A company limited by guarantee (CLG) is a type of

company A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

where the liability of members in the event the company is wound up is limited to a (typically very small) amount listed in the company's articles or constitution. Most have no

share capital A corporation's share capital, commonly referred to as capital stock in the United States, is the portion of a corporation's equity that has been derived by the issue of shares in the corporation to a shareholder, usually for cash. ''Share ...

, although rare exceptions exist. The form originated in the United Kingdom, and now exists under the

company law Corporate law (also known as company law or enterprise law) is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. The term refers to the legal practice of law relating to corp ...

of the Australia, Bermuda, Gibraltar, Hong Kong, Gambia, and Ireland, and in the Canadian provinces of

Alberta Alberta is a Provinces and territories of Canada, province in Canada. It is a part of Western Canada and is one of the three Canadian Prairies, prairie provinces. Alberta is bordered by British Columbia to its west, Saskatchewan to its east, t ...

and

Nova Scotia Nova Scotia is a Provinces and territories of Canada, province of Canada, located on its east coast. It is one of the three Maritime Canada, Maritime provinces and Population of Canada by province and territory, most populous province in Atlan ...

. It previously existed in New Zealand. It is used primarily but not exclusively by non-profit organisations (including charities) that require

legal personality Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or the personhood itself in regard to an entity other than a natural person (in this sen ...

. Other uses include mutual insurance companies and quasi-governmental bodies.

Characteristics

In the UK, a company limited by guarantee can distribute its profits to its members, if allowed by its articles of association. However, in Australia this is not allowed. In many countries, a company limited by guarantee must include the suffix ''Limited'' in its name; alongside private companies limited by shares. Until 1981, it was possible in the United Kingdom to form a company limited by guarantee with a share capital, although the number of these companies remaining is very small.

Not-for-profit uses

Some uses of companies limited by guarantee include clubs and membership organisations, including students' unions, residential property management companies, sports associations, such as the PGA European Tour, co-operatives, other social enterprise,

non-governmental organization A non-governmental organization (NGO) is an independent, typically nonprofit organization that operates outside government control, though it may get a significant percentage of its funding from government or corporate sources. NGOs often focus ...

s and charities (especially larger charities, such as Oxfam), and at least one

political party A political party is an organization that coordinates candidates to compete in a particular area's elections. It is common for the members of a party to hold similar ideas about politics, and parties may promote specific political ideology, ...

(the UK Independence Party). The form is also often used by organisations with some kind of national coordinating function. Examples in the UK include the domain name registry Nominet UK,

England and Wales Cricket Board The England and Wales Cricket Board, aka ECB, is the Sports governing body, national governing body of cricket in England and Wales. It was formed on 1 January 1997 as a single governing body to combine the roles formerly fulfilled by the Test ...

and IXPs LINX ( London Internet Exchange) and LONAP (London Access Point). Examples elsewhere include

Cricket Australia Cricket Australia (CA) is the governing body for professional and amateur cricket in Australia. It was originally formed in 1905 as the 'Australian Board of Control for International Cricket'. It is incorporated as an Australian Public Company ...

and the World Wide Fund for Nature Hong Kong. In the UK, some quasi-governmental organisations are incorporated as companies limited by guarantee, a government department or minister having ultimate control. The Financial Conduct Authority and Network Rail (the railway infrastructure provider) are examples.

Commercial enterprises

One of the largest companies limited by guarantee is Bupa, the healthcare company, which has 32 million customers in more than 190 countries and which employs more than 84,000 people around the world. A number of professional services providers are structured as private companies limited by guarantee in which the members that provide client-facing services are the individual constituent firms using a common brand. The company limited by guarantee typically does not itself provide client-facing services. The Big Four accountancy firms (Deloitte, Ernst & Young, KPMG, and PriceWaterhouseCoopers) are each organized using this structure. Some law firms also use this structure to establish an internationally branded presence. For example, the Anglo-Canadian law firm of Gowling WLG, formed in 2016, is structured as an English private company limited by guarantee (named Gowling WLG International Limited), in which the two

limited liability partnership A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit aspects of both partnerships and corporations. In an LLP, each partner is n ...

s of Gowling WLG (Canada) LLP and Gowling WLG (UK) LLP are members and provide legal services; the structure is similar to the Swiss Verein structure used by several other major international law firms. In another example, the Anglo-American law firm of Womble Bond Dickinson is similarly structured, with two limited liability partnerships of Womble Bond Dickinson (UK) LLP and Womble Bond Dickinson (US) LLP being the members and providing client-facing services.

References

External links

UK Office of Public Sector Information: Companies Act 2006
{{Use British English, date=May 2025 01 Privately held companies Social economy in the United Kingdom Types of business entity Companies of Northern Ireland . 01 01 de:Aktiengesellschaft (Vereinigtes Königreich)#Private company limited by guarantee