In British, Australian, Bermudian, Hong Kong and Irish company law (and previously New Zealand), a company limited by guarantee (CLG) is a type of

corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...

used primarily (but not exclusively) for

non-profit organisation A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...

s that require

legal personality Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or altogether the personhood itself in regard to an entity other than a natural person ( ...

. A company limited by guarantee does not usually have a share capital or

shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal own ...

s, but instead has members who act as

guarantors In finance, a surety , surety bond or guaranty involves a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults. Usually, a surety bond or surety is a promise by a surety or guarantor to pa ...

of the company's liabilities: each member undertakes to contribute an amount specified in the articles (typically very small) in the event of

insolvency In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet i ...

or of the

winding up Liquidation is the process in accounting by which a company is brought to an end in Canada, United Kingdom, United States, Ireland, Australia, New Zealand, Italy, and many other countries. The assets and property of the company are redistrib ...

of the company. A company limited by guarantee can distribute its profits to its members, if allowed to by its

articles of association In corporate governance, a company's articles of association (AoA, called articles of incorporation in some jurisdictions) is a document which, along with the memorandum of association (in cases where it exists) form the company's constituti ...

, but then it would not be eligible for

charitable status A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, religious or other activities serving the public interest or common good). The legal definition of a ch ...

. Like a

private company limited by shares A private company limited by shares is a class of private limited company incorporated under the laws of England and Wales, Northern Ireland, Scotland, certain Commonwealth countries, and the Republic of Ireland. It has shareholders with limit ...

, a company limited by guarantee must include the suffix " Limited" in its name, except in circumstances specifically excluded by law. One condition of this exclusion is that the company does not distribute profits. Until 1981, it was possible in the United Kingdom to form a company limited by guarantee with share capital. Under section 5 of the

Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...

, new companies cannot be formed as a company limited by guarantee with a share capital.

Uses

Some uses of companies limited by guarantee include

club Club may refer to: Arts, entertainment, and media * ''Club'' (magazine) * Club, a '' Yie Ar Kung-Fu'' character * Clubs (suit), a suit of playing cards * Club music * "Club", by Kelsea Ballerini from the album ''kelsea'' Brands and enterprises ...

s, membership organisations, including

students' unions A students' union, also known by many other names, is a student organization present in many colleges, universities, and high schools. In higher education, the students' union is often accorded its own building on the campus, dedicated to social, ...

, residential property management companies, sports associations (such as the

PGA European Tour The European Tour (currently known as the DP World Tour for sponsorship reasons), legally the PGA European Tour is the leading men's professional golf tour in Europe. The organisation also operates the European Senior Tour (for players aged fif ...

), workers'

co-operatives A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-control ...

, other

social enterprise A social enterprise is an organization that applies commercial strategies to maximize improvements in financial, social and environmental well-being. This may include maximizing social impact alongside profits for co-owners. Social enterprises ca ...

non-governmental organization A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...

s (NGOs) and charities (such as

Oxfam Oxfam is a British-founded confederation of 21 independent charitable organizations focusing on the alleviation of global poverty, founded in 1942 and led by Oxfam International. History Founded at 17 Broad Street, Oxford, as the Oxford Co ...

), and at least one

political party A political party is an organization that coordinates candidates to compete in a particular country's elections. It is common for the members of a party to hold similar ideas about politics, and parties may promote specific political ideology ...

(the

UK Independence Party The UK Independence Party (UKIP; ) is a Eurosceptic, right-wing populist political party in the United Kingdom. The party reached its greatest level of success in the mid-2010s, when it gained two members of Parliament and was the largest par ...

). The railway infrastructure provider

Network Rail Network Rail Limited is the owner (via its subsidiary Network Rail Infrastructure Limited, which was known as Railtrack plc before 2002) and infrastructure manager of most of the railway network in Great Britain. Network Rail is an "arm's leng ...

, domain name registry

Nominet UK Nominet UK is currently delegated by IANA to be the manager of the .uk domain name. Nominet directly manages registrations directly under .uk, and some of the second level domains .co.uk, .org.uk, .sch.uk, .me.uk, .net.uk, .ltd.uk and .plc.uk. ...

England and Wales Cricket Board The England and Wales Cricket Board (ECB) is the national governing body of cricket in England and Wales. It was formed on 1 January 1997 as a single governing body to combine the roles formerly fulfilled by the Test and County Cricket Board, ...

and

IXP Internet exchange points (IXes or IXPs) are common grounds of IP networking, allowing participant Internet service providers (ISPs) to exchange data destined for their respective networks. IXPs are generally located at places with preexisting ...

s LINX (

London Internet Exchange The London Internet Exchange ("LINX") is a mutually governed Internet exchange point (IXP) that provides peering services and public policy representation to network operators (over 950 different ASNs). It was founded in 1994 in London. LI ...

), and

LONAP The London Access Point (LONAP) is a London-based Internet exchange point (IXP) founded in 1997 as a membership organisation and currently has over 200 members, making it the second largest IXP in the UK and around the 15th largest IXP in the wo ...

(London Access Point) are also companies limited by guarantee. Australia and Hong Kong also have companies limited by guarantee,

Cricket Australia Cricket Australia (CA), formerly known as the Australian Cricket Board (ACB), is the governing body for professional and amateur cricket in Australia. It was originally formed in 1905 as the 'Australian Board of Control for International Crick ...

and the World Wide Fund for Nature Hong Kong being 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 (Deloitte, Ernst & Young, KPMG, and PriceWaterhouseCoopers) 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 Gowling WLG is a multinational law firm formed by the combination of Canada-based Gowlings and UK-based Wragge Lawrence Graham & Co in February 2016, in the first multinational law firm combination co-led by a Canadian firm. Gowling WLG ranks at ...

, formed in 2016, is structured as an English private company limited by guarantee (named Gowling WLG International Limited), in which the two

limited liability partnership A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not ...

s of Gowling WLG (Canada) LLP and Gowling WLG (UK) LLP are members and provide legal services; the structure is similar to the

Swiss Verein A Swiss association ("''Verein''" in German, "association" in French, "associazione" in Italian) is a type of corporation in Swiss law. It is similar to the Anglo-American voluntary association. Unlike in Germany, a Swiss association does not need ...

structure used by several other major international law firms. In another example, the Anglo-American law firm of

Womble Bond Dickinson Womble Bond Dickinson is a transatlantic law firm formed in 2017 as a result of a merger between UK-based Bond Dickinson LLP and US-based Womble Carlyle Sandridge & Rice, LLP. The combination followed a strategic alliance announcement made in 2 ...

is similarly structured, with two limited liability partnerships of Womble Bond Dickinson (UK) LLP and Womble Bond Dickinson (US) LLP being the members and providing client-facing services.

References

{{Reflist

External links

UK Office of Public Sector Information: Companies Act 2006
01 Privately held companies Social economy in the United Kingdom Types of business entity Companies of Northern Ireland . 01 01 de:Aktiengesellschaft (Vereinigtes Königreich)#Private company limited by guarantee