Description

English Company Formation – LBG (Limited by Guarantee)

Ideal for Clubs, Nonprofit Organizations, Membership Organizations, Associations

LBGs, also known as “guarantee companies”, are companies that do not have share capital but have limited liability.

The members run by the Guarantee Company are known as the “Guarantor” and therefore their liability is limited to the nominal amount specified in the Articles of Association in order to guarantee each of them in the event of liquidation of the Company’s debts.

LGB is most commonly used by non-profit organizations, charities, clubs, professional associations and educational institutions.

As there are no shares, LBG members generally believe that the Articles of Association prohibit the distribution of assets to members. Instead, the profits of the company should be used to further increase the company’s goals or, if liquidated by the remaining assets, be transferred to a nonprofit organization with similar purposes.

(There may be employees in the company who may receive salaries. Otherwise, LBG will only be able to recover the accumulated assets if it establishes a LTD that is solely owned and controlled by LBG. , so the owner can pick up dividends there.)