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Limited by Guarantee

Limited by Guarantee

Company limited by guarantee

A company limited by guarantee is a non profit organisation that requires corporate status; examples are trade associations, sports and other clubs, societies and educational establishments – generally any organisation that would consider itself a 'Social Enterprise'.

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 (commonly £1.00) in the event of the company being wound up with debts. The members are generally only liable up to the amount that they have guaranteed. The Articles of Association will usually include 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 generally expected that a company limited by guarantee will include a statement of its objects in its Articles of Association. This is normally to give confidence that the money raised by the company will only be used to fulfil its stated objects.

To denote its status, a company limited by guarantee formed for the purpose of the promotion or regulation of commerce, art, science, education, religion or charity that also includes a non profit distribution clause may elect to not use the word "limited" at the end of the company name.

Limited by guarantee formation

Interested in forming a company limited by guarantee? We offer companies limited by guarantee from only £12.39. Start by searching your company name and then selecting the LBG package.

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