Private company limited
by guarantee
In British and Irish
company law, a private
company limited by
guarantee (LBG) is an
alternative type of
corporation used primarily
for non-profit
organisations that require
legal personality . A
company limited by
guarantee does not usually
have a share capital or
shareholders, but instead
has members who act as
guarantors. The guarantors
give an undertaking to
contribute a nominal
amount (typically very
small) in the event of the
winding up of the
company. [1] It is often
believed that such a
company cannot distribute
its profits to its members
but (depending on the
provisions of the articles)
this is not actually true. [2]
Converting a limited
company to a Community
Interest Company (CIC)
removes this doubt
entirely, as CICs feature an
asset lock which prevents
the extraction of profits.
However, a company
limited by guarantee that
distributes its profits to
members (nor CICs) would
not be eligible for
charitable status.
Until 1981, it was possible
in the United Kingdom to
form a company limited by
guarantee with