Legal requirements to establish a limited by guarantee company: this is a form of corporate entity that is often used by non-profit organisations in order to retain the benefits that come with limited financial liability.
A limited by guarantee company does not have shareholders but is owned by guarantors who do not generally receive profits, but who commit to contributing a set amount towards the company’s debts. Such a company limited by guarantee is effectively a complete legal entity, separate from its owners, and the personal finances of its guarantors are protected.
What is a Private Company Limited by Guarantee?
A company limited by guarantee is also termed a Guarantee Company. In simpler terms, it’s a company without any shareholders but it is owned by members called guarantors who agree to pay a nominal amount in the event of the company’s being wound up. It’s a specific form used for a non-profit organisation.
Under this form, profits earned by the company are re-invested again in the company to use for different purposes. Hence, it’s a legally preferred structure for non-profit companies, clubs, charitable trusts, and other similar setups. A company limited by guarantee has a separate legal identity.
It can carry out activities in the name of the company such as employing human resources, borrowing credit, buying and sell of property and defending a lawsuit, etc. A Memorandum of association is specifically drafted for such types of companies.
Procedure for Company Limited By Guarantee (Ltd/Gte) in Nigeria
The Corporate Affairs Commission (CAC) is the agency responsible for the registration of a company limited by guarantee and the procedure for such registration is highlighted below;
- Application for consent for name reservation and registration of the company Limited by guarantee to the registrar of the Corporate Affairs Commission. The information required for this process includes two proposed company names in order of preference, the objectives of the company, details of directors and secretary, Statement of Guarantee of the proposed Company limited by guarantee.
- Application to the Attorney General of the Federation for authorization to register the company within 30 days, the AG shall approve where there are no objections or where there is no reasonable cause to refuse the application, and where no decision is made within 30 days, we shall – Place an advertisement in 3 daily National Newspaper for 28days inviting the public to object if any.
- Conclusion of the registration process on the Company Registration Portal. (inclusive of document uploads).
- Approval by the commission.
Requirements for starting a Company Limited By Guarantee (Ltd/Gte) in Nigeria
There are a number of essential requirements associated with the registration of a limited by guarantee company. A limited by guarantee company must also have at least one named guarantor and one director. It is acceptable for the same person to fulfill both roles but all details of guarantors and directors will be held on record by CAC.
You must also provide a registered address as part of the process of establishment. This will be the official company limited by guarantee address that is displayed in the public record and has to be a physical postal address located in the same country where the company is registered.
Finally, there are two important documents to be drawn up before the company can be registered. The first is the memorandum of association, which details the identities of every guarantor and confirms their agreement to set up the company, and the second is the articles of association, which set out the regulations and rules, that the company has to abide by.
Requirements for starting a Guarantee Company;
- Memorandum of Association and Articles of Association
- The consent from the Attorney-General of the Federal Republic of Nigeria
If you are still not sure which one to pick for your business, feel free to reach out to us and our experts will guide you in making the right decision.
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