Company Limited by Guarantee set-up with RAK ICC
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
any other liability expressly provided for in the memorandum or articles of the company
Company Limited by Guarantee
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.