What is a company limited by guarantee?


Hey, guys! I’m trying to get together a new fencing society in Edinburgh, and I’m a bit confused about all of this company jargon. I’ve been told if you’re starting a non-profit you should form a company limited by guarantee, but nobody’s bothered to tell me why. So, does anybody know what a company limited by guarantee is? I’m just looking for a general outline to make sure I’m following the correct path, here.



A limited by guarantee is the company structure you should use if you are starting a nonprofit venture - i.e. you don’t plan to make any personal financial gain from the business because all of the income you make will be put back into the business to run and promote it.

This type of company does not have a share structure like the limited by shares company structure, and you will not have any shareholders. You will have one guarantors who put up a guarantee in case anything goes wrong, and directors who will manage the activities and legal obligations of the company.

You can register a limited by guarantee with one or more guarantors or directors. To do this, you need to fill out a company formation application for Companies House. When approved, your company has been formed. You can set up your company online in just a few hours if you go through a formation agent.

2 years ago

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