Jurisdiction(s):
United Kingdom

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Key definition

Company limited by guarantee definition

What does Company limited by guarantee mean? A company limited by guarantee is a corporate vehicle commonly used for charities, clubs, associations and social enterprises, where members agree to contribute a fixed sum if the company is wound up. In practice, members are guarantors rather than shareholders, their liability is limited to the amount stated in the articles (UK) or constitution (Ireland)—often £1/€1—and is only called on in a winding up. This form is defined in legislation: in the UK by the Companies Act 2006 (applying in England & Wales, Scotland and Northern Ireland) and in Ireland by the Companies Act 2014 (as a CLG). Key...

Companies Limited by Guarantee: Formation, Governance, Membership, Advantages, Disadvantages and Typical Uses under the Companies Act 2006

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Practice notes

A Company limited by guarantee is a corporate form where Members promise to contribute to the company’s assets if it is wound up. This Practice Note outlines the principal characteristics of a guarantee company and explains why such a vehicle might be chosen to run a business rather than a company limited by Shares...

What is a company limited by guarantee?

Limited companies fall into two categories: limited by shares or limited by guarantee. In a guarantee company, the members agree to pay a specified amount towards the company’s assets should it be wound up. A company limited by guarantee cannot be a public company...

Most companies limited by guarantee have no shares, because since 22 December 1980 (1 July 1983 in Northern Ireland) it has not been possible to form a guarantee company with a Share Capital. Those with a share capital can be public or private, are comparatively uncommon and largely historical, and are not addressed in the main body of this Practice Note...

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Web page updated on 21/05/2026

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