VPM

Village & Parish Magazines

Company Limited by Guarantee
Companies limited by guarantee are private limited companies where the liability of the members is limited. A guarantee company does not have a share capital, but has members who are guarantors instead of shareholders. Limitation of liability takes the form of a guarantee from its members to pay a nominal sum in the event of the company being wound up while they are a member or within one year of their ceasing to be a member. The amount of money that is guaranteed can be as little as #1 and will be stated within the constitution of the company (the Memorandum & Articles of Association).

Why form a Company Limited by Guarantee?
Guarantee companies are useful for non-profit organisations that require corporate status. This means that its profits are not distributed to its members but are retained to be used for the purposes of the guarantee company. Of course this does not mean that the guarantee company cannot make a profit, as indeed it is almost paramount that it can and does so. Where an organisation is likely to enter into contracts it may need the benefit of limited liability to protect its Board of Trustees and its members, who may be involved on a voluntary basis.


More about becoming a Company Limited by Guaranteecan be found on our download pages. Note however that it will not be necessary to become a CLBG and a registered Charity as two separate entities as new legislation being drafted, at present, by the Charities Commission will negate the need to do both. See the section under Charity Commission on this website titled Charitable Incorporated Organisation (CIO).