Are all limited by guarantee companies charities?



I was wondering about limited by guarantee companies. Based upon the nature of my business, I was told by my business mentor that a limited by guarantee company structure would be most appropriate for my new venture. What worries me is that this appears to be the way to incorporate a charity, which my business definitely is not. Do all limited by guarantee companies need to be charities?


Toby Ryan



No, not all limited by guarantee companies are charities. Charity registration is something that is carried out separately with the Charity Commission once a company has been incorporated at Companies House.

Many people use limited by guarantee companies to set up other types of non-profit ventures that focus on social or community-based objectives, including:

  • Membership organisations
  • Co-operatives
  • Sports clubs
  • Societies
  • Community projects
  • Voluntary groups or agencies
  • Workers’ or students’ unions

It is also possible to set up a limited by guarantee company for any kind of commercial profit-making business venture. However, most people prefer the limited by shares structure for this type of business because the company owners (shareholders) - each of whom owns a certain percentage of the company as shares - can more easily work out and distribute their profit entitlement according to the shareholdings.

2 years ago

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