Limited by guarantee

Limited by guarantee

In British and Irish company law, a private company limited by guarantee is an alternative type of corporation used primarily for non-profit organisations that require legal personality.

What kind of organisation will be incorporated as limited by guarantee?

Examples of organisations limited by guarantee include clubs, membership organisations, including students' unions, residential property management companies, workers' co-operatives, other social enterprises, non-governmental organizations (NGOs) and charities (such as Oxfam).

What is the implication behind it and the related meaning come up along with this?


A company limited by guarantee does not usually have a share capital or shareholders, but instead has members who act as guarantors. The guarantors give an undertaking to contribute a small nominal amount in the event of the winding up of the company.
A limited company can be converted to a Community Interest Company (CIC) that features an asset lock which prevents the extraction of profits. A company limited by guarantee cannot distributes its profits to members (nor CICs) in order to secure a charitable status.
Like a private company limited by shares, a company limited by guarantee must include the suffix "Limited" in its name, except in circumstances specifically excluded by law such as that the company does not distribute profits.