Q&As

How might a private company limited by guarantee be sold?

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Published on LexisPSL on 05/01/2017

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • How might a private company limited by guarantee be sold?

We assume for the purposes of this Q&A that the entity is not a charity nor subject to special provisions by virtue of being regulated by a regulatory authority.

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. A perceived advantage of companies limited by guarantee is the flexibility of membership. Membership of a guarantee company is not attached to shares, so it is relatively straightforward to join or leave (although the articles of association may have more complicated provisions). See for example Article 22(2) of the Model articles—private company limited by guarantee—companies incorporated on or after 28 April 2013, which simply states that membership is not transferable. It is therefore essential to consider the articles of the particular company in question to determine what options in relation to sale or transfer are available, and if necessary, to amend those provisions as required.

Those options may include:

  1. the admission o

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