Benefits of Registration of Private Companies Limited By Guarantee in England

Beyond all doubt, over the last several years, the most popular types of corporation in England are:

• Private companies limited by shares;
• Public limited companies;
• Limited Partnership – limited partnership has one limited partner and one general partner (GP).
• Limited Liability Partnership – limited  liability partnership in which both partners are limited.

However, in England one may also register Private Companies Limited By Guarantee.

According to UK legislation, Private Companies Limited By Guarantee should be registered in the Companies House. The company structure should have at least one director and one member. One person is entitled to hold both positions. The information on People with significant control is also entered in the Companies House.

The experts of Law and Trust International provide a full-service support for your business in UK – from the first advice to a full-service accounting and legal support throughout the entire period of operation.  Our company offers each business owner the quality services in company registration, opening of a bank account, getting a residence permit as well as staff employment.

Private Companies Limited By Guarantee are commonly created as the non-profit organisations, whose owners wish to benefit from of such type of companies. Namely:

1. Private Companies Limited By Guarantee are the legal entity.
2. The company structure has no shareholders, therefore, there are no shares.
3. There is no authorized capital in such type of companies either.
4. The members create the company. The members’ contributions into the company are the guarantees which may be used for the organisation needs.
5. The company members’ personal finances are protected. They will be liable only for repayment of company debts to the extent of the amount of their guarantees.

It is worth noting that the members of private companies limited by guarantee do not receive dividends, the total return is reinvested for achieving the company’s non-commercial purposes. The contributions of organisation members cannot be returned to them. 

In the event that the company makes profit from business which is totally reinvested for achieving the company’s non-commercial purposes stipulated in the articles of association, such company may be recognized as a non-profit organisation, but it does not exempt the company from tax.  

If the profit exceeds £5000, one usually submits the application for obtaining a charity licence that exempts from tax.

In this case it is important to understand for which purposes the company is created, in order to correctly choose the company form and its type. If the company owner intends to keep company’s profit for himself by withdrawing dividends, in this case it is worth choosing Private companies limited by shares and carry out business operations with further profit taking without any limitations, because in case of profit distributions in Private Companies Limited By Guarantee the company will not be able to be recognized as the non-profit organisation with the further right to obtain status of a charity organisation.

Each business project is considered individually depending on the type of activity and preferences of business owners. To get a qualified advice on your business support, you may refer to our lawyers.