Company Limited by Guarantee Frequently Asked Questions

We have listed below answers to the more frequent questions that we are asked regarding companies limited by guarantee. If you do not find the answer to your question below, or you would like a more detailed answer, please feel free to contact us.

What is the difference between a company limited by guarantee and one limited by shares?

• The main diffrerence between a company limited by guarantee and a company limited by shares is that the company has no share capital. A company limited by guarantee has members, rather than shareholders, the members of the company guarantee/undertake to contribute a predetermined sum to the liabilities of the company which becomes due in the event of the company being wound up, normally £1.

How long does it take to incorporate a company limited by guarantee?

• We incorporate all our companies electronically. It usually takes about 4-5 working hours to incorporate a company. However if you have specific needs, such as ammended memorandum or you wish to use a sensitive word it can take slightly longer.

Which type of organisations are normally limited by guarantee?

• A company limited by guarantee is normally incorporated for non-profit making functions. Companies limited by guarantee are typically used by

• Schools & Educational Establishments

• Clubs & Associations

• Charities and Organisation intending to apply for charitable status

• Churches & other Places of Worship

• Trade or Research Associations

Does my company name have to include the word Ltd or Limited?

• Limited companies must normally have the word 'limited' (or its Welsh equivalent 'cyfyngedig') as part of their company name. This may be abbreviated to 'ltd.' (or 'cyf.'). However, under Section 30 of the Companies Act 1985, some company names need not include the word 'limited' if they satisfy certain criteria.

• A company which takes advantage of such an exemption will also:
  be exempt from the Companies Act 1985 in relation to the publication of its name; and
  will not have to send lists of members to the Registrar.
  

What kind of company can be exempt from using 'limited' in its name?

To be exempt, a company must be a private company limited by guarantee; the objects of the company must be the promotion of commerce, art, science, education, religion, charity or any profession; and the memorandum or articles of association must say that:
any profits, or other income, are to be spent in promoting the company's objects;
no dividends are to be paid to members;
if the company is wound up, all the assets are to be transferred to another body which has similar objects, or which promotes a charity.

Can we use a company limited by guarantee to purchase a freehold of a property?

• A company limited by guarantee can be used to purchase the lease or freehold of a property and to protect the interests of the leaseholders.

• If you wish to buy a freehold through the collective enfranchisement rights given in the Leasehold Reform act of 1993 you will need to incorporate a company limited by guarantee.

Can we use a company limited by guarantee to manage a property?

• A company limited by guarantee can be used as a Property or Flat Management Company

If you like further information about our company formation service, and other types of companies that we incorporate (we incorporate companies limited by shares in under 5 hours please use the links on the left.

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