What is a Company Limited by a Guarantee

What is it?

A company limited by guarantee (CLG) applies where the liability of the members is limited to the amount that the members promise to contribute to the assets of the company in the event of its being wound up. A CLG cannot be formed with share capital and if the constitution of the company seeks to increase its shares then it will be a company limited by shares.

Can a public company be a CLG?

It follows from the above that as a public company must have a share capital, it cannot be limited by guarantee.

Can you give me some examples of CLG?

For example a social or working member club, a trade association, a management company where all the tenants are members. Its important that these associations are incorporated because you dont have to transfer the share every time someone leaves, while at the same time it provides the benefit of limited liability.

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