Table of Contents
What is company limited by guarantee in company law?
Introduction. A company limited by guarantee is a private company where the liability of the members is limited by the company’s constitution. 1. The limit is set out in the Memorandum of Association to such amount as the members may respectively undertake to contribute in the event of winding up of the company.
Is a company limited by guarantee a separate legal entity?
For example, compared to an unincorporated association, a company limited by guarantee enables you to limit the members’ liability and operate as a standalone entity.
Does company limited by guarantee have limited liability?
Like all other companies, companies limited by guarantee must comply with the applicable provisions of the Corporations Act. They are formed on the principle that the liability of members is limited to the amount they agree to contribute if the company is wound up.
Who owns a company limited by guarantee?
A company limited by guarantee is owned by individuals and/or corporate bodies known as ‘guarantors’. Guarantors do not have any shares in the company and, generally, they do not take any of the profits.
Does a company limited by guarantee need a public officer?
Yes. Each company must have a public officer.
What are the benefits of a company limited by guarantee?
Benefits of companies limited by guarantee
- A company limited by guarantee is a distinct legal entity from its owners and is responsible for its own debts.
- The personal finances of the company’s guarantors are protected.
- ‘Limited’ status builds trust and confidence amongst clients and investors.
Do companies limited by guarantee have to be audited?
Any one member of a CLG may object and require an audit to be performed pursuant to the Act.
Does a company limited by guarantee have directors?
A company limited by guarantee is much like an ordinary private company limited by shares. It is registered at Companies House, must register its accounts and an annual return each year, and has directors. A major difference is that it does not have a share capital or any shareholders, but members who control it.