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A Guide to Not-For-Profit Organisations

Jul 12, 2017

Is a company limited by guarantee more appropriate for your needs?

For those wanting to form a not-for-profit organisation or a charity, a company limited by guarantee, rather than a company limited by shares, is usually more appropriate. In this blog post, @UKplc Company Registrations explains what limited by guarantee means, alongside the differences between not-for-profits and charities.

What is a not for profit?

A not for profit is defined as an organisation that does not distribute its earnings to members and instead must use them for defined objectives or aims. For example, associations, societies and clubs.

What is a charity?

A charity is slightly different from a not for profit. A charity must dedicate its surplus to charitable causes. When forming a charity, the objectives of the charity need to be made clear and a minimum of three trustees (directors) are required, as well as a UK registered office address. More information on setting up a charity in the UK can be found here.

What does limited by guarantee mean?

A company that is limited by guarantee does not have share capital or shareholders and has members who act as guarantors instead.

How many people are needed to form a limited by guarantee company?

Just one. The same person can act as both director and guarantor. Please note there must be at least one director who is a person, aged 16 years or over and is not disqualified from acting as a company director.

Who are the members in a limited by guarantee company?

Because a company limited by guarantee has no share capital, there are no shareholders. Instead, a company limited by guarantee has members who are guaranteed to contribute a specific amount in the event of the company going into liquidation. This amount is determined in the Memorandum and Articles of Association and is usually only a small amount of a few pounds.

Membership is not transferable and new members may be required to pay a non-refundable entry fee, as well as an annual subscription.

Does @UKplc Company Registrations offer limited by guarantee formation packages?

Yes, we do! You can view our charity and not for profit packages here.

For further information on the different types of company in the UK, read our guide


@UKPLC Company Registrations


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