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