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A Limited by Guarantee (LBG) company is formed in a similar way to a company limited by shares. However, instead of shareholders, the company has guarantors who agree to contribute a small amount if the company is dissolved. This structure is commonly used by nonprofit organizations, charities, clubs, and community groups.
Today, the fastest way to establish an LBG company is through an online company formation agent. Using online registration services, a company can often be incorporated and ready for trading within a few working hours. Alternatively, applications can be submitted through web incorporation systems or by post via official company registration authorities, though these methods may take longer and sometimes involve higher costs.
Information Required for Online Registration
To complete the online registration process for a company limited by guarantee, certain information and documents must be provided.
Company Name
A unique and legally compliant company name must be chosen. The name must not duplicate or closely resemble an existing registered company.
Director Details
At least one natural director aged 16 or above must be appointed. Directors are responsible for managing the company and ensuring compliance with legal requirements.
Guarantor Information
The company must have at least one guarantor. Guarantors are members who agree to contribute a specified amount if the company is wound up.
Service Address
Each director and guarantor must provide a service address where official correspondence can be sent.
People with Significant Control (PSC)
Information about all individuals who have significant influence or control over the company must be disclosed.
Registered Office Address
The company must maintain a registered office address in the same country where the business is incorporated. This address is used for official communications.
SIC Code
A Standard Industrial Classification (SIC) code must be selected to identify the type of activities the company will carry out.
Legal Documents
The application must also include the Memorandum of Association and Articles of Association, which outline the company’s structure and operating rules.
Statement of Guarantee
A Statement of Guarantee is required during the incorporation process. This legal declaration confirms that each guarantor agrees to contribute a specific amount if the company is dissolved. This requirement is established under Section 11 of the Companies Act 2006.
The statement confirms that guarantors agree to contribute funds if necessary to cover:
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Outstanding debts and liabilities of the company
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Costs and expenses involved in winding up the company
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Adjustments among members during the liquidation process
Statement of Compliance
Another important document is the Statement of Compliance. This confirms that the company formation process follows all legal requirements.
The statement also specifies the amount guaranteed by each member, which limits their financial liability. In most cases, guarantors agree to a nominal amount such as £1. This amount is only required if the company is dissolved and financial obligations need to be settled.
Each subscriber to the Memorandum of Association must sign the Statement of Compliance to confirm their agreement with the guarantee terms and the incorporation requirements.
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