Company Limited by Guarantee

A company limited by guarantee is a type of incorporated legal structure that is suitable for some Not-For-Profit organisations.In a company limited by guarantee, the members of the company have limited liability. The members agree in writing (‘guarantee’) to pay a nominal amount (usually $10-$100) to the property of the company. If the company is wound up, the liability of the members is limited to the nominal amount that they have guaranteed.

Benefits of a company limited by guarantee

Some of the benefits of this structure include:

• it is facilitative of not-for-profit status
• as a public company it has the extra scrutiny, transparency and accountability that is required of such companies, giving it a level of credibility and independence that will give confidence to funders and members alike
• it can be established as a ‘special purpose’ company
• it is a straight forward structure familiar to organisations wish to provide funding or be involved
• it provides operational flexibility
• the liability of members is limited to a fixed amount, being the sum of the guarantee
• it allows for perpetual succession
• the company has capacity to enter into and enforce contracts
• the company has the capacity to sue and be sued
• it has all the benefits of corporate status
• the activities of the organisation may be carried out throughout Australia

Checklist to establish a Public Company Limited by Guarantee (PDF)