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Company Limited by Guarantee set-up with RAK ICC

A Company Limited by Guarantee (CLG) could be set up with RAK ICC as a company authorised to issue shares or as a company not authorised to issue shares. The name of a limited company shall end with the word “Limited” or “Incorporated” or the abbreviation “Ltd” or “Inc”.
In the case of a Company Limited by Guarantee, whether or not authorised to issue shares, at least one of the members of the company shall be a guarantee member and where the company is authorised to issue shares, a guarantee member may also be a shareholder. The guarantors give an undertaking to contribute a nominal amount in the event of winding up of the company.

The liability of a guarantee member to the company, as a guarantee member, is limited to

The liability of a guarantee member to the company, as a guarantee member, is limited to
the amount that the guarantee member is liable to contribute as specified in the memorandum and articles of association
any other liability expressly provided for in the memorandum or articles of the company
In the event of winding up of a Company Limited by Guarantee, any former guarantee member who was a guarantee member in the period of one year prior to the commencement of the winding up shall be liable to contribute an amount not exceeding the amount guaranteed by such person to the assets of the company for the payment of its debts and liabilities. They are also liable for the expenses of winding up, and for the adjustment of the contributions of that company’s guarantee members and former guarantee members that such former guarantee member would have been liable to contribute had the winding up occurred on the last day of their membership of the company.

Company Limited by Guarantee

Setting up a Company Limited by Guarantee (CLG) with RAK ICC (Ras Al Khaimah International Corporate Centre) offers a unique legal structure suitable for non-profit organizations, charities, and associations. Here are key points to consider when establishing a CLG with RAK ICC

Authorization to Issue Shares

A CLG can be set up either as a company authorized to issue shares or as a company not authorized to issue shares.


The name of the limited company must end with specific designations, such as "Limited," "Incorporated," or the abbreviations "Ltd" or "Inc," regardless of whether it is authorized to issue shares.

Winding Up

In the event of winding up, former guarantee members who were guarantee members in the one-year period before the commencement of winding up are liable to contribute an amount not exceeding the guaranteed amount to the company's assets for the payment of debts and liabilities.


Former guarantee members are also liable for winding-up expenses and the adjustment of contributions that they would have been liable for had the winding up occurred on the last day of their membership.

Guarantee Members

In the case of a CLG, at least one of the members must be a guarantee member. In situations where the company is authorized to issue shares, a guarantee member can also be a shareholder.


Guarantee members commit to contributing a nominal amount in the event of the company's winding up.

Memorandum and Articles of Association

The specific obligations and liabilities of guarantee members, as well as the details of the guarantee, are outlined in the memorandum and articles of association. These documents form the legal foundation for the CLG's operations.

Liability of Guarantee Members

The liability of a guarantee member is limited to the amount specified in the memorandum and articles of association.


Additional liabilities may be expressly provided for in the memorandum or articles of the company.

Non-Profit Focus

CLGs are commonly chosen for non-profit entities, charities, and associations. The structure allows organizations to operate with a focus on a specific purpose or cause, and any surplus funds are typically reinvested in the organization's objectives.

Establishing a Company Limited by Guarantee with RAK ICC provides a flexible and internationally recognized framework for organizations that prioritize a non-profit model. It allows for legal separation, limited liability for guarantee members, and a commitment to a specific cause or mission. Legal advice and thorough understanding of RAK ICC regulations are crucial when setting up such entities to ensure compliance with applicable laws and regulations.

Features of a Company Limited by Guarantee

A Company Limited by Guarantee (CLG) is a distinct legal structure primarily used by non-profit organizations, charities, clubs, and associations. Here are the key features of a Company Limited by Guarantee

Limited Liability

Members of a CLG have their liability limited to a predetermined amount they guarantee to contribute in the event of the company’s winding up. This structure protects members’ personal assets beyond their guarantee.

Legal Personhood

Despite being a non-profit entity, a CLG is considered a separate legal person distinct from its members. It can enter into contracts, own property, and sue or be sued in its own name, providing legal protection to its members.

Non-Profit Focus

CLGs are primarily used by organizations with non-profit objectives, such as promoting education, culture, arts, sports, or charitable causes. Any surplus funds generated by the organization are typically reinvested in furthering its objectives rather than distributed to members.

Flexible Structure

While primarily used by non-profit organizations, CLGs can have varied structures and purposes, allowing for flexibility in how they are organized and managed to suit the needs of their members and the objectives they seek to achieve.

Guarantee Members

Instead of shareholders, a CLG has guarantee members who commit to contributing a nominal amount (typically a small sum) to the company’s assets upon winding up. These members typically have a shared interest in furthering the organization’s objectives rather than seeking financial gain.

Members' Rights

Guarantee members have rights similar to shareholders in traditional companies, including voting rights at general meetings, the ability to appoint directors, and access to company information.

Compliance Requirements

CLGs are subject to regulatory requirements and must comply with relevant laws and regulations governing non-profit organizations in their jurisdiction. This includes filing annual reports, maintaining financial records, and adhering to governance standards.

No Share Capital

Unlike traditional companies, CLGs typically do not have share capital. Instead, guarantee members provide guarantees, which serve as a form of financial backing for the organization.

Memorandum and Articles of Association

The rights and obligations of guarantee members, as well as the company’s objectives and governance structure, are outlined in its memorandum and articles of association. These documents govern the operation and management of the CLG.

Mission-Oriented

CLGs are often established to pursue specific social, cultural, or charitable missions. They provide a structured framework for individuals and groups to collectively work towards a common goal while benefiting from limited liability protection.
Overall, a Company Limited by Guarantee provides a legally recognized framework for organizations with non-profit objectives to operate effectively while offering limited liability protection to its members.

Possible uses of a Company Limited by Guarantee

A Company Limited by Guarantee (CLG) is a versatile legal structure primarily used by non-profit organizations, clubs, associations, and charitable entities. Here are some possible uses of a CLG

Charitable Organizations

CLGs are commonly used by charities and non-profit organizations dedicated to addressing social, environmental, or community needs. They provide a structured framework for fundraising, managing donations, and implementing charitable programs.

Educational Institutions

Schools, colleges, and educational foundations may choose the CLG structure to govern their operations. This includes managing school finances, overseeing educational programs, and ensuring compliance with regulatory requirements.

Research and Development Bodies

Organizations focused on scientific research, technological innovation, and academic collaboration may establish as CLGs. They facilitate research partnerships, support innovation initiatives, and promote knowledge exchange.

Community Development Organizations

CLGs play a vital role in community development initiatives, neighborhood revitalization projects, and local empowerment programs. They mobilize resources, engage stakeholders, and implement community-driven solutions.

Professional Associations

Professional bodies and industry associations often adopt the CLG structure to represent and advocate for the interests of their members. These organizations may provide networking opportunities, professional development resources, and industry-specific services.

Arts and Cultural Organizations

Museums, galleries, theaters, and cultural institutions often operate as CLGs. They promote artistic endeavors, preserve cultural heritage, and provide access to arts and cultural experiences for the community.

Policy and Advocacy Groups

Advocacy organizations, think tanks, and policy institutes use the CLG structure to influence public policy, advocate for social change, and advance specific causes or ideologies.

Healthcare and Social Services Providers

Non-profit healthcare organizations, social service agencies, and advocacy groups may operate as CLGs. They deliver essential services, promote health and well-being, and support vulnerable populations.

Clubs and Societies

Social clubs, sports clubs, hobby groups, and other membership-based organizations can benefit from the CLG structure. It allows members to come together around shared interests, organize events, and manage club activities while providing limited liability protection.

Environmental and Conservation Groups

CLGs dedicated to environmental conservation, wildlife protection, and sustainable development work towards preserving natural habitats, promoting biodiversity, and raising awareness about environmental issues.

Legal and Regulatory Bodies

Regulatory authorities, professional regulatory bodies, and oversight agencies may adopt the CLG structure to regulate and govern specific industries or professions. They set standards, enforce regulations, and uphold professional ethics.

Membership-Based Publications

Journals, magazines, and newsletters operated by member subscriptions can be structured as CLGs. They produce and distribute publications, organize events, and serve as platforms for knowledge sharing and networking.
In summary, a Company Limited by Guarantee offers a flexible and legally recognized framework for a wide range of non-profit and community-oriented endeavors. Its use extends across various sectors and industries, providing organizations with the structure, governance, and limited liability protection necessary to pursue their missions effectively.

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