Choose your formation service, or speak with Coddan first

Company limited by guarantee formation through Coddan

If a member-based company without shares fits your plans, Coddan brings together preparation, application review, approved submission and useful formation documents. Start with straightforward formation or discuss particular articles, addresses and document requirements. If equity ownership is intended, use our separate company limited by shares formation service.

Personal-manager help with every formation order. Your manager assists with information, documents, approvals and next steps during working hours. This formation assistance is separate from paid priority handling and continuing support.

Compare CLG packages and inclusions · Start England and Wales CLG formation · Ask about your formation requirements

Choosing and forming your company: the essentials

Choose the participation model. A CLG has guarantor-members and no shares; a company limited by shares records ownership through shares. Both can earn income. Compare the intended control, funding and use of surplus, rather than relying on a “non-profit” label.

Prepare the arrangements. Have the name, purposes, participants, voting and actual control details, registered office and registered email ready. A private CLG needs at least one director and one guarantor-member; one person can hold both roles. Particular organisations may need more.

Choose the work. Coddan helps clarify requirements, prepares suitable information and documents, reviews the application and submits it with approval. England and Wales CLG formation starts at £119.99 + VAT, including the £100 filing fee, using your own appropriate address. Share-company packages have their own prices.

Allow for preparation. Gathering details typically takes 1–2 hours with established articles, 2–3 hours with supplied documents, or several days for tailored articles. Checks, review, approvals and official processing are separate. Your personal manager helps with formation questions; charity registration and tax recognition are separate routes.

Compare structures · Prepare your organisation · CLG packages · Shares formation · Ask Coddan

1. Company Limited by Guarantee Registration vs Private Company Limited by Shares: Introduction

Decide what members, founders and prospective investors should be able to do: vote, appoint directors, join or leave, transfer ownership or receive financial returns. Those decisions help establish which formation route fits.

Use the comparison below to distinguish membership rights from share ownership. The guarantee or share capital records a particular legal commitment; neither substitutes for suitable company rules.

Tell Coddan how the organisation will earn money and apply its surplus. The articles and any applicable charitable, regulatory or funding conditions should reflect those plans.

Start with the side-by-side comparison or decision checklist. Ready customers can use the package links; if the arrangements need discussion, explain them to Coddan before ordering.

2. What Is a Company Limited by Guarantee?

A Company Limited by Guarantee has members who undertake a stated contribution if the company is wound up in the circumstances covered by the guarantee. Agree and record the amount; £1 is common.

It has no share capital. Members’ voting, appointment and other rights arise from company law and the articles, not from owning shares or contributing a particular amount of money.

The company is a separate legal person. It can hold assets, enter contracts, employ staff, trade and bring or defend proceedings in its own name. See the liability comparison for members’ commitments and separate personal liabilities.

Clubs, membership organisations, professional bodies and community groups often consider a CLG. Explain the proposed activities and any funder or regulator requirements so Coddan can help identify suitable formation preparation.

Income can include subscriptions, service fees, trading, grants and donations. Genuine payments for work are distinct from distributions to members; the articles and applicable restrictions govern what is permitted.

Before incorporation, settle who can become a member, how membership ends and how decisions are made. The articles choices explain how Coddan can prepare or work with suitable documents.

3. What Is a Private Company Limited by Shares?

A private company limited by shares has one or more shareholders. Shares represent ownership interests and carry the voting, dividend and other rights attached to their class under the articles and company law.

The statement of capital records the relevant share information. Agree initial shareholders, share numbers, classes, nominal values and rights. A share’s nominal value does not establish the company’s market value.

This structure commonly suits trading businesses and founders who want transferable ownership or future equity investment. Share issues and transfers need the appropriate authority, documents and records.

Company money belongs to the company. Shareholders cannot simply withdraw it as their own; salary, dividends, loan repayments and expenses have different approval, recording and tax requirements.

Shareholders’ ordinary liability is limited to amounts unpaid on their shares. The liability section explains why personal guarantees and a person’s own conduct remain separate matters.

A share company can pursue social or community aims too. If ownership and equity fit your plans, compare Coddan’s company limited by shares formation services.

4. The Fundamental Difference Between Guarantee and Share Capital

In a CLG, people join under membership rules and undertake a guarantee. In a company limited by shares, people hold shares representing ownership interests. This affects how rights, capital and changes in participation are recorded.

A guarantee is a winding-up commitment, not an investment stake. Its amount does not give the member a percentage of company assets, votes, profits or sale proceeds. Membership rights follow the articles and applicable law.

Shares carry the rights attached to their class. Transfers and new issues can accommodate changes in ownership or equity investment, subject to the articles, any relevant agreement and legal procedures.

A CLG can provide member-led governance; a share company can record founders’ and investors’ ownership and economic rights. The articles still need to reflect the actual decision-making arrangements.

Share dividends require distributable profits and proper authorisation. CLG membership does not itself create an entitlement to surplus; lawful payments and any distribution restrictions depend on the constitution and applicable rules.

Tell Coddan whether participants are joining a shared-purpose membership body or acquiring ownership and potential equity returns. We help clarify the formation information before the application is prepared.

5. Company Limited by Guarantee vs Company Limited by Shares: Side-by-Side Comparison

The table summarises the main structural distinctions. It is a general guide: rights and obligations can vary with the articles, share classes, membership rules, charitable status and the circumstances of the company.

Neither structure guarantees access to grants, investment, bank accounts or tax relief. Funders and counterparties may have their own eligibility requirements. If a particular grant, contract or investor is central to the project, review those requirements before incorporation rather than assuming the company type will satisfy them.

6. Ownership, Membership and Control

Agree who should make decisions before registration. Time, money or expertise contributed by a participant does not by itself establish their voting rights or director powers.

For a CLG, settle admission, membership categories, voting and departure rules. One-member-one-vote is an option, not an automatic rule for every organisation. Clear provisions help manage subscriptions, succession and disagreements.

For a share company, agree the rights attached to each share class and what happens if a founder leaves or transfers shares. Voting ownership and the board’s management authority are different.

Directors manage the company within their authority and duties. A member or shareholder need not be a director, and a director need not hold shares. Identify decisions reserved for members or shareholders.

Assess significant control against actual voting, appointment and influence arrangements. A CLG may have reportable PSCs despite having no shareholders; not every shareholder necessarily meets a PSC condition.

Tell Coddan about quorum, reserved decisions, director appointments, conflicts or transfer rules you need. We use those requirements to identify suitable articles and any further preparation before you approve the application.

7. Limited Liability: Guarantee Amount vs Unpaid Shares

Both structures provide limited member liability on different bases. A CLG member’s guarantee is a stated contribution in relevant winding-up circumstances, not a formation fee or bank deposit.

For a shareholder, the ordinary limit is the amount unpaid on their shares. Fully paid shares ordinarily leave no further contribution due merely because the company cannot pay its debts.

A separate personal guarantee, personal contract, unlawful distribution, misconduct or breach of duty can create liability outside those ordinary limits. Directors’ responsibilities are distinct from membership or share ownership.

The company is a separate legal person and normally owes its own debts. Keep company funds, commitments and records separate from the personal affairs of members, directors and shareholders.

Choose the participation model first, then record the guarantee or share capital and relevant rights accurately. Comparing a £1 guarantee with a share’s nominal value does not establish which structure fits the organisation.

For substantial contractual exposure, regulated activity or public funds, consider suitable insurance, financial controls and specialist advice alongside incorporation.

8. Profits, Surpluses, Dividends and Reinvestment

Decide how the company should use its income. A CLG can earn a surplus from subscriptions, services, events or trading and retain funds for its activities and future commitments.

A share company can pay dividends when sufficient distributable profits exist and the payment is properly authorised. Dividends, salaries, director fees, loan repayments and genuine expenses are different payments.

CLG membership does not itself create an entitlement to a percentage of surplus. Suitable articles can reflect the intended non-distribution arrangements and use of assets.

A CLG can pay for genuine work where lawful and properly authorised. Charitable organisations need particular attention to trustee benefits, connected persons and conflicts of interest.

Explain any promises or restrictions attached to grants, donations or other funding. These may affect the articles, use of income and what happens to assets on closure.

Coddan can include your purposes in suitable articles and discuss further provisions where needed. Use the articles preparation choices to select work matching the organisation’s plans.

9. Fundraising, Investment and Business Growth

A company limited by shares can issue equity to investors where the company has the necessary authority and follows the relevant rights and procedures. Agree initial ownership and consider how later investment may affect control.

A CLG has no shares to issue. It can fund activities through subscriptions, grants, donations, sponsorship, trading or loans. Record restrictions, repayment terms and any governance conditions attached to that money.

Check the criteria of a significant funder before incorporation. Grants may depend on the purposes, location, beneficiaries and constitution; lenders and investors assess their own commercial and governance requirements.

A share company is generally the more natural route where angel or venture investors expect equity. A CLG can grow, but its funding model must work without issuing shares.

A member-funded or grant-supported organisation still needs cash-flow planning, reserves and financial records. Non-profit purpose does not remove the need to meet commitments and maintain services.

Explain expected new members, investors, ownership transfers, premises or major contracts to Coddan before choosing the formation route. This helps identify preparation needs while arrangements are still being settled.

10. Articles of Association and Constitutional Documents

The articles are the company’s core governance rules. Suitable established articles can serve straightforward formations well; particular membership or share arrangements may need different provisions. Coddan helps identify the preparation route from the organisation’s actual plans.

CLG rules may cover admission and departure, membership classes, guarantees, votes, subscriptions, meetings, director appointments, conflicts and use of surplus. Charitable applicants also need appropriate purposes, benefit restrictions and dissolution provisions.

Share-company articles should fit the intended share classes, voting and economic rights, transfers and management arrangements. A separate shareholders’ agreement may be useful for founder or investor relationships; it is not the same document as the articles.

Explain how decisions should work in practice. Broad member participation, founder control or investor rights should be reflected clearly rather than left to assumptions.

Later article changes generally require formal approval and appropriate filing or records. They may affect participant rights, contracts, funding conditions or charitable status.

Agree the main participation and departure arrangements before submission. The following preparation choices help match the work to the organisation and documents already available.

Help with setting up your organisation before incorporation

Tell Coddan the proposed purpose, participants, activities and intended decision-making. We help clarify who should be a director, guarantor-member or shareholder, the guarantee or initial share arrangements, voting, actual control and relevant PSC information. We also discuss the registered office, director service addresses and information needed to prepare the approved application.

Existing clubs, associations and businesses can send their current constitution, membership or ownership arrangements and other relevant documents. Formation creates a company; moving existing activities, assets, staff or contracts into it requires separate decisions and transfer arrangements. Explain any commitments and dates before the formation work is agreed.

Choose how your company’s articles are prepared

• Suitable established Coddan articles. An approachable route where the existing provisions fit your organisation.
• Your purposes included in Coddan’s articles. Describe what the company will do; you do not have to prepare an entire constitution yourself.
• Customer-prepared articles. Use articles already prepared by your organisation or adviser. Email them to info@coddan.co.uk before ordering so Coddan can discuss the requirements and confirm the work and price. For an existing order, your personal manager confirms how to supply the documents through the appropriate submission route.
• Particular requirements. Describe membership, voting, appointments or other arrangements. Coddan confirms suitable further customisation or drafting and its price before you proceed.

For suitable new CLGs seeking exemption from the “Limited” suffix, Coddan has special articles for that route. See CLG formation without “Limited”. The exemption needs appropriate purposes and constitutional provisions, not simply a shorter name. Keep the memorandum in its prescribed form; purposes and governance provisions belong in the articles.

Allow time for your chosen preparation route

When gathering the required details for suitable established articles, allow typically 1–2 hours. Gathering details and supplying prepared documents typically takes 2–3 hours. Gathering details and requesting tailored articles typically involves several days. These estimates cover gathering details and preparing or supplying the relevant documents. Required checks, clarifications, drafting approval and Companies House processing follow separately.

Choosing work suited to your needs makes formation affordable in practical terms. Use established documents where suitable, make use of information already prepared and agree particular work when it is genuinely needed. You can explain the intended arrangements without knowing which technical service to request.

Quality formation work for your organisation

Send your plans before ordering. Email info@coddan.co.uk with your purpose, participants, intended decision-making, existing documents and relevant dates. Coddan explains suitable preparation and confirms the work and price. An enquiry does not commit you to an order. Identity evidence and confidential codes follow the appropriate secure process, not an ordinary pre-order email.

11. How to Register Each Type of Company in the UK

Both structures register through Companies House. Coddan prepares the incorporation application from your information and required company documents, checks the details and submits the application with your approval. With the online service, enter information through the portal; you do not need to complete a separate paper Form IN01.

For a CLG, the application includes the statement of guarantee and initial guarantor-member details, rather than share capital. The prescribed memorandum records the subscribers’ agreement to form the company; the articles provide its governance rules. The guarantee is normally a nominal amount, commonly £1, agreed for the organisation.

For a company limited by shares, agree the initial shareholders, number and class of shares, nominal value and attached rights. Coddan prepares the relevant share information and statement of capital for the chosen service.

A private company needs at least one director who is a natural person. The same individual can be a director and the initial guarantor-member or shareholder. Check any additional board or membership requirements in the intended constitution or charitable arrangements.

Choose the company name and registration jurisdiction before selecting addresses. Coddan can help form a CLG in England and Wales, Scotland or Northern Ireland, using an appropriate registered office in the corresponding jurisdiction. Select the appropriate jurisdiction and address service before confirming the order.

Coddan CPM Limited has provided formation and business-support services since 2005 and appears on the Companies House formation-agent list. That experience supports practical preparation, application review and approved submission through integrated software.

After registration is confirmed, check the company number, registered particulars and documents. Use the completion guidance below to put the relevant records and remaining actions in place.

Checks, addresses and accurate company information

Identify the people with significant control from the actual voting, appointment and influence arrangements; the guarantee amount does not measure control. Individual directors need Companies House identity verification and their Personal Codes for incorporation. PSC verification has its own applicable requirements and time windows. Being a guarantor-member alone does not make every member subject to the director-verification step.

Coddan undertakes AML customer checks as an HMRC-supervised trust or company service provider. Companies House identity verification is separate: our registered ACSP role enables Coddan to review verification evidence and manually submit confirmation when that service is selected. Companies House issues the Personal Code. Direct verification with Companies House is also available.

The registered office receives statutory correspondence; a director service address is a separate public correspondence address. The company also needs an appropriate registered email address, which is not displayed on the public register. Use addresses you have permission to use and arrangements that ensure official communications reach someone able to act.

From preparation to Companies House processing

The processing experience in the formation overview starts when Coddan submits a ready ordinary electronic application. Allow separately for choosing the structure, preparing information, required checks, our review and customer approval. Coddan’s practical standard-route allowance is 24–48 hours from a complete client portal application to incorporation, allowing for review and Companies House workload or backlogs.

If urgent, ask about the selected same-day service before ordering. The published form uses an 11:30 a.m. London-time working-day cut-off, with the necessary information and identity steps ready. A “Limited” exemption application follows its own preparation and filing route.

In Coddan’s experience, Northern Ireland formation usually takes longer because Companies House may check the registered office and request confirmation. For a third-party address, it may ask for a letter confirming no objection to its use. Supply any requested confirmation so Coddan can progress the application. These timings concern company incorporation, not separate charity registration or HMRC recognition.

Your company documents and practical completion

The certificate confirms legal incorporation. The prescribed memorandum records the initial subscribers’ agreement, and the articles govern the company’s operation. A CLG’s statement of guarantee and a share company’s statement of capital serve different application purposes. Appropriate minutes, membership or share records and relevant certificates then support actual company administration.

Choose digital files, professionally prepared printed documents or both according to the intended use and selected service. Coddan can prepare suitable company records and guarantor membership certificates where relevant. A share certificate records a shareholding, not CLG membership. Explain any bank, funder or overseas-recipient requirement before ordering certification, notarisation or apostille.

Keep supplied documents and check the registered details. Record initial company decisions and put the register of members and accounting records in place. Ask your manager what information or approval remains outstanding and which later dates need attention. Opening a bank account, obtaining permissions and transferring existing assets or contracts are distinct next steps.

A written service agreement, customer-specific engagement letter and service schedule are available to identify the selected work, charges, service period, relevant terms and named contact. Discuss formation, address and later support requirements together, without assuming all continuing services must be purchased now.

12. Ongoing Compliance, Accounts and Companies House Filings

Both structures must maintain accounting records, prepare and file appropriate accounts, file confirmation statements and report relevant changes. Directors remain responsible for the company’s decisions, approvals and statutory duties, including where professional assistance is used.

Keep an accurate register of members, resolutions and relevant meeting records. CLGs record membership and voting arrangements; share companies also document allotments and transfers. Since 18 November 2025, separate local directors’, residential-address, secretaries’ and PSC registers are no longer mandatory, but the relevant information must still be kept up to date at Companies House.

Hold the register of members at the registered office or an appropriate Single Alternative Inspection Location (SAIL), and meet applicable inspection requirements. The Companies House central-register option for members ended on 26 January 2026. Address privacy services do not remove statutory inspection rights.

Companies House accounts and HMRC tax work have different purposes and deadlines. Plan separately for Corporation Tax, payroll, VAT and any charity-regulator reporting according to the company’s activities and status.

Keep director and PSC information current and complete the applicable identity-verification steps. Some changes require their own filings and must not wait for the annual confirmation statement.

Your company can return to Coddan for relevant CLG records and secretarial assistance as needs change. Formation help, paid priority handling, one-off filings and continuing support are distinct services. Confirm the work and charges before instruction.

File a confirmation statement at least every 12 months, within 14 days after the review period ends, even if details have not changed. A private company’s first accounts are generally due 21 months after incorporation; later accounts are generally due nine months after the financial year end. Check the company’s actual recorded deadlines and any shortened or changed accounting period.

Annual work is not automatically included with every formation order. Where a selected continuing-support package covers particular work, its stated inclusions and periods apply. For separately instructed work, Coddan explains the preparation, approvals, submission, professional charges and official fees before proceeding.

If an address or support service is no longer suitable, contact Coddan about the approved change or ending arrangements. Keep a working registered office and email, arrange replacement services where needed and complete required address or officer filings. Confirm first periods, renewal terms and any outstanding work against the written arrangements.

13. Tax, Charity Registration and Non-Profit Status

Company incorporation, charity registration and HMRC recognition serve different purposes. Forming a CLG does not by itself establish charitable status or tax relief. Discuss charitable plans before the articles are approved.

The relevant charity arrangements differ between England and Wales, Scotland and Northern Ireland. Identify where the organisation is established and operates, and check the appropriate regulator’s requirements.

Charitable purposes must meet the applicable legal definition and public-benefit requirements. The governing document may need restrictions on private benefit, trustee payments and the destination of remaining assets on closure.

HMRC recognition is needed to claim charity tax reliefs. Relief depends on the income, gains and use of funds meeting the relevant conditions; not every receipt is automatically exempt. Non-charitable CLGs also assess tax obligations against their activities.

A social or community purpose does not automatically determine the legal form. Depending on the intended arrangements, compare a suitable CLG, a charitable incorporated organisation or a community interest company. A CIC cannot also be a charity.

Tell Coddan the purpose, beneficiaries, activities, funding and intended use of surplus. We can explain the relevant formation preparation and discuss separately scoped charity or tax assistance where needed.

14. Formation Costs, Ongoing Costs and Administrative Considerations

Compare the service you will receive, not only the incorporation price. Coddan’s published England and Wales CLG choices are CLGEssential at £119.99 + VAT, CLG AddressPro at £159.99 + VAT, CLG ProtectPro at £199.99 + VAT and CLG ContinuityPro at £299.99 + VAT. See the current package panels and full inclusions.

CLGEssential uses your own appropriate England and Wales registered office and includes the £100 Companies House incorporation fee, professional preparation, review, submission and digital incorporation documents. Identity-verification guidance is included; Coddan-performed verification is a separate service when selected. The advertised price is + VAT; check the selected order’s VAT and payable total before approving payment.

The other CLG packages add the stated address, director-address or continuing-support services. Confirm the selected location and package terms; an advertised starting price does not mean every location or address service is included at that price. Company limited by shares formation has separate packages, prices and inclusions.

Choose digital files, professionally prepared printed materials or a combination through the appropriate service. Further constitutional drafting, authentication, specialist work and separately instructed annual services are priced for the accepted work. Straightforward formation using suitable established articles remains an accessible choice.

Affordability also means suitable preparation, clear inclusions, useful documents and someone to ask. Tell Coddan what is already prepared so you can choose the service your organisation needs rather than commission unnecessary work.

Before selecting an address or continuing service, check its first period, start date, renewal charge and renewal basis in the applicable package and written arrangements. Ask about changing or ending the service if circumstances change; arrange any replacement address and required filing before the current address service ends.

15. When a Company Limited by Guarantee May Be the Better Choice

Consider a CLG when participants should join a membership body rather than own shares. Clubs, associations, professional networks and community organisations often need this form of participation.

It can suit an organisation retaining surplus for its activities. A community group may charge fees and pay staff while using funds to develop services or maintain facilities. Check the constitution and funding conditions.

A suitable CLG can be the incorporated form for a charitable applicant. Prepare the purposes and governing document for the intended regulator, keeping charity registration separate from incorporation.

Without share capital, membership can remain distinct from how much money each person contributes. Clear admission, voting and director-appointment rules are still important.

If founders expect to issue equity, create share-based incentives or sell shareholdings, compare the share-company route before ordering. A CLG’s non-equity funding options do not replace those features.

Use the CLG formation service overview to see preparation, articles, address and document choices together.

16. When a Private Company Limited by Shares May Be the Better Choice

Consider a private company limited by shares when founders want ownership recorded through shares and may introduce equity investors. This commonly suits trading businesses, consultancies and startups.

Agree ownership percentages, share classes and transfer arrangements before registration. Nominal share capital is not the company’s market value or a substitute for a business plan.

Shareholders may receive dividends only when lawful and properly authorised. Salary, director fees and genuine expenses are separate payments that need the appropriate records and tax treatment.

A share company can pursue community or environmental aims and reinvest profits. Where binding non-distribution rules or member-led governance are central, compare the constitutional requirements carefully.

Investors may seek voting, economic, information and exit rights. Additional investment documents or shareholders’ agreements need their own consideration alongside the incorporation articles.

See Coddan’s company limited by shares formation options for the relevant service. Ask before ordering if the intended ownership or share rights need particular preparation.

17. Practical Scenarios: Choosing the Right Structure

Scenario A: A local membership association

Illustration: a local association wants subscriptions, activities and members electing directors, rather than equity ownership. A CLG may fit. Coddan can help clarify membership, voting and appointment requirements for suitable articles.

Scenario B: A startup seeking equity investment

Illustration: two software founders expect angel investment and want to allocate ownership. A share company is the more natural starting point. Agree initial shareholdings and discuss particular rights before selecting the formation service.

Scenario C: A community organisation with grant funding

Illustration: a community group plans to retain surplus and seek grants. Check likely funder conditions before incorporation. Send those requirements to Coddan with the proposed purposes so the formation preparation can address them.

Scenario D: A consultancy owned by its founders

Illustration: consultants want ownership interests and a route to transfer shares when a founder leaves. A share company may fit. A professional membership association with no equity ownership would present different requirements.

Scenario E: A purpose-led organisation considering charitable registration

Illustration: a public-benefit project expects to seek charitable registration. Consider the appropriate legal form and regulator requirements first, then prepare suitable governing documents. The company certificate alone does not complete the charitable route.

These are illustrations, not client case studies. Describe your own arrangements to info@coddan.co.uk; Coddan explains suitable formation preparation and confirms the work and price.

18. Can You Change from One Structure to the Other Later?

Choose the structure for the foreseeable plan rather than assume it can later be switched by a simple form. A CLG’s guarantee cannot be treated as shares, and replacing share ownership with membership requires more than changing a label.

A different structure may require a new entity and a planned transfer of activities or assets. Assess the available route against the constitution, participant rights, assets, liabilities and regulatory status before proceeding.

Check stakeholder rights and consent requirements. Contracts, lending and grants may restrict transfers; charitable assets can carry particular restrictions.

Consider tax, accounting, employment and reporting consequences. Registrations, licences and contracts do not automatically move to a new entity.

If equity investment is likely, assess the share-company route before ordering. If member-led participation is central, settle suitable membership and governance arrangements from the outset.

Explain intended changes to Coddan before formation. Where an existing organisation needs restructuring, agree the appropriate specialist work separately from incorporating a new company.

19. Decision Checklist: Questions to Answer Before Registration

Use these questions to describe your plans. If an answer is unsettled, tell Coddan what you want to achieve so we can discuss the relevant preparation before submission.

• What is the company’s main purpose? Is it primarily a trading business, a membership body, a community organisation or a vehicle for another defined activity?
• Who should participate? Should people join as members with voting rights, or should they hold shares representing ownership interests?
• What do participants expect financially? Will they seek a return linked to share ownership, or will funds generally be retained and applied to the organisation’s aims?
• Will the company need equity investment? If founders expect to issue shares to investors, a company limited by shares may align better with that plan.
• How will decisions be made? Consider member or shareholder voting, director appointments, reserved decisions and dispute procedures.
• Will the organisation seek charitable status or grants? Check the requirements of the relevant regulator and likely funders before settling the constitution.
• What rules should govern surplus funds and assets? Make sure the articles reflect the intended financial model and any restrictions that apply.
• What ongoing work will be required? Plan for accounting, annual filings, tax, records, identity verification and any sector-specific obligations.
• What are the likely future changes? Consider new members, investors, ownership transfers, growth, restructuring or a possible sale.
• Have the initial documents been checked? Confirm that the company name, registered office, director details, member or shareholder information and constitution are accurate and suitable.

Send relevant existing documents and dates with your answers. Coddan explains the formation work and price; particular legal, tax or restructuring advice can be identified separately where needed.

20. Frequently Asked Questions: CLG vs Company Limited by Shares

1. Are both company types private limited companies, and who participates?

Yes. “Private limited company” does not mean only a company limited by shares. A CLG is also a private limited company, with guarantor-members and no share capital. A shareholder holds shares and the rights attached to them; a guarantor undertakes a specified contribution in relevant winding-up circumstances. The guarantee is not an equity stake or an automatic right to a percentage of profits. Choose the type and articles that reflect how people should participate.

2. Can one founder start the company, or do we need a committee?

The basic private CLG requirement is at least one director and one guarantor-member, and the same person can hold both roles. A private company limited by shares can also start with one individual director who is its shareholder. Your articles, charitable plans, funder or operational needs may require a broader board or membership. Explain the intended arrangements to Coddan rather than assuming that the legal minimum will suit every organisation.

3. Can a CLG charge customers and keep money for future projects?

Yes. A CLG can trade, charge fees, employ staff and generate a surplus. How the surplus may be used depends on the constitution and any applicable legal, charitable, regulatory or funding restrictions. The company type alone does not make the organisation a charity or automatically exempt it from tax.

4. Can founders work for the CLG and be paid?

A CLG can employ staff and may pay directors for legitimate services where the arrangement is lawful, properly authorised and consistent with the constitution. If the company is a charity, additional rules may apply to trustee benefits, conflicts of interest and payments to connected persons. The organisation should distinguish proper remuneration from an impermissible distribution or private benefit.

5. Does joining a CLG give a member a return on their money?

A CLG has no shares and therefore does not pay dividends to shareholders. Members do not have an automatic entitlement to the company’s surplus simply because they are members. Payments must have a lawful basis and comply with the constitution and applicable restrictions. A charitable CLG must also comply with the rules governing charitable funds and benefits.

6. Will the CLG certificate let us claim charity tax relief immediately?

No. The certificate confirms company incorporation, not charitable status or tax relief. The organisation must meet the relevant charity requirements and register with the appropriate regulator where required. HMRC recognition for charity tax relief is a separate step, and the relief depends on the relevant conditions being met. Tell Coddan about charitable plans before formation so suitable purposes and governing-document preparation can be discussed.

7. Our organisation is small: should we choose the cheapest company type?

It depends on the business model. A company limited by shares is often suitable where founders want ownership interests, potential dividends or equity investment. A CLG may suit a membership organisation or a purpose-led body that does not need share capital. The size of the organisation alone does not determine the right structure.

8. What if an investor expects a percentage ownership stake?

A company limited by shares is generally more straightforward when investors expect to acquire an equity stake, because shares can represent ownership and defined rights. A CLG cannot issue shares while it remains a company limited by guarantee. A CLG may receive loans, grants, donations or other funding, but those arrangements are not the same as equity investment.

9. Does a £1 guarantee protect a director who signs a personal guarantee?

No. A member’s guarantee and a separate personal guarantee are different commitments. The ordinary CLG member contribution applies in the relevant winding-up circumstances; it does not cap a personal guarantee given to a bank, landlord or supplier. Shareholders’ ordinary limited liability likewise does not cancel a separate personal commitment. Check contractual obligations and director duties alongside the choice of company structure.

10. Can our accountant handle accounts while Coddan helps with company filings?

Yes, you can divide the work clearly. Coddan can handle an agreed confirmation statement or file suitable accounts already prepared by your accountant, with the required approvals. Alternatively, ask about accounts preparation. Confirm who prepares the statements, who approves them, who submits each filing and which deadlines apply. Companies House work, HMRC tax returns and any charity-regulator reporting have separate scopes; using one service does not automatically commission them all.

11. Can we order now and switch between guarantees and shares later?

Do not assume that a CLG can be changed into a share-based company by a simple form or amendment. The available route depends on the law, constitution, assets, contracts, member rights, funding and any charitable or regulatory restrictions. In some cases a restructuring or new entity may need to be considered. Obtain advice specific to the company before taking action.

12. Our existing association has a constitution: should we send it first?

Yes. Send the existing constitution and describe the proposed purpose, participants, decision-making, activities and relevant dates to info@coddan.co.uk before ordering. Coddan can explain suitable formation preparation and confirm the work and price. Existing documents may help establish what is needed; you do not have to diagnose bespoke drafting. Incorporating a company does not itself transfer the association’s assets, contracts or activities. Use the appropriate secure process for identity evidence and confidential codes.

21. Conclusion: Make an Informed Company-Structure Decision

Choose a CLG where the intended participation is through membership and guarantees, or a company limited by shares where ownership and equity rights are central. Use the comparison and checklist to explain the arrangements you want.

Coddan helps prepare the formation information and suitable documents, reviews the application and handles approved submission. Select straightforward formation, relevant address and document choices, or discuss particular constitutional requirements first.

Ready for a CLG? Compare the formation packages or start England and Wales CLGEssential formation. Need shares? See company limited by shares formation.

For help choosing the preparation, email Coddan before ordering or call +44 (0)20 7935 5171. Explain your purpose, participants and relevant dates. We confirm suitable work and price, with no obligation to order from an enquiry.

Official Guidance and Further Reading

Use current official guidance to verify registration details and obligations, particularly where legal requirements or Companies House processes have changed.

• GOV.UK: Choose a company type — overview of company structures, including companies limited by shares and guarantee.
• GOV.UK: Register your company — incorporation process and required information.
• GOV.UK: Company directors — information about directors and their responsibilities.
• GOV.UK: Company accounts — general guidance on accounts and filing obligations.
• GOV.UK: Confirmation statements — information about keeping Companies House details up to date.
• Charity Commission for England and Wales — guidance for organisations considering charitable registration in England and Wales.
• Companies House — official company registration and filing information.

Important: The links above are starting points for general guidance. Check the latest official information for the company’s jurisdiction, activities and circumstances. This article is general information and should not be relied on as individual legal, tax or financial advice.