UK Company Limited by Guarantee or Company Limited by Shares

Register a UK company limited by guarantee or setting-up a company limited by shares: there are two types of limited companies - those limited by shares (e.g. commercial companies) and those company limited by guarantee (usually charities or non-profit companies).

Companies limited by shares are owned by shareholders, of which there only needs to be one, and are run by boards of directors. Companies limited by guarantee have members and are usually run by a committee of management. In general, companies limited by shares carry out trading since guarantee companies can't usually pay the benefits of their trade to their members.

A company limited by guarantee is a incorporated company having the liability of its members limited by the memorandum to such amounts as the members may respectively undertake to contribute to the assets of the non-profit company in the event of its being wound up. Such companies limited by guarantee are widely used for schools, professional and trade associations, clubs and management companies for blocks of flats.

The main differences between a guarantee company and a company with shares are: its members do not receive share certificates and whilst they control the guarantee company, through decisions taken by them at general meetings, they do each not "own" a proportionate part of the guarantee firm. Its members cannot receive any dividend, profit or other income from the guarantee company, nor can they share in its assets if the guarantee company comes to an end. Its members enjoy limited liability, but usually have to pay an annual subscription (at a rate set annually by themselves at general meeting) and, if the guarantee company comes to an end through a liquidation, they are obliged to pay a final sum of £1.00 each to the liquidator.

The members elect the board of directors (usually called trustees or governors to avoid connotations of salaries and bonuses) which is responsible for setting and overseeing the policy of the guarantee company. The directors also enjoy limited liability, provided that they have not acted negligently, or fraudulently, or have not permitted the guarantee company to continue trading when it was insolvent (this is known as "wrongful trading").

We prepare and electronically submit new non-for profit company registration as soon as we receive your instructions. Registration of a non-for profit company can be completed within 1 working day. We can register your guarantee company in with memorandum and articles of association suitable for registration as a charity. If you do not want to register as a charity we can establish the non-profit company with less restrictive memorandum and articles of association.

Charities have specific restrictions on paying trustees (directors) salaries and also restrict some commercial activities such as borrowing. These issues can be avoided by using the memorandum and articles that we have specially drawn up. Whichever format suits you does not affect the price.

Our team of professionals has the experience to register your guarantee organisation quickly and efficiently. Our e-formation service eliminates the need to complete forms (to appoint the directors and secretary), making the process of setting-up of a company limited by guarantee even easier and quicker. With our new on-line electronic non-for profit entity registration system, we take you through each step of your company limited by guarantee creation process as quickly and as simply as possible.

Our specialist knowledge and vast experience enable us to provide a fast, efficient, and professional service, and one which a great many businesses have been founded and built upon to date. Once you have completed our on line order form and your new guarantee enterprise is in the processing stage of being registered at Companies House you will receive an order acknowledgement from us by e-mail. You can add your directors and secretary before formation. This is absolutely free.

Commonly the "companies limited by guarantee" are not to make profit for the directors, where as directors / investors of a "company limited by shares" receive a share of company profits. "Company limited by shares" is obliged to use the word 'limited' in its name and on its stationery but "companies limited by guarantee" may apply for an exemption.