Forming a company limited by guarantee in the United Kingdom

Why to open a company limited by guarantee in the United Kingdom? When you create a company limited by guarantee, you are required to appoint at least one guarantor who is responsible for covering any company debts up to an agreed amount. This allows guarantors to be responsible for a nominal amount (usually £1.00), therefore protecting them from losing any of their own money in the event of accruing company debt.

A company limited by guarantee essentially enjoys the prestigious "limited" status which creates trust among potential clients and suppliers, with much less risk. It's valuable credibility for an incredibly low incorporation cost, which is why so many organisations choose Coddan to set up guarantee companies.

Companies limited by guarantee are typically incorporated by not-for-profit organisations, including (but not limited to) workers' co-operatives, private members' organisations and sports clubs, whose owners want to enjoy limited financial liability.

A limited by guarantee company in the Great Britain doesn't have shareholders or shares and is instead owned by guarantors, each of which agrees to pay an agreed amount towards company debts. No profits are automatically distributed to these guarantors, as profits are re-invested in order to promote the objectives of the organisation. Portions of the company profits can be distributed to the owners, although the company will automatically lose its right to charitable status if this is the case.

If you're intending to set up a non-profit organisation, a company limited by guarantee makes sense. The personal finances of the company guarantors are protected, with guarantors only responsible for any debts up to their agreed amount.

"Limited" status affords a company limited by guarantee some professional credibility, which increases trust among investors and clients alike, thus ensuring that a guarantee company objectives are more effectively met.

With us, it couldn't be simpler – we offer affordable packages tailored to the needs of our customers. Before applying to start a limited by guarantee company in England, please be aware of the following: -

• Companies limited by guarantee must, by law, be registered with Companies House.
• Companies limited by guarantee require a minimum of one guarantor and one director, each of which will be noted on public record. An individual is entitled to assume both positions.
• Guarantee companies are required to provide domiciled office address details during the formation process. This is the address that will be noted on public records, and must be a full postal address in the country of a company limited by guarantee registration.
• During the company limited by guarantee formation process you are required to create a memorandum of association whilst adopting articles of association. This memorandum states the name of each guarantor and their agreement to become a company member. At Coddan, we provide memorandum and articles which are suitable for use by a limited by guarantee company.