Guarantee company

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Company law - limited liability - guarantee.

In a guarantee company the liability of the members is restricted to a predefined amount which the members guarantee to contribute (on the event of any winding up of the company).

This type of company is also known as a company limited by guarantee.

The members of the company are known as guarantors.

Guarantee companies are most often used for charitable purposes, or other not for profit purposes.

For commercial activities, companies limited by shares are generally a more convenient choice.

Guarantee companies are technically owned by the guarantors.

However, in the usual cases where the company is a charity or not for profit undertaking, the guarantors would not be seeking any personal benefit from their ownership.

See also