What is a guarantor?


I am planning to set up a not-for-profit sport society in Newcastle, and I have been advised by a colleague that the type of company structure that would be best for me would be a limited by guarantee company. In the past, I have been a shareholder in a private limited company, but I am relatively inexperienced when it comes to not-for-profit companies. Instead of shareholders, I know that limited by guarantee companies have guarantors. But what exactly is a guarantor?

Thank you for your help



A guarantor is a the person who owns a company limited by guarantee and provides financial security to the business in the form of a guarantee. If the company cannot pay its bills, the guarantor has to pay the sum stated in their guarantee. This money is used to pay the company’s creditors.

Most guarantors are also directors of their companies. You can set up a company with one guarantor and one director, or multiple guarantors and directors.

2 years ago

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