How is a company limited by guarantee?
A company limited by guarantee is a company which does not have any shares or shareholders but is owned by guarantors who agree to pay a certain amount of money for company debts and the operation of the company. Where profits are made same does not go back to the guarantors it reverts to the operation of the company.
A company limited by guarantee is most times incorporated by non-profit organisations such as sports clubs, workers’ co-operatives and membership organisations, whose owners wish to have the benefit of limited financial liability instead of an NGO.
A company limited by guarantee is a distinct legal entity from its owners, and is responsible for its own debts and like the limited liability company structure, the personal finances of the company’s guarantors are protected. They will only be responsible for paying company debts up to the amount of their guarantees.
Read up blog post on How to register a company limited by guarantee.
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Lucklyn Audu
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