A company limited by guarantee is a type of incorporated legal structure that is suitable for some Not-For-Profit organisations.
In a company limited by guarantee, the members of the company have limited liability. The members agree in writing (‘guarantee’) to pay a nominal amount (usually $10-$100) to the property of the company. If the company is wound up, the liability of the members is limited to the nominal amount that they have guaranteed.
Benefits of a company limited by guarantee
Some of the benefits of this structure include:
- it is facilitative of not-for-profit status
- as a public company it has the extra scrutiny, transparency and accountability that is required of such companies, giving it a level of credibility and independence that will give confidence to funders and members alike
- it can be established as a ‘special purpose’ company
- it is a straight forward structure familiar to organisations wish to provide funding or be involved
- it provides operational flexibility
- the liability of members is limited to a fixed amount, being the sum of the guarantee
- it allows for perpetual succession
- the company has capacity to enter into and enforce contracts
- the company has the capacity to sue and be sued
- it has all the benefits of corporate status
- the activities of the organisation may be carried out throughout Australia