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