Companies limited by guarantee

by Practical Law Corporate

A Practice Note that provides guidance on companies limited by guarantee, a corporate structure commonly used by non-profit organisations such as charities, clubs, property management companies, and trade associations. This Practice Note outlines the key characteristics of these companies under the Companies Act 2006 (CA 2006), focusing on the members' liability being limited to a nominal guarantee amount payable only on a winding up, and the general absence of a share capital. It explores the entire lifecycle of a company limited by guarantee, from the initial incorporation process to its ongoing operation and constitutional requirements, including the use of model articles. The guidance also addresses practical considerations such as admitting and removing members, members' rights, and the conditions for obtaining an exemption from using the word "limited" in the company's name.