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Coddan CPM Ltd. – Company Registration Agent in the UK
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The Constitution of a Company Limited by Guarantee

The constitution of a company limited by guarantee

Company Limited By Guarantee

The constitution of a company limited by guarantee: the constitution document is known as "the memorandum and articles of association". It is in two parts - the memorandum of association and the articles of association. The memorandum of association explains: the type of organisation. Its main objects (all of which must be charitable if the guarantee company is to be recognised as a charity), which describe the maximum extent of the guarantee company's ambit. Its powers (to enable the objects to be carried out). Restrictions on money being paid out by the guarantee company to its members and trustees.

The personal guarantee given by each member (usually £1.00) upon liquidation. What is to happen to the surplus assets if the non-profit company comes to an end (which, if the guarantee company has been a charily, must be transferred to one or more other charities).

The articles of association explain: how membership can be applied and ended. Is to be recognised as a charity, which describe the maximum extent of the guarantee company's. How trustees are elected or appointed, their term of office and how they retire. The rules relating to board meetings and meetings of any committees. Any provisions relating to conflicts of interest. The appointment of the company secretary. Provisions relating to the finances and the annual accounts. Provisions relating to notices.

A number of issues will require to be considered by the promoters of the new organisation, which include: determining the objects which the new organisation intends to carry out. Particular care with the objects requires to be taken where charitable status is to be sought, as all of the objects must be charitable, not just some. If only some are charitable, consideration should be given to setting up a separate but wholly-owned subsidiary company to carry out the non-charitable trading - this is most appropriate where a guarantee company which is a charity owns all the shares in a trading subsidiary company.

Determining the membership, and its composition; whether the membership will be "open" to all-comers, or "closed" to a specific group of organisations or individuals, or "hybrid" as a mixture of the two; whether there will be more than one class of member; and whether and how new members are to be recruited.