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Advantages of company limited by guarantee formation, disadvantages of a company limited by guarantee registration

Company limited by guarantee formation vs public company limited by shares

Incorporate a Guarantee Company

Company limited by guarantee formation vs public company limited by shares: if you are struggling to decide between register as a company limited by guarantee or a public company limited by shares, it may be a good idea to get in touch with the Coddan Formations Agency team. We have been providing this type of advice for a number of years, and they will be able to empower you to make an informed decision that relates to your precise needs. While there are a number of similarities between the two set-ups, there are also a number of significant differences that can be advantageous in different situations.

Both of these company registrations are suitable for charitable organisations and community interest groups, and each system has a legal framework in place to limit the overall liability of members in the event of accrued debts. For a company limited by guarantee, there is a drafted agreement that states that members will be responsible for settling any bad debts - but the maximum liability may be up to a nominal value, such as £1. For a company limited by shares, the shareholders are only responsible for making full payment for the actual shares, and this action is the extent of their responsibilities. In a regular company situation, the liability could have a severe effect on the financial commitments of individual directors. Public company requires to have two directors and one secretary, and the share capital of £50.000 and the quarter of it needs to be fully paid before you can start your business. 

If there is going to be a need for ongoing fundraising, there may be a stronger case to opt to form as a company limited by shares. Individual investors can purchase shares in the company, and there can be a legal agreement in place to specify the extent of the dividend that may be payable in the event of the company turning a profit. This can actually be a sort of compromise between investing for profit and investing to benefit a community project - such flexibility may be more difficult to obtain within a company limited by guarantee. Please note, that you cannot convert a public company into a non-profit company.

Whatever the overall objectives of your group, organisation or company may be, the specialists at Coddan Formations Agency can provide you with everything you need to choose the best route to formation - this is then followed by everything you need to operate your company successfully.

To find out more about the full range of services that are on offer, there is a wealth of information online at To get more information about the private company limited by guarantee vs public company limited by shares, you can call directly on + 44 (0) 207.935.5171 or +44 (0) 330.808.0089, and send us your enquiry via email.