can also help with drafting the Memorandum & Articles of Association for your company to ensure complete compliance with the regulations stipulated by the charity commission.