A company Limited by Guarantee is usually used for non-profit making organisations that require corporate status. Some examples are: social, sports and other clubs, trade associations, societies, charities and educational establishments.
Companies Limited by Guarantee do not have a share capital or shareholders. In their place, the company has members who guarantee to contribute an amount, as specified in the Articles of Association (usually £1), in the event of the company being wound up. The members are generally only liable up to the amount that they have guaranteed. The Articles of Association usually includes a non-profit distribution clause, which means the company cannot declare a dividend or otherwise distribute profits to the members.
Although a company is no longer required to declare its objects in its constitution, it is still generally expected that a company Limited by Guarantee will include a statement of its objects in its Articles of Association. This is usually to give confidence that the money raised by the company will only be used to fulfil its stated objects.
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