So, you want to form a company limited by guarantee, but what information do you need to get started? In this post, we’re going to go over everything you need to know when forming a limited by guarantee company.
Why form a company limited by guarantee?
In general, this type of structure will be used by an organisation that is not seeking to make a profit. This can include sports clubs, community projects, trade associations, membership organisations, neighbourhood associations and workers’ co-operatives.
Similar to a limited by shares company, limited by guarantee provides its members with limited liability. However, a company limited by guarantee does not have any shares or shareholders. It is instead owned by its guarantors who will agree to pay a fixed amount of money towards any company debts.
In general, guarantors will not be entitled to any profit distributions as any profits generated are usually re-invested back into the company to further its cause. If profits are distributed, then the company will forfeit the right to apply for charitable status.
The company name
The first thing to consider when starting a company is what to name it. Whilst there are some restrictions on what you can name a company, there is still a lot of freedom to be had and it can be practically anything you want.
Much the same as a limited by shares company, companies limited by guarantee will need to end in either “Limited”, Ltd” or “Ltd.”. However, there are certain circumstances where a limited by guarantee company can apply for an exemption from this requirement.
The company must have certain aims and there are specific requirements that will need to be included in their articles of association. To check to see if your company name is available, head over to our company name checker.
The registered office address
You will also need to decide on what your registered office will be. This is the official address of the company and is made available on the Companies House public register.
It is the address where you will receive all your statutory correspondence (such as HMRC mail and Companies House mail) for your company. Some people do choose to use their residential address but for the sake of privacy and convenience, many people choose to use a registered office address service.
Once the company has been formed, the registered office must be displayed on your website and company stationery.
You will need to confirm what types of activities your company is seeking to undertake. This information is reported on Companies House as Standard Industrial Classification (SIC) codes.
The appointments needed for a limited by guarantee company
You will need to have at least one director and one guarantor to get started. It is permitted for the director and guarantor to be the same person. You may also wish to appoint a company secretary, however, this is not a requirement.
The director of any company will need to be at least 16 years of age and you will need to confirm their:
- Full name
- Date of birth
- Home address (not available on the public record)
- Service address (displayed at Companies House)
For secretaries and members, the requirement for information is slightly reduced. For a secretary, their full name, date of birth and services address is required and for a member, only their full name and address are needed. In addition to these appointments, you will also need to confirm who all of the people with significant control (PSC) are in the company.
Statement of Guarantee
When a limited by guarantee company is registered, the first guarantors (subscribers) will need to complete a Statement of Guarantee during the incorporation application. The Statement of Guarantee details when and under what circumstances a guarantor will be required to pay their guarantees.
The amount each subscriber will guarantee will be confirmed when completing the incorporation application. In the majority of cases, this will be a small value such as £1 guaranteed by each member.
So, there you have it…
If you’re looking to form your own limited by guarantee company, we can help via our dedicated Limited Guarantee Package. Find out more below:
We hope you have found this post helpful. If you have any questions, please leave a comment below.