FAQ for companies limited by guarantee
What is a company limited by guarantee?

A company limited by guarantee is one which does not have a share capital and in which Members do not buy shares. Instead the Members guarantee to pay a certain sum (usually £1) in settlement of liabilities on winding up.

The Memorandum and Articles of Association of a company limited by guarantee are based on Table C of the Companies Regulations 1985.

The Members of the company are the original subscribers to the Memorandum of Association and any other persons whom the directors may approve for membership and who agree to be members.

Do I need a company limited by guarantee?

In deciding whether you need a company limited by guarantee or a limited company with share capital you should consider the following factors:

Is the company is trading for profit? If so, then you should incorporate a private limited company with a share capital.

Companies limited by guarantee typically comprise non-profit making organizations such as:
charities and trusts
trade and professional associations
social, sporting and other clubs
tenants' and residents' associations

It should be particularly noted that that the Charities Commission will not approve a company for registration as a charity unless it is limited by guarantee.

What are the requirements for company formation?

The requirements are the same as for a limited company with share capital:
A minimum of two officers, one of whom must be the company secretary,
A minimum of one Member
Registered office address in the country of incorporation
Articles of Association based on Table C of Companies Act 1985
(In a limited company with share capital the Articles of Association are based on Table A).

Do I have to write ‘Limited’ at the end of company name?

If the limited company is non-profit making it may be permitted to omit the word 'limited' from its name. The company is still required to disclose on the company stationery that it is a limited liability company.

To obtain this exemption, the objects of the company must be the promotion of commerce, art, science, education, religion, charity or any profession. Any profits or other income must be spent in promoting the company's objects. No dividends must be paid to members
If a company limited by guarantee is wound up, all assets must be transferred to another body which has similar objects or which promotes charity.

Companies permitted to omit the word 'limited' form their name need not submit a list of members to Companies House with the annual return.