This page has the purpose of explaining what a company limited by guarantee is and how it operates.
Unlike unincorporated partnerships/organisations, an incorporated body, such as a limited company, has a separate legal existence from its members. Jubilee Park Woodhall Spa Limited (henceforth referred to as “JPWS Ltd”) is a company limited by guarantee. This is a special type of company available only to non-profit making organisations and charities.
JPWS Ltd intends also to register itself as a charity so will be bound both by the Companies Acts and the Charities Acts, thereby requiring annual accounts and annual returns to be sent to both Companies House and to the Charity Commission.
As JPWS Ltd will be a company limited by guarantee, instead of buying shares, anyone who wants to be a member signs a form agreeing to pay £5.00 if the company goes into insolvent liquidation. This form is called the “guarantee‟ and because members liability is limited to the sum they each guarantee, then the company is said to be “limited by guarantee‟. The guarantee is legally binding while the guarantor remains a member and for one year after he or she ceases to be a member.
Protection from Personal Liability
The members of JPWS Ltd are only liable for the amount they have guaranteed if the company goes into insolvent liquidation.
The trustees however, can be made liable for any losses or debts caused by dishonesty, negligence or carrying on activities which are not permitted by the company’s objects or powers clauses.
The rights of JPWS Ltd members
These are contained in the Companies Act and may also be set out in the Articles of Association. All members have the right to be notified of and attend general meetings of the company and to vote at these meetings. Members attend the Annual General Meeting to receive the audited accounts, appoint the auditors for the next financial year, hear the trustees’ annual report and financial report and vote in new trustees as required.
The duties of the trustees
Their duties are above all to act in good faith and in the best interests of the company’s members. Additionally they are required to…
• Take the same degree of care in managing the company’s finances, assets and affairs as a reasonably prudent business person would take in respect of their own business.
• Keep the account books in such a way that they can be audited or examined
• Present the accounts and financial statements to the members at each annual general meeting
• Produce an annual report and the annual accounts and annual returns each year.
• Supervise and manage the company’s employees and voluntary workers properly, and make sure they give regular reports on their work
• Comply with employment, health and safety and other relevant law, and make sure the company is properly insured
• Hold an annual general meeting once in every calendar year
• Maintain the ‘statutory books’ eg Register of Member, etc.
• Make sure that JPWS Ltd complies with company law
If you would like to become a Member please click the button below to download an application form: