A company limited by guarantee does not have shares, but each Trustee (Director) agrees to 'guarantee' the company by committing to a nominal sum for which they would become liable in the event of the company being liquidated. The company must be a not-for-profit organisation. This type of company is used for all kinds of not-for-profit venture.

To form a company limited by guarantee registered in England you must have an address in England to use as the Registered Office. You need two or three people to serve as Trustees (Directors) and one person to serve as Company Secretary. However, the Company Secretary may also be a Trustee. The Trustees/Directors are not allowed to take a salary from the company, although they are allowed to reclaim expenses or to charge for professional services.

The Memorandum and Articles of Association, which are essential documents for the formation of your company, must contain statements about the Aims (objectives) of your organisation and explain what will happen with any ‘Excess Earnings’ (since the company is not allowed to make a profit). Before forming your company you should thing through these issues and write down in simple terms what you are aiming to achieve through the company.

IMPORTANT: If the organisation is intended to be a charity you must tell us, as it requires different documentation.