Companies Limited by Guarantee: A Clear Guide

1
Companies Limited by Guarantee A Clear Guide
www.futureformations.co.uk
2
A company limited by guarantee is similar to a
business limited by shares in that it has
directors who are responsible for the day-to-day
operations. If necessary, a corporate secretary
can be appointed. Members' responsibility is
limited in the same manner as shareholders'
liability is restricted, but it is not restricted
to the value of the shares because a guarantee
company does not issue shares.
3
Purpose of Forming Company Limited by Guarantee
A company limited by guarantee is essentially the
same as a limited company, but with the apparent
difference that there is no share capital.
Members of the firm are guarantors rather than
shareholders. Charities frequently employ this
type of business formation, though not all
limited-by-guarantee corporations are charitable
in nature. Membership organizations and clubs,
especially sports groups, are common types of
organizations that opt for this sort of firm.
This is because since gains cannot be given to
members as a dividend, it is less likely to be
employed by a traditional trading company.
4
Benefits of Forming Company Limited by Guarantee
A business limited by guarantee is a legal entity
apart from its shareholders, accountable for its
own debts. Therefore, the company's guarantors'
personal funds are safeguarded. They will only be
liable for obligations owed to the corporation up
to the amount of their guarantees. Other than
this, clients and investors like 'limited' status
because it fosters trust and confidence. This
form of p
5
Drawbacks of Forming Company Limited by Guarantee
A change in directors, a change in the company
secretary, or a change in the registration office
must all be reported to Companies House.
Similarly, yearly accounts and returns must be
submitted. If the organization is charitable, it
must additionally file an annual report with OSCR
and inform or get prior authorization from OSCR
before making certain modifications.
6
Set-up fees can be more than for a charitable
organization or trust, and yearly expenditures
can be greater as well, especially if an external
company secretary is hired and/or a formal audit
is necessary.
Future Formations LTD
7
Contact
Future Formations Ltd 4 Cochrane House Admirals
Way, Canary Wharf London E14 9UD 442077818033
www.futureformations.co.uk
support_at_futureformations.co.uk