By
August 23, 2026
What Is a Company Limited by Guarantee?
A company limited by guarantee is a type of UK limited company that has guarantors instead of shareholders. Instead of owning shares, members agree to contribute a specified amount to the company if it is wound up.
This structure is commonly used by non-profit organisations, clubs, associations, community groups and some charities.
Unlike a company limited by shares, there are normally no shareholders or share capital.
Instead, the company has one or more guarantors, also known as members.
Each guarantor promises to contribute a fixed amount if the company cannot meet its debts when it is wound up.
The guaranteed amount is often relatively small, such as £1, although the company can specify another amount.
A company limited by guarantee does not have shareholders in the traditional sense.
Its members act as guarantors and have rights according to the company's articles of association.
The company itself remains a separate legal entity from its members and directors.
Yes. A private company limited by guarantee must have at least one director who is an individual.
The directors are responsible for managing the company and ensuring that its legal obligations are met.
Yes. A company limited by guarantee can generate a surplus.
However, these companies are commonly established to pursue a particular purpose rather than distribute profits to shareholders.
The company's articles may specify how income and assets can be used.
The main difference is ownership structure:
Limited by Shares → Shareholders + Shares
Limited by Guarantee → Guarantors + No Shares
Companies limited by shares are commonly used for commercial businesses, while companies limited by guarantee are often used for non-profit or membership organisations.
No.
Being limited by guarantee does not automatically make an organisation a registered charity.
Charitable status has separate eligibility, registration and regulatory requirements.
A company limited by guarantee is a UK limited company with guarantors rather than shareholders.
Members agree to contribute a specified amount if the company is wound up, while their personal liability is generally limited to that guarantee.
This structure is particularly common for clubs, associations, community organisations, non-profits and some charities where issuing shares and distributing profits to owners is not the main purpose.
