A practical guide to the right company structure

Guarantee or shares? Choose the right company and start online

A company limited by guarantee (CLG) and a private company limited by shares are both incorporated companies with a separate legal identity. Both can enter contracts, employ people, hold property and continue beyond changes in the people involved. The difference is how their members participate: a CLG has guarantors and no share capital; a company limited by shares has shareholders and shares.

Your choice affects who controls the company, how it raises money and what happens to any surplus. A CLG can suit a club, association, community group or residents' body whose members do not need shares. If founders want ownership stakes, dividends or investors who buy shares, look at a company limited by shares.

Start your Coddan order online whenever you are ready, including evenings and weekends. Tell us who is involved and what the company needs to do. We check the details, prepare the agreed filing and take it to Companies House when ready. Below you can compare guarantee and shares, see what to prepare, and plan what your new company will need after registration.

1. What is a company limited by guarantee?

A CLG is a company whose members promise to contribute a specified amount if the company is wound up while they are members or within the relevant period after membership ends. This is the guarantee, often a nominal amount such as £1 per member. It is a contingent promise, not a share subscription or a routine fee payable on incorporation.

At least one guarantor and one director are needed. The same individual can occupy both roles. The company has no shares to issue or transfer, and a member does not acquire a percentage of the organisation simply by providing the guarantee. Its articles determine admission, voting, appointment, resignation and other internal rules. The directors manage the company subject to their duties and those rules.

Limited liability does not remove a director's duties or protect anyone from their own wrongdoing or a separately agreed personal guarantee. The company remains responsible for its own debts and obligations.

2. What is a private company limited by shares?

A private company limited by shares has share capital. Its shareholders hold shares with the rights attached to them under the articles and any applicable arrangements. The shares may carry voting rights, rights to dividends and rights to capital on a winding up. A shareholder's ordinary liability is generally limited to any unpaid amount on their shares.

This is a common route for a business whose founders want equity ownership, future investors or a potential sale of shares. It can also serve some social or charitable purposes when structured appropriately; the legal form alone does not decide an organisation's purpose or tax treatment. Directors and shareholders may be the same people, but their roles are legally distinct.

3. CLG versus company limited by shares: the practical differences

Neither structure automatically makes an organisation a registered charity, gives it a tax exemption or removes its Companies House responsibilities.

4. When does a CLG make sense?

The CLG is often useful where an organisation needs an incorporated legal person, continuing existence and a membership framework, but does not need owners with transferable equity. Clubs, trade or professional associations, community projects, some property or residents' organisations, charitable companies and certain non-profit service bodies may consider it. Their needs are not identical: a right-to-manage company, a charitable company and a small members' club can need different articles and governance arrangements.

A CLG can receive income, trade where lawful, employ staff, own property and enter contracts. Calling it “non-profit” does not prohibit every commercial activity; what matters is its purposes, constitution, transactions and the rules that apply to it. If the proposed organisation will distribute returns to investors or use share ownership to allocate value, discuss the structural choice before ordering a CLG.

5. Benefits and limits of the guarantee structure

A CLG can sign contracts and hold property in its own name. Members' ordinary exposure is limited to their agreed guarantee, and the company can continue as members change. Clear articles can set membership and voting rules that make participation and succession easier to manage than in an informal association.

The trade-off is that a CLG cannot raise equity by issuing shares. Membership rights, subscriptions, use of surplus and asset treatment need to suit its purpose and governing document. Directors still have filing and record-keeping obligations. If the organisation needs charitable registration, CIC status, a “Limited” name exemption or specialist property provisions, those are further questions rather than automatic results of incorporating a CLG.

Online access and human review

6. What does 24/7 CLG formation mean with Coddan?

Start your order online at any hour. You can enter the name, people and other formation details at night, at the weekend or from overseas. Coddan then reviews the order during its service hours, asks for anything missing and prepares the filing. Companies House makes the final registration decision.

Have the proposed name, directors, guarantors, registered office and intended articles ready. We check control and identity requirements too. Straightforward orders can move quickly once complete; a name needing consent or unusual governance may need more work. We will tell you what is holding up the filing.

7. What happens after an online order?

We check your order, identify any missing information and prepare the documents and Companies House application included in your chosen service. Once the people, name, address and identity requirements are ready, we submit it by the suitable route. If you need custom articles or a more complex arrangement, we explain the work and price before you instruct us.

When Companies House registers the company, it issues the incorporation certificate. We then send the documents included in your package, with any agreed printed records or address documents. Check the package list for exactly what you receive. You can also ask us to help with the registered office, first records, later changes and annual filings.

8. How quickly can a CLG be incorporated?

Companies House says standard software incorporation applications are normally processed within 24 hours, with complex cases taking longer. Its separate same-day software service must be applied for by 3 pm Monday to Friday and carries a higher government fee. Choose the Coddan package and filing speed that fit your deadline, then check the displayed total and what you must supply.

Those are processing routes, not guaranteed outcomes. The preparation stage can take longer if an identity check is outstanding, the name needs evidence or consent, the constitution requires tailoring, a director or member arrangement is unusual, or the information supplied is incomplete. An order placed at night or at a weekend still needs the required preparation and a Companies House decision.

9. When urgent formation is useful, and when to pause

An organisation may need a legal entity for a lease, property transaction, grant application, contract, membership launch or planned activity. A fast electronic filing can help once the people, purpose, name, address and articles are settled. First make sure the company type, members and control arrangements are right.

If the group is still deciding who can become a member, whether directors must also be members, how voting works, what happens to property or whether charitable or CIC rules apply, resolving those matters before filing is usually the faster route overall. Coddan can discuss a tailored formation where a standard model does not reflect the organisation.

10. What can delay an online CLG application?

• An unavailable, sensitive or otherwise unsuitable company name.
• Missing or inconsistent director, guarantor, address or PSC details.
• Identity verification or the director's Companies House personal code not yet ready.
• Articles that need to reflect unusual membership, property, charity or community arrangements.
• A proposed registered office that does not satisfy the address requirements.
• An application requiring paper submission, consent, further evidence or Companies House examination.

We will tell you what we need to move the order forward. Answering promptly helps us prepare the filing; Companies House still controls its decision and timing.

11. Choose the name and identify the organisation's purpose

Check that the proposed name can be registered and consider existing trade marks and similar names. Some words or expressions require supporting evidence or consent. If you want to omit “Limited” from a qualifying CLG name, a different registration route and additional requirements may apply; do not assume that selecting a name on the online form grants the exemption.

Then state what the organisation will do. A concise description helps identify appropriate SIC codes and whether model articles are enough. Charitable objects, right-to-manage purposes, special membership rights or property restrictions can call for more specific documents. A CLG is a legal form, while “non-profit” is a description of purpose or operating model.

12. Decide who the guarantors and members will be

A CLG needs at least one initial guarantor. Each subscribes to the memorandum and undertakes to contribute the stated guarantee if called upon under the relevant winding-up rules. A person may also be a director, but membership and directorship remain separate roles. Later admissions and departures should follow the articles and be recorded properly.

A £1 guarantee is common, but the amount and membership scheme should be deliberately chosen. It is different from an annual membership subscription, which may finance activities and should be governed by the articles or the body's decisions. If different classes of members or different voting rights are intended, settle those rules before incorporation.

13. Appoint directors and identify actual control

A private CLG must have at least one director. A company secretary is optional, although some organisations choose to appoint one for governance and administrative support. Directors manage the company's affairs, act within their powers and remain responsible for its statutory obligations even if a provider assists with filings.

The PSC assessment is based on real voting rights, appointment rights or other significant influence or control, not on a guess that every guarantor is a PSC. Some CLGs will have a registrable individual or relevant legal entity; others may have no individual who meets the conditions, in which case the appropriate statement still matters. Membership, trusteeship and directorship do not automatically produce identical PSC outcomes.

14. Complete Companies House identity verification where required

Directors of a newly registered company need to have verified their identity and provide their Companies House personal codes as part of the incorporation filing. An individual PSC also has verification and role-connection requirements under the applicable timetable. The same person may need to provide their code separately for the director and PSC roles. An ordinary guarantor does not need verification merely because they are a member, unless another relevant role applies.

Individuals may use the available direct Companies House route or an authorised corporate service provider (ACSP) where appropriate. Coddan can discuss its supported ACSP service separately. Verification is a process involving evidence review; the Companies House personal code is issued to the individual by Companies House. It is not a code Coddan creates or guarantees to issue.

Read about CLG director and PSC identity verification.

15. Provide a suitable registered office and registered email

A CLG must have an appropriate registered office address in its jurisdiction of registration. Correspondence delivered there must be expected to come to the attention of someone acting for the company, and delivery must be capable of acknowledgement. The address is public. A registered email address is also required and must be maintained, although it is not published on the public register.

You may use your own suitable address or an address service within the selected Coddan package or separately ordered service. The registered office is not necessarily a trading office or general mail-forwarding service. Check exactly what correspondence handling, scanning, forwarding and renewal terms are included. A company registered in Scotland needs a Scottish registered office; the corresponding jurisdictional rule also applies to Northern Ireland and England and Wales.

16. Choose model or tailored articles

The memorandum records the initial subscribers' agreement to form the company; the articles set out how it will operate. Companies House publishes model articles for a private company limited by guarantee. These may suit a straightforward organisation, but a model constitution should not be assumed to cover special objects, membership classes, subscriptions, board composition, voting, asset restrictions or a statutory property regime.

For example, a community body may need clear rules on who joins and how decisions are made; a charitable company must address its charitable purposes and applicable charity requirements; a property-related body may need documents suited to its function. Tell us about these requirements before choosing a standard package. We can explain the document work and its price.

17. Step-by-step: from decision to incorporation

1. Decide the legal form: guarantee or shares, and any charitable, CIC or specialist status to pursue separately.
2. Settle the organisation: its name, purpose, initial members, directors, control and articles.
3. Choose the jurisdiction and addresses: registered office, registered email and service addresses where required.
4. Complete verification: obtain relevant directors' personal codes and plan PSC verification and role connection.
5. Select the Coddan route: review the package, government fee, address term, documents and any additional work.
6. Submit complete information: Coddan reviews and prepares the agreed filing, then sends it through the appropriate Companies House route.
7. Receive the result: incorporation exists only when Companies House approves and issues the certificate.
8. Put the company to work: organise records, accounts, tax and any further registrations relevant to actual activity.

Electronic submission is convenient, but each preceding decision matters. The incorporation certificate confirms a legal entity; it does not itself establish charity registration, VAT registration, a bank account or permission to carry on regulated activity.

18. Can an overseas founder establish a UK CLG?

UK residence is not generally a requirement simply to be a director or guarantor of a UK company. If you live overseas, you can start the Coddan order online and arrange a suitable UK registered office and documents with us. The individuals involved still need to meet the applicable Companies House identity and information requirements. A corporate member or more complex control arrangement may need additional review.

UK incorporation does not grant immigration status, a UK bank account, tax residence or automatic acceptance of documents overseas. Think about where the organisation will be managed and operate, whether local laws or tax rules also apply, how official mail will reach the responsible people and whether documents must be used abroad. Certification, notarisation, apostille or translation should be arranged only where the intended destination requires it.

19. England and Wales, Scotland or Northern Ireland?

Companies House registers companies in the relevant UK jurisdiction. Decide where the company's registered office will be before filing: an England and Wales company needs an address there; a Scottish company needs one in Scotland; a Northern Ireland company needs one in Northern Ireland. This is a legal address decision, not simply a preference for a city name in a package.

A body seeking charitable recognition must also consider the regulator and law applicable to where it is established and operates. Charity rules differ across England and Wales, Scotland and Northern Ireland. Coddan can discuss the CLG formation and appropriate address options, and any separate charity or specialist registration can be discussed and priced where required.

20. What do you receive after registration?

Once Companies House approves the application, you receive a certificate showing the company name, number and incorporation date. The memorandum and articles explain how it was formed and governed. Depending on the package, Coddan may also prepare first board minutes, membership certificates, company registers, printed documents and an address-service certificate. Check the package description for what is included digitally, in print or by post.

A membership certificate is an internal record of membership, not a share certificate. Company registers and first decisions need to match the actual directors, members and agreed constitution. If a bank, landlord, overseas authority or another recipient requires an official certified copy, notarisation or legalisation, that is a separate question about the document's destination and the service ordered.

21. What does CLG formation cost?

The Companies House standard digital incorporation fee is £100; its same-day digital fee is £156. These are government fees, not the full Coddan package price. Compare the displayed package total, VAT and inclusions before ordering; check whether the government fee is included. The government fee alone is not the price of a formation agent's work.

Compare packages by the actual deliverables: whether you provide your own registered office, whether an address service is included and for how long, what documents are prepared, whether printed materials or mail handling are supplied, and whether an urgent filing route is included. An annual address renewal, identity verification, custom articles, charity application, ongoing secretarial work or future filing should not be inferred to be included unless the offer says so.

22. What might need a separate instruction?

The incorporation certificate starts the company. Your members and directors may also need practical records, an address service and arrangements for running it. Additional drafting or support may be appropriate for custom objects and articles, multiple classes of members, unusual control, a charitable structure, a CIC, right-to-manage or property arrangements, corporate guarantors, overseas evidence, or a name requiring consent. Each should be considered because of the organisation's real needs, not bundled automatically with every order.

Post-incorporation services can include maintaining a registered office, preparing registers and minutes, filing a confirmation statement, notifying officer or PSC changes, accounts and tax coordination, document certification, or ongoing company secretarial support. Coddan will explain the scope and price of separately requested work. A basic formation package need not buy the company's future annual filings in advance.

23. Your CLG's first year: from incorporation to a working organisation

After registration, make sure the directors and members know what the organisation is for, who has authority to act, where its records are kept and how decisions are made under the articles. Keep the registered office and registered email effective. Maintain appropriate company and accounting records and review the PSC position from actual rights and control. A provider's address or filing service can help, but directors remain responsible for their company.

If the CLG begins business activity, it must deal with the applicable HMRC requirements; a dormant company has a different position. VAT registration is separate and depends on the circumstances. The first confirmation statement and accounts need their own deadlines. A charitable company may have additional reporting to the relevant charity regulator. The right first-year work depends on what this CLG actually does.

Explore Coddan's CLG secretarial support.

24. Annual filings and changes after the first year

A company must review and file a confirmation statement at least once in each 12-month review period, normally within 14 days after the period ends. It must also prepare and file accounts. First accounts for a private company generally have a deadline measured from incorporation, while subsequent annual accounts are generally due nine months after the financial year end; check the company's actual Companies House dates. HMRC tax-return and payment deadlines are separate from Companies House deadlines.

Changes to directors, PSC information, registered office, registered email, articles or other registrable matters may call for event-driven action before the next confirmation statement. Members' internal records must also be kept accurate. Coddan can assist with agreed filings and continuing secretarial support, but agree who will handle each filing and what any continuing Coddan service includes.

Read about CLG confirmation statement filing.

25. Three practical structure choices

These are illustrations, not automatic answers. Purpose, participants, funding and legal obligations determine the appropriate route.

26. Why form your CLG with Coddan?

Order online when it suits you, in the UK or overseas. Coddan checks the information, prepares the formation work you choose and files through the suitable Companies House route. Choose an available registered office and document service if your package offers them, or ask us about separate arrangements. We can help with a standard CLG and discuss additional governance needs.

Tell us what the organisation is for, who will be involved and how it should work. We can spot where the chosen company form or standard articles may not fit before the application goes in. Where identity verification is needed, Coddan can explain the available route and its separately priced ACSP support. After incorporation, the company can return for addresses, records, changes, annual filings and document services as relevant.

Starting is easy: choose your route, send the details online and respond to any follow-up questions. We handle the agreed preparation and submission; Companies House decides registration. Banking, charity registration and tax arrangements each have their own requirements.

27. Frequently asked questions

Can I order a CLG formation at night or at the weekend?

Yes. Start online whenever you are ready. We review and prepare the filing during service hours, then submit it once complete. Companies House makes the registration decision.

Is a CLG automatically a charity?

No. A CLG is a company form. Charitable status and registration depend on the purposes, activities, governing document and relevant charity regulator's requirements.

How many people do we need?

At least one director and one guarantor are needed, and the same person can fill both roles. The organisation's governance or specialist regime may call for a broader group.

Can a CLG issue shares or pay dividends on shares?

No. A CLG has no share capital. If share ownership and equity investment are central to the plan, consider a company limited by shares.

Can an overseas person be a director or guarantor?

Generally yes, subject to the ordinary eligibility, information and identity requirements. Incorporation alone does not decide immigration, banking or cross-border tax matters.

Do all guarantors need Companies House identity verification?

Not merely because they are guarantors. The director and PSC roles have their own requirements, so identify each person's actual roles.

Does the package include next year's confirmation statement?

Only if the chosen package expressly says so. Read its scope and annual renewal terms. Otherwise the filing can be arranged separately when due.

What is the difference between a £1 guarantee and a subscription?

The guarantee is the stated contingent contribution associated with winding up. A subscription is a fee members may pay to fund the organisation under its rules; it is not the guarantee amount.

28. Choose the route that fits, then start online

Need a company with members, an agreed guarantee and no shares? Compare the CLG packages on this page. If founders need shares, investors or transferable ownership, consider the limited-by-shares route before ordering. When your purposes, members, directors, articles and address are settled, you can begin the Coddan application online. Tell us first if the formation involves custom governance, charity registration, a specialist property regime or overseas document use.

Explore the related guidance on company status, incorporation, constitution and membership:

Explore Coddan's CLG formation routes See post-formation support