Private Companies Limited By Guarantee

A private company limited by guarantee, or a ‘guarantee company’, is a registered company in which the liability of each of the members is limited to a particular amount of money that they guarantee they will contribute personally in the event that the company fails and owes debts. This can be as low as £1.

Guarantee companies are not normal trading companies. Instead, they are widely used by charities, schools, professional and trade organisations, clubs and management companies for blocks of flats in which all the leaseholders are shareholders.

Normally the aims and objectives of the company are to promote the particular company, but there can be no shareholders as such because the company does not have a share capital. Rather, the members of the guarantee company cannot take shares in the company or any rights equivalent to shares (such as the right to receive dividends).

Due to the lack of shareholders and the fact that guarantee companies are so different from companies with a share capital, the Memorandum of Association and the Articles of Association of a guarantee company are very different to those of a normal trading company.

However, like private companies limited by shares, guarantee companies must have a registered office address, directors and a company secretary. Likewise, there are restrictions on their choice of name.

However, one advantage of a guarantee company is that if it so chooses, it need not use the word ‘limited’ at the end of its name, provided that the object of the company is to promote commerce, art, science, education, religion, charity or any profession; and certain additional formalities are met.

Forming A Guarantee Company

If you have decided to form a guarantee company then there are a number of things that you must decide in order to allow us to form the company to your exact requirements.

You can either consider these yourself or discuss some or all of them with us when you come to see us. So it does not matter if you are not sure at the moment what you require; we are very happy to discuss that with you and guide you through the process.

Please click here to see the things to decide or discuss with us.