Company limited by guarantee
A company limited by guarantee is a type of company where the liability of members in the event the company is wound up is limited to a amount listed in the company's articles or constitution. Most have no share capital, although rare exceptions exist.
The form originated in the United Kingdom, and now exists under the company law of Australia, Bermuda, Gibraltar, Hong Kong, the Gambia, Ireland, India, and the Canadian provinces of Alberta and Nova Scotia. It previously existed in New Zealand.
It is used primarily but not exclusively by non-profit organisations that require legal personality. Other uses include mutual insurance companies and quasi-governmental bodies.
Characteristics
In the UK, a company limited by guarantee can distribute its profits to its members, if allowed by its articles of association. However, in Australia this is not allowed.In many countries, a company limited by guarantee must include the suffix Limited in its name; alongside private companies limited by shares.
Until December 1980, in England, Wales and Scotland, and until July 1983 in Northern Ireland, it was possible in the United Kingdom to form a company limited by guarantee with a share capital, although the number of these companies remaining is very small.
Not-for-profit uses
Some uses of companies limited by guarantee include clubs and membership organisations, including students' unions, residential property management companies, sports associations, such as the PGA European Tour, co-operatives, other social enterprise, non-governmental organizations and charities, and at least two political parties.The form is also often used by organisations with some kind of national coordinating function. Examples in the UK include the domain name registry Nominet UK, England and Wales Cricket Board and IXPs LINX and LONAP. Examples elsewhere include Cricket Australia and the World Wide Fund for Nature Hong Kong.
In the UK, some quasi-governmental organisations are incorporated as companies limited by guarantee, a government department or minister having ultimate control. The Financial Conduct Authority and Network Rail are examples.
Commercial enterprises
One of the largest companies limited by guarantee is Bupa, the healthcare company, which has 32 million customers in more than 190 countries and which employs more than 84,000 people around the world.A number of professional services providers are structured as private companies limited by guarantee in which the members that provide client-facing services are the individual constituent firms using a common brand. The company limited by guarantee typically does not itself provide client-facing services. The Big Four accountancy firms are each organized using this structure.
Some law firms also use this structure to establish an internationally branded presence. For example, the Anglo-Canadian law firm of Gowling WLG, formed in 2016, is structured as an English private company limited by guarantee, in which the two limited liability partnerships of Gowling WLG LLP and Gowling WLG LLP are members and provide legal services; the structure is similar to the Swiss Verein structure used by several other major international law firms. In another example, the Anglo-American law firm of Womble Bond Dickinson is similarly structured, with two limited liability partnerships of Womble Bond Dickinson LLP and Womble Bond Dickinson LLP being the members and providing client-facing services.