Private Company Limited by Guarantee

Private Company Limited by Guarantee

A company limited by guarantee is basically formed by non-profit organizations such as sports clubs, membership organizations and worker cooperatives in order to attain the corporate status and enjoy the benefit of limited financial liability.

Unlike private limited company by shares, company limited by guarantee does not contain any shares or shareholders. The company is owned by guarantors who agree to pay the set amount of debt towards the company. If no profits are distributed among guarantors, it is reinvested to promote the activities performed by non-profit organization and to achieve the organization’s objectives more efficiently.

In case any profits are distributed among the owners, a company’s right of being a charitable trust will be forfeited.

Why should i form a private company limited by guarantee?

It is very simple to open a private limited company by guarantee and any individual can do it. Kindly be aware of the following requirements & regulations before applying for private limited company registration by guarantee –

• A company limited by guarantee must be registered with company’s house in UK.
• Minimum one director & one guarantor are required to incorporate a private limited company by guarantee. There can be multiple directors & guarantors or a single person can hold both the positions. Information regarding all directors and guarantors should be available on public record.
• At the time of company formation, every limited company should provide details of their registered office address. The officially registered address should be displayed on the public records. The full physical address shared with the company’s house should be of the same country in which the company is registered.
• The application must contain details of people with significant control (PSC’s). Generally, the guarantors & directors are the PSC’s.
• Every company should supply standard industrial classification codes (SIC) which explain the nature of their trading activities. You can supply up to four SIC codes.
• You need to complete Memorandum of association to state the objectives, mission and vision of the company.
• You also need to complete Articles of association to state the rules & regulations of the company and its members.

Benefits of Private Company Limited by Guarantee –

The benefits of private limited company by guarantee are as follows –

1. A company limited by guarantee is a separate legal entity from its owners & members and is responsible for its own debts.
2. It protects the personal finances of the company’s guarantors and only responsible for paying company debts up to the value of their guarantees.
3. It builds trust & confidence and makes your company legally strong in the eyes of clients & investors. It helps you in achieving company’s objectives earlier and efficiently.
4. Private limited company by guarantee doesn’t have a share capital limit which restricts its fund raising capacity.
5. A private limited company by guarantee can be exempted from using the word “Limited” at the end of its name in case it is for promotion of art, science, education, commerce, religion, charity or any profession.