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  • Companies Limited by Guarantee

Companies Limited by Guarantee


The only book available that deals exclusively with such companies

Companies Limited by Guarantee provides a complete guide to the formation, administration and winding up of companies limited by guarantee and their suitability for a diverse range of purposes. It includes full coverage of:
  • The nature and purposes, the advantages and disadvantages and consideration of the circumstances in which they are used
  • The company's constitution, including company names, its objects, the guarantee and the content and effect of the articles
  • Methods of financing a company limited by guarantee
  • Membership of the company, including admission and expulsion of members
  • The directors of the company, their appointment, removal and duties
  • The calling, requisition and conduct of company meetings
  • Reorganisation, takeovers and winding-up of companies limited by guarantee
  • Precedent clauses for the company’s constitution are also included, along with useful checklists for lawyers and company secretaries.
This new edition updates the text to take into account the provisions that have been introduced under the Charities Act 2011 including:
  • The new charitable form of Charitable Incorporated Organisations under the Charities Act 2011 and the related provisions contained in CIO (General Regulations 2012) along with explanation of where existing charities can adapt the new charitable form
  • Update on annual filing requirements (Charitable Companies)
  • Amendments to legislation relating to Scotland and Northern Ireland
  • Update of model articles of a company with additional clauses for use by a property company and a procedure for expulsion of a member.

  • Nature and purposes of a company limited by guarantee
  • A company’s formation and constitution
  • Finance
  • Membership
  • Directors
  • Company meetings
  • Reorganisations, takeovers and winding up
  • Appendices: Memorandum of association; Alternative clauses for a property management company; Expulsion of a member; Miscellaneous clauses; Checklist for formation of a company limited by guarantee; Application for membership; Notice of general meeting; Checklist of requirements – company stationery and premises; Checklist for converting an unincorporated charity into a charitable company; Checklist of annual filing requirements (charitable companies)
     Appendices are included on the accompanying CD-ROM.
"For lawyers, accountants, company directors and company secretaries dealing with companies limited by guarantee, this concise and authoritative volume from Jordan Publishing is essential ... It’s entirely accurate to say that this book is an incredibly useful resource for all professional groups involved in this field."
Phillip Taylor and Elizabeth Taylor of Richmond Green Chambers
Click here to view the review
Reviews from the previous editions
"exceptionally well written and very comprehensive ... for those practitioners who deal each day in the law relating to charities, housing associations, property management or trade associations, this book will prove an invaluable reference point ... an excellent guide"
Solicitors Journal
"a detailed and practical book ... clear and well laid out"
"Company law practitioners have complete access to the law governing these companies in a slim volume"
New Law Journal
"Contains a wealth of new material...practiculary useful are the ten appendices with their range of useful forms and checklists...a real time saver, which very handily presents, in one lucidly written and concise volume, virtually everything you need to know concerning this area of company law"
Phillip Taylor MBE 'click here for a full review'
"Those looking for a text exclusively dedicated to companies limited by guarantee for whatever reasons will find this text handy. In particular, the book will be of particular interest to those working in the public sector, charities, the social enterprise sector, or even to businesses aiming to engage in social-oriented activities."
"The strength of the book lies in its employment of simple but effective language. It also goes beyond the cursory treatment of an increasingly important area and is very up-to-date"
Peter Yeoh
   Business Law Review

The last edition of this book, published at the beginning of 2011, marked the implementation of the Companies Act 2006. The Act provides a single company law regime for the whole of the United Kingdom, simplifying a company’s constitutional arrangements, the way in which it communicates with its members and makes decisions. Directors’ duties were codified by statute for the first time.
 The Charities Act 2006 had also been enacted, setting out a new regulatory regime for charities. This edition has been comprehensively revised to take account of the Charities Act 2011, which consolidates provisions of the earlier Acts.

These and other reforms come at a time when the company limited by guarantee is enjoying a resurgence, particularly as a vehicle for social enterprise. Academies and free schools are operated by companies limited by guarantee and they are typically the corporate structure adopted by Community Interest Companies. Commonhold Associations and ‘Right to Manage’ companies must be companies limited by guarantee, as must ‘Right to Enfranchise’ companies, although the relevant provision relating to this last category are yet to be brought into force.

Companies limited by guarantee are also proving attractive in the management and protection of private wealth, particularly as vehicles for holding trust assets. At the time of writing, the UK government has signalled a programme of intensive regulatory reform for private companies. The proposals include a central registry of beneficial ownership of companies, which may be made available to the public. It is far from clear as to how those proposals might be implemented in relation to companies limited by guarantee, which may have a shifting membership and whose assets may not be available to the members on winding up.

That the proposals do not sit easily with companies limited by guarantee may be explained by the scant attention that they receive in the company law textbooks. They may be mentioned in the introductory chapter explaining the different types of company that may be formed under the Companies Act, but with only limited consideration of the law peculiar to them. The purpose of this work is therefore to provide a guide to company law as it affects companies limited by guarantee, not only for use by lawyers advising them, but by those involved in the formation and running of them.

This edition has been updated in the light of the changes in the law since 2011. The appendices contain the model articles of a company limited by guarantee and include additional clauses for use by a property management company, a procedure for the expulsion of a member and other precedents which may be useful in running a company limited by guarantee.
 We have attempted to state the law as at 9 December 2013.

Mark Mullen
Josh Lewison

Lincoln’s Inn

 December 2013
Chapter 3 - Finance
 3.1 Methods of financing a company limited by guarantee
 Membership fees and subscriptions
 Membership fees or subscriptions are an important means by which a company limited by guarantee may raise finance. The terms ‘membership fee' and ‘subscription' are not legal terms of art, but it is common to refer to subscriptions when describing annual or other regular fees payable by members.

A membership fee may, for example, be required on first admission to the company. A fee is required by some trade associations whose members are mostly other companies or commercial organisations. A membership fee on admission may be provided for in the articles of association or, if the articles give the board of directors the necessary discretion as to the admission of members, only in the form of application for membership. An application for membership can be seen as a form of offer by the prospective member to join the company, and on acceptance of that offer by the company, he becomes subject to the contract formed by the articles of association. The company can only accept offers, therefore, on certain terms.

Companies should be careful that any invitation to a prospective member sets out not only the membership fee payable, but also that the application is subject to acceptance by the company and incorporates an agreement by the member to be bound by the constitution of the company. Otherwise the offer from the member, when accepted by the company, could be construed as forming a contract to receive the benefits of membership independent of the terms of the articles. A board of directors proposing to charge an admission fee should also make sure that the articles give it the authority to impose conditions on application for membership. It is not clear whether a general discretion conferred by the articles to refuse to admit an application would be construed as giving this authority. The normal inference of such a provision is that the directors may refuse to admit a particular person, whilst acting (as always) in the best interests of the company as a whole. However, the articles may give the board the authority to make rules imposing conditions on membership, and if a rule were to provide for an admission fee then the directors could properly charge one.

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