Company limited by guarantee

Acompany limited by guarantee(CLG) is a type ofcompanywhere the liability of members in the event the company iswound upis limited to a (typically very small) amount listed in thecompany's articles or constitution.Most have noshare capital,although rare exceptions exist.

The form originated in the United Kingdom, and now exists under thecompany lawof the Australia, Bermuda, Gibraltar, Hong Kong and Ireland, and in the Canadian provinces ofAlbertaandNova Scotia.It previously existed in New Zealand.

It is used primarily but not exclusively bynon-profit organisations(including charities) that requirelegal personality.Other uses includemutual insurancecompanies and quasi-governmental bodies.

Characteristics

In the UK, a company limited by guarantee can distribute itsprofitsto its members, if allowed by itsarticles of association.However, in Australia this is not allowed.

In many countries, a company limited by guarantee must include the suffixLimitedin its name; alongsideprivate companies limited by shares.

Until 1981, 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 includeclubsand membership organisations, includingstudents' unions,residential property management companies, sports associations (such as thePGA European Tour),co-operatives,othersocial enterprise,non-governmental organizationsand charities (especially larger charities, such asOxfam), and at least onepolitical party(theUK Independence Party).

The form is also often used by organisations with some kind of national coordinating function. Examples in the UK include the domain name registryNominet UK,England and Wales Cricket BoardandIXPsLINX (London Internet Exchange) andLONAP(London Access Point). Examples elsewhere includeCricket Australiaand theWorld Wide Fund for Nature Hong Kong.

In the UK, some quasi-governmental organisations are incorporated as companies limited by guarantee, a government or minister having ultimate control. TheFinancial Conduct AuthorityandNetwork Rail(the railway infrastructure provider) are examples.

Commercial enterprises

One of the largest companies limited by guarantee isBupa,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 provideclient-facingservices are the individual constituent firms using a common brand. The company limited by guarantee typically does not itself provideclient-facingservices. 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 ofGowling WLG,formed in 2016, is structured as an English private company limited by guarantee (named Gowling WLG International Limited), in which the twolimited liability partnershipsof Gowling WLG (Canada) LLP and Gowling WLG (UK) LLP are members and provide legal services;the structure is similar to theSwiss Vereinstructure used by several other major international law firms.In another example, the Anglo-American law firm ofWomble Bond Dickinsonis similarly structured, with two limited liability partnerships of Womble Bond Dickinson (UK) LLP and Womble Bond Dickinson (US) LLP being the members and providingclient-facingservices.

External links

• UK Office of Public Sector Information: Companies Act 2006.