Companies Limited by Guarantee

A company limited by guarantee or a “guarantee company” is a registered company having liability of its members limited by its memorandum to such amount as the member may respectively undertake to contribute to the assets of the company in the event of its winding up. Clubs, trade associations and societies for promoting different objects are examples of such a company. It should be noted that a special feature of this type of company is that the liability of members to pay their guaranteed amounts arises only when the company has gone into liquidation and not when it is a going concern company Registration Coimbatore.

As the regards the funds, a guarantee company without share capital obtains working capital from other sources, e.g. fees or grants. But a Guarantee company having a share capital raises its initial capital from its members, while the normal working funds would be provided from other sources, such as fees, charges, subscriptions, etc.

The Memorandum of Association of every guarantee company must state that every member of the company undertakes to contribute to assets of the company in the event of its being wound up while he is member for the payment of the debts and liabilities of the company contracted before he ceases to be a member, and of the charges, cost and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount company Registration Coimbatore.

The Memorandum of a company limited by guarantee must state the amount of guarantee. It may be of different denominations.In case of guarantee company having share capital the shareholders have two-fold liability: to pay the amount which remains unpai A guarantee company must include the word ‘limited’ or the words “private limited” as part of its name, and must register its articles, although it may adopt the provisions of the table ‘D’ of Schedule 1. It must also state the d on their shares, whenever called upon to pay, and secondly, to pay the amount payable under the guarantee when company goes into liquidation. The voting power of guarantee company having share capital is determined by the shareholding and not by the guarantee. number of members with which it proposes to be registerd, although the number can be increased by means of a resolution company Registration Coimbatore.