Companies limited by guarantee
Companies limited by guarantee

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Companies limited by guarantee
  • What is a company limited by guarantee?
  • Why incorporate as a company limited by guarantee?
  • Setting up a company limited by guarantee
  • Meetings, voting and other administrative matters
  • Members
  • Directors
  • Companies limited by guarantee with a share capital

What is a company limited by guarantee?

Limited companies can be either limited by shares or by guarantee. A company limited by guarantee is a type of company whose members have undertaken to contribute to the assets of the company in the event of it being wound up. It is not possible for a company limited by guarantee to be a public company.

Most companies limited by guarantee do not have shares because since 22 December 1980 (1 July 1983 in Northern Ireland), it has not been possible to form a company limited by guarantee with a share capital. Companies limited by guarantee with a share capital can be public or private companies. They are relatively rare and historical, so are not covered in the main part of this Practice Note, but further details on companies limited by guarantee with a share capital are provided below in the following section: Companies limited by guarantee with a share capital .

Companies limited by guarantee and without a share capital have members who, Instead of holding shares in the company, give a guarantee to pay a certain amount in the event of the company being wound up. The members' liability is limited to the amount of that guarantee, which is usually a nominal amount (eg, £1 to £10).

A key difference between companies limited