Choose guarantors for a company limited by guarantee

When setting up a company limited by guarantee you must have at least one guarantor and a 鈥榞uaranteed amount鈥�.

Guarantors:

  • are company members
  • control the company and make important decisions
  • do not usually take profit from the company - instead the money is kept within the company or used for other purposes
  • can also be a director of the company

When registering your company you鈥檒l need to provide information on your guarantors and their guaranteed amount.

Companies limited by shares have shareholders and shares instead of guarantors and a guaranteed amount.

Guaranteed amount

Guarantors promise an agreed amount of money to the company if it cannot pay its debts. This is the 鈥榞uaranteed amount鈥�.

If the company cannot pay its debts, the guarantor must pay the full amount of the guarantee to the company.

This payment covers guarantors for situations such as the company being closed down. The guaranteed amount is not linked to how much the company is worth - you choose how much they pay.

You can set the guaranteed amount to a low value (for example, 拢1) to limit a guarantor鈥檚 liability.

A guarantor who owns more than 25% of voting rights in a company is classed as a person with significant control (PSC).

Part of Set up a limited company: step by step

  1. Step 1 Check if setting up a limited company is right for you

    1. Check what a private limited company is

    How you set up your business depends on what sort of work you do. It can also affect the way you pay tax and get funding.

    Most businesses register as a limited company or a sole trader.

    1. Find out about the different ways to set up a business
    1. Get help deciding how to set up your business

  2. Step 2 Choose your limited company type

    1. Check whether you'll be limited by shares or guarantee

  3. Step 3 Choose directors and a company secretary

    You must appoint a director but you do not have to appoint a company secretary.

    1. Find out what directors are responsible for
    2. Check who can be a director or company secretary

  4. Step 4 Decide who the shareholders are

    You need at least one shareholder, who can be a director.

    1. Check how to choose shareholders for a company limited by shares
    2. Find out how dividends from shares are taxed

  5. or Decide who your guarantors are

    You need at least one guarantor who can be a director.

    1. You are currently viewing: Check how to choose guarantors for a company limited by guarantee

  6. and Identify people with significant control (PSC) over your company

    You need to identify people with significant control (PSC) - for example, anyone with more than 25% of the shares or voting rights.

    1. Find out what counts as a PSC

    You'll confirm these when you register your company with Companies House.

  7. Step 5 Choose a name

    1. Check the rules for company names
    3. Check existing trade marks

  8. Step 6 Prepare documents agreeing how to run your company

    You need to prepare documents agreeing how to run your company. These documents include the :

    • 'memorandum of association'
    • 'articles of association'
    • 'statement of capital'
    • 'statement of guarantee'
    1. Find out how to create these documents

  9. Step 7 Check what records you'll need to keep

    1. Check the company and accounting records you must keep

  10. Step 8 Register your company with Companies House

    You'll need to register an official address and choose a SIC code - this identifies what your company does.

    1. Check the rules for registered office addresses and email addresses
    2. Check what your SIC code is
    3. Register your company with Companies House

  11. Step 9 Find out what to do after you've registered

    There are some things you may need to do once you've registered a limited company.

    1. Add Corporation Tax services to your business tax account
    2. Check the next steps for your limited company