How does a Company Limited by Guarantee work?

• Firstly, LBG Company is the ideal structure for non-profit organizations.
• It requires one director to the very least.
• Additionally, for LBG in the UK, the director can be the guarantor.
• However, the number of directors or guarantors has no limitation. The Articles of Association determines the number.
• The LBG company structure has no shares or shareholders.
• Having a registered office address is mandatory for LBG companies.

What is the meaning of a company limited by guarantee?

LBG or limited by guarantee company is different than the structures based on equity. It comes with no shareholders or there’s no shared capital. Instead, an LBG structure consists of members who are the guarantors of the company. In this regard, the guarantors here are also called trustees or governors, or committee members. The title depends on the organization itself.

And, each guarantor has some tasks or duties towards the company. These are –

• Formation of projects
• Setting up the corporate priorities and objectives
• Handling day to day activities
• Agreements regarding the competence of the directors

Requirements for Forming an LBG Company

• There has to be at least one guarantor and one principal
• A guarantor can work in several positions or you can have different managers for different jobs
• Details of all the directors and guarantors have to be there on the public records
• During company formation, the address of the registered office and the details are mandatory
• The company’s official address has to be published for public records (should be a complete postal address)
• Need the completion of an Association Memorandum
• During establishing the company, must follow the Articles of Association

Our LBG Company Formation Package Includes:

• Limited Company formation service
• Certificate of Incorporation
• VAT Registration
• An address for VAT registration
• Handling Payments of Companies House filing fee
• Free Online Company Manager for Maintaining the Company
• Ready to trade limited liability partnership
• PDF Files containing Statutory Books
• PDF File for the Certificate of Incorporation
• A Registered Office
• PDF Files containing all the Share Certificate(s)
• Business Telephone
• Free of cost online consultation for the Company
• DF File containing information of Memorandum & Articles of Association
• PDF File containing information of Minutes of the first meeting of Directors
• Web authentication code to update Companies House records

LBGs with Objects and Services of the Charity

In order to be able to get registered with the Charity Commission, a company’s annual gross profit has to be above £6000. And, if a business has less than £6000 of gross profit, the entity can obtain tax exemptions from HMRC. However, this happens when the items of the company are charitable and the Articles puts a restriction on using funds and profits for charity purposes.

Furthermore, the service will provide Association Articles. And, you will have to edit these. To be able to achieve the tax exemption requirements of HMRC, well-written documents are the key.

Understand the Risk of Using the Word Charity with your Company’s Name

According to the Companies Act of the UK, the word “Charity” is a sensitive term. Thus, you can only add the term with your company’s name when you are registered with the Charities Commissions.

Therefore, one must incorporate their business first. And then, register with the Charities Commissions upon being able to fulfill the requirements. So, if you use Charity in the name, it is better to change it until the grounds are met.

LBG of Charitable Objects and Association Articles

Articles of Association demand the amendment of provisions that are allowed by the Company Acts for HMRC. This is the legal gateway for obtaining tax exemptions if the annual turnover is less than £5000. Also, it will be applicable if your business does not contain the suffix LTD in the company’s name.

The clauses for removing LTD from the company’s name are –

• A clause stating the company's charitable objects
• Another clause stating that the revenue of the business will be used to promote its artifacts
• One clause that will prohibit the income of the company from being distributed to its members
• A provision that demands the transfer of all the properties of the members to another entity having items that are identical to the business