What is a company Limited by Guarantee?

A company limited by Guarantee is often referred to as a ‘not for profit’ or ‘Charitable company’, this refers to the fact the parties involved do not remove the profit from the company as shareholders can in a company limited by shares. Any profit made by the company is re-used for the good of the business.

A company limited by Guarantee has a very similar structure to a company limited by shares as they have directors appointed to manage the day to day running of the company. A company secretary can also be appointed if required.

The liability of the members is still limited in the same way it is limited for shareholders however it is not capped to the value of the shares as a guarantee company does not issue shares.

Members of a company limited by guarantee act as guarantors and agree to pay the ‘Guarantee value’ which is set at the time of incorporation. The guarantee value of newly formed companies is usually set at £1 per member however this value can be set at a higher value if required. 

A company limited by guarantee can be registered as a charity with the charities commission in England or Wales.

If your company has been registered in Scotland you can register as a charity with the Office of the Scottish Charity Regulator, alternatively if your company has been registered in Northern Ireland you must register your company with The Charity Commission for Northern Ireland. To register as a charity your company will need to be incorporated with specific articles of association.

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