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What is a company limited by a guarantee


Lawdit Solicitors - Expert Author

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8 July 2012

A company limited by guarantee.

What is it?

A company limited by guarantee (CLG) applies where the liability of the members is limited to the amount that the members promise to contribute to the assets of the company in the event of its being wound up. A CLG cannot be formed with share capital and if the constitution of the company seeks to increase its shares then it will be a company limited by shares.

Can a public company be a CLG?

It follows from the above that as a public company must have a share capital, it cannot be limited by guarantee.

Can you give me some examples of CLG?

For example a social or working member club, a trade association, a management company where all the tenants are members. Its important that these associations are incorporated because you dont have to transfer the share every time someone leaves, while at the same time it provides the benefit of limited liability.

Michael Coyle is a Solicitor Advocate and can be contacted at

Lawdit Solicitors is a commercial law firm based in Southampton

About the Author

Lawdit Solicitors offer services and advice for litigation, commercial contracts, Intellectual Property and IT legal agreements. We are experts in commercial law with a heavy emphasis on Intellectual Property, Internet and e-commerce law. Lawdit is a member of the International Trademark Association, the Solicitors' Association of Higher Court Advocates and we are the appointed Solicitors to the largest webdesign association in the world, the United Kingdom Website Designers Association.

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Article Published/Sorted/Amended on Scopulus 2012-08-17 08:50:33 in Legal Articles

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