A Company Limited by Guarantee is a type of business structure where members guarantee to pay a nominal amount to cover debts if the company is wound up, rather than owning shares.
A Company Limited by Guarantee is primarily used for non-profit organisations, charities, clubs, and social enterprises.
It's the preferred structure when you want to reinvest profits back into your mission rather than distribute them to owners.
Unlike a traditional limited company with shareholders, a Company Limited by Guarantee has members who don't own shares or receive dividends.
Members control the organisation through voting rights but cannot profit from its success directly.
A Company Limited by Guarantee is controlled by its members who elect directors to manage day-to-day operations.
The members make key decisions at general meetings, similar to shareholders in a regular company.
The key benefits include limited liability protection for members, enhanced credibility with funders and partners, and a structure that aligns with non-profit purposes.
It also provides a clear framework for governance and accountability.
Setting up a Company Limited by Guarantee requires filing incorporation documents with the relevant company registry, including articles of association and a memorandum.
You'll need at least one member and one director to begin the process.
A Company Limited by Guarantee must file annual returns, maintain proper accounting records, and hold annual general meetings.
The organisation also needs to comply with any additional regulations if it operates as a registered charity.
A Company Limited by Guarantee can generate surpluses, but these must be reinvested into the organisation's objectives rather than distributed to members.
This restriction makes it ideal for mission-driven organisations focused on social impact.
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