Info Sheet - Company Limited By Guarantee

Info Sheet - Company Limited By Guarantee

More on charitable status.

A company limited by guarantee has:

• a legal identity;
• the ability to own property in the company’s name;
• the ability to enter into contracts (e.g. service delivery agreements, terms and conditions of a grant) in the company’s name;
• additional legal requirements e.g. company law;
• limited liability* (i.e. members only commit to pay a normal amount such as £1 if the company has outstanding debts to meet).

* Limited liability does not protect the Management Committee or its members against negligence, acting improperly or dishonestly, failing to comply with statutory requirements (such as employment law), failing to meet obligations under company law or trading without sufficient assets to cover debts, failing to meet terms of a contractual agreement (such as spending grant money on an activity outside that agreed with your funder), etc.

A company limited by guarantee is usually appropriate where some or all apply:

• the organisation is to be quite large;
• it will have employees;
• it will deliver charitable services under contractual agreements;
• it will regularly enter into commercial contracts;
• it will own property or leasehold land.

More on the advantages & disadvantages of different legal structures
More on Northern Ireland Company Limited by Guarantee