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WHAT IS A COMPANY LIMITED BY GUARANTEE?
A charity that is a company limited by guarantee, will be a limited company that has been formed by its members. The members of the company all agree to contribute a nominal account (usually £1 or £10) towards the debts of the company should it go into liquidation. The company’s articles of association are usually drafted so that the members of the company are unable to withdraw any value from the company for their own bene t. A limited company exists as an entity in its own right.
If your charity is set up as a company limited by guarantee then:
The members of the company will appoint the directors, who are referred to as the charity trustees. Often in a religious institute charity the company will only have one member, which will be the superior of provincial superior. The sole member will then appoint and remove the directors of the company
The assets of the charity will be registered in the name of the company
When new directors are appointed their details are updated in the company’s registers and the appropriate paperwork led at Companies House
The company can enter into commercial contracts in its own name. Normally one director can sign a contract on behalf of the company, aside from the case of a deed where two directors may be needed
The company will be liable for any debts arising out of contracts. The directors would normally only be personally liable if they have acted in some manner that is wrongful or fraudulent when entering into
the contract
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Chapter 1
