A Company limited by guarantee is a type of company with Members who have undertaken to contribute to the assets of the company in the event of its being wound up. This Practice Note summarises the main features of a company limited by guarantee and why a guarantee company might be used as a vehicle to carry on a business as opposed to a company limited by Shares.
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
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Company limited by guarantee definition
What does Company limited by guarantee mean?
A company limited by guarantee is a company whereby the liability of the members is limited to such amount as the members undertake to contribute to the assets of the company in the event of its being wound up.
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