Company Limited by guarantee is most often formed by non-profit organizations such as NGO, charitable trust, foundations, sports clubs, workers’ co-operatives and membership organizations, whose owners wish to have the benefit of limited financial liability.
A company limited by guarantee does not have any shares or shareholders (like the more common limited by shares structure) but is owned by guarantors who agree to pay a set amount of money towards company debts.
Furthermore, there will generally be no profits distributed to the guarantors as they will instead be re-invested to help promote the non-profit objectives of the company. If any profits are distributed to the owners, then the company will forfeit its right to apply for a charitable status.
A company limited by guarantee is a distinct legal entity from its owners, and is responsible for its own debts.
The personal finances of the company’s guarantors are protected. They will only be responsible for paying company debts up to the amount of their guarantees.
‘Limited’ status builds trust and confidence amongst clients and sponsors – this type of professional credibility is valuable and can help a company achieve its objectives more effectively.
Can own property in its name
The functions of the company are not monitored/regulated by registration bodies.
Takes 30-45 days to be incorporated.