Companies are not always run to make the shareholders/owners money. Many companies are formed as ‘not for profit’ organisations. This type of organisation is often referred to as a limited by guarantee company and many of these organisations register as a charity.
Most, but not all, limited by guarantee companies are formed with articles of association that state the objects of the company. The companies are then operated to raise money/funds for the good of the companies objects. Successful guarantee companies do make a profit (they do not operate at a loss), but any profits are used for the advancement of the company in achieving the objects. Profits are not created to be withdrawn by shareholders.
The formation of not for profit companies is completed in a similar way to ordinary limited by shares companies. You have a registered name, a registered office address and appoint company directors and a secretary if required. The main difference is that you appoint ‘subscribing members’ to the company and not shareholders. Additionally there are several types of memorandum and articles of association to choose from depending on your companies intended business.
We can form your limited by guarantee company in just 2 to 3 hours. Our team of advisors can offer you advice on the different types of articles of association available. We strongly advise customers to seek advice from a reputable company formation agent when looking to start your company. Too many agents offer one type of model articles for guarantee companies and it is likely these are not suitable for your business. SFS have intervened to amend many company’s documents after using incorrect information from online formation services.
Not all ‘not for profit’ companies register as a charity so it is important that you consider whether registering as a charity would be suitable for your company. There are advantages and benefits to registration as a charity.
It is important that any company intending to register as a charity has the correct type of memorandum and articles of association. These should also include your own company objects that details the reason your company will operate. Our all inclusive formation service will ensure that your company documents are suitable for registration as a charity.