Company limited by guarantee (original) (raw)
Company limited by guarantee
In British or Irish company law, a company limited by guarantee is an alternative type of corporation used primarily for non-profit organisations that require legal personality. A guarantee company does not usually have a share capital, but instead has members who are guarantors instead of shareholders. The guarantors give an undertaking to contribute a nominal amount (typically very small) towards the winding up of the company in the event of a shortfall upon cessation of business. It is commonly believed that it cannot distribute its profits to its members but this is not actually true. [_cite book|author=Hannigan, B.|title=Company Law|publisher=Oxford University Press|year=2003|isbn=9780406913562_] A company limited by guarantee that distributes its profits to members would not be eligible for charitable status.
Like a private limited company, a company limited by guarantee must include the suffix "Limited" in its name, except in circumstances specifically excluded by law. One condition of this exclusion is that the company not distribute profits.
Common uses of guarantee companies include clubs, membership organisations (including students' unions, sports associations (such as the PGA European Tour), workers' co-operatives, other social enterprises, non-governmental organizations (NGOs) and charities (such as Oxfam). The railway infrastructure provider Network Rail, domain name registry Nominet UK, England and Wales Cricket Board and IXP LINX (London Internet Exchange) are also companies limited by guarantee. Australia also has companies limited by guarantee, Cricket Australia being one example.
When incorporating multi-stakeholder organisations, this form is sometimes preferred over the industrial and provident society because company law allows multiple classes of member with separate voting constituencies.
Under section 5 of the Companies Act 2006, new companies cannot be formed as a company limited by guarantee with a share capital; which makes this type of companies unsuitable for commercial enterprises.
ee also
*Community interest company
*Company
*Private limited company by shares
References
External links
* [_http://www.opsi.gov.uk/ACTS/acts2006/ukpga\_20060046\_en.pdf Companies Act 2006_] , Office of Public Sector Information.
Wikimedia Foundation.2010.
Look at other dictionaries:
- company limited by guarantee — ˌcompany ˌlimited by guaranˈtee noun companies limited by guarantee PLURALFORM [countable] LAW FINANCE a company in which each shareholder is responsible for paying debts up to a certain amount if the company goes bankrupt * * * company limited… … Financial and business terms
- company limited by guarantee — See company. Collins dictionary of law. W. J. Stewart. 2001 … Law dictionary
- Company limited by guarantee — Aktie der Barnum Bailey Limited Limited Company (deutsch: limited: beschränkt, hier: haftungsbeschränkt; company: Firma) wird im britischen Gesellschaftsrecht die nicht börsennotierte Aktiengesellschaft genannt. Die Limited Company ist in… … Deutsch Wikipedia
- company limited by guarantee — An incorporated organization in which the liability of members is limited by the memorandum of association to amounts that they have agreed to undertake to contribute in the event of winding up. This is a less popular form of company than the… … Accounting dictionary
- company limited by guarantee — company that in the event of its breakup its owners will be responsible for its debts in an amount that was determined in advance … English contemporary dictionary
- company limited by guarantee — An incorporated organization in which the liability of members is limited by the memorandum of association to amounts that they have agreed to undertake to contribute in the event of winding up. See limited company … Big dictionary of business and management
- Private company limited by guarantee — Companies law Company … Wikipedia
- company limited by guarantee — ➡ companies * * * … Universalium
- Private company limited by shares — Companies law Company … Wikipedia
- Lynton and Barnstaple Railway Company Limited — The Lynton and Barnstaple Railway Company Limited is a private company, limited by guarantee, with no share capital. Incorporated on 11 August 1993 as The Lynton Barnstaple Light Railway Company Limited (Name changed on 8 February 2002), the… … Wikipedia