About Company Limited by Guarantee

About Company Limited by Guarantee

Company Limited by Guarantee?

You should register a company limited by guarantee if you are planning to run a non-profit organisation. This type of business generally falls into one of two categories:

1. A non-profit company like a sports club, society, workers co-operative, etc.
2. A charitable company which uses its ‘profits’ for charitable purposes only.

In most cases, a company limited by guarantee will not distribute any profit to its members (guarantors) – surplus income will be reinvested in the business, instead.

Who owns a Company Limited by Guarantee

A company limited by guarantee is owned by one or more ‘guarantors’. A minimum of two directors must be appointed to manage the company on behalf of the guarantors; however, it is also possible for one person to be the sole guarantor and one of the directors of a company.

Each guarantor is required to financially back the business in the form of a ‘guarantee’ – no shares are issued in this type of company. If the company accrues any debts, each guarantor is legally required to contribute the sum stated in their guarantee. This is the limit of their personal financial liability.

Key features and benefits of a Company Limited by Guarantee

• This type of company has guarantors and guarantees instead of shareholders and shares.
• Guarantors protect their personal finances with limited liability – they are only responsible up to the sum of their guarantee, not the total debts of the company.
• Company has ‘limited’ status – this is preferred by many clients, suppliers and investors because of added credibility and transparency.
• Company has the option to register for charitable status (subject to the articles being in the correct format). Profits can be distributed to members if stated in the articles of association – if this option is selected, the company is unable to claim charitable status.

The legal requirements

• Must be incorporated with the Companies Registry.
• Minimum of one guarantor and two directors, but you can choose the same person to fill both positions.
• Physical address must be situated in Zimbabwe country of incorporation.
• Company details are available to everyone to view at he Companies Registry.
• Memorandum of Association must be completed.
• Articles of association must be adopted – this is a governing document that outlines the rules and regulations for running a company, stating the company’s objects (aims), and what will be done with any residual.

Additional Innovation

Company Formations will complete your full company limited by guarantee registration, including the supply of standard memorandum and articles of association.