Limited by guarantee company

What is the difference between limited by guarantee and limited by shares?

Unlike a standard private limited company with shares, a Limited by Guarantee (LBG) company has no share capital or shareholders. Instead, it has members who contribute an agreed nominal amount towards any asset shortfall if the company is wound up. Non-profit organisations often opt to set up a limited by guarantee company .

What are guarantors?

Guarantors are individuals or other corporate bodies that provide a cash guarantee for a limited company rather than holding shares . Generally, guarantors do not take any profit from the company.

Who can be a guarantor?

Any individual or another company can be a guarantor.

How many people do I need to set up a limited by guarantee company?

When you register a company as limited by guarantee, you only need one person. This person can act as both the guarantor and director.

Who would Opt to form a company limited by guarantee instead of the most common setup with shares?

Non-profit organisations such as membership organisations, clubs and sports associations would usually opt to form a limited by guarantee company. Charities also usually adopt the limited by guarantee structure, but these business types must have charity articles .

Are the profits paid to the guarantors, as dividends would be paid to shareholders?

No, in most cases the guarantors are not entitled to receive any profits, especially if required by law, if they are a charity or if there are specific rules in the company’s articles of association .

What must be on an application to register a limited company by guarantor?

A limited company must have at least one director and one guarantor (this can be same person), as well as a registered office address in the United Kingdom (this cannot be a PO box).

How do I set up a company limited by guarantee?

An LBG company must be registered with Companies House, for which you can use our online service. Simply click on the “Set up My Limited By Guarantee Company Today” button, fill in your details and we’ll form your business with Companies House and send you all the paperwork you need to get started!

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Set up a Limited by Guarantee Company - £79 +VAT

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