Companies Limited by Guarantee: Structure, Registration, and Governance

Published by Legal Foundations. Last reviewed: March 2026.

A company limited by guarantee (CLG) is a form of incorporated entity under the Companies Act 2006 that has members rather than shareholders, and where each member’s liability is limited to a fixed amount — the “guarantee” — typically £1. There are no shares and no dividends. This structure is the workhorse of the non-profit and membership organisation sector: professional associations, trade bodies, residents’ associations, sports clubs, charities, and social enterprises all commonly use it.

This guide explains what a CLG is, how it compares to alternative structures, how to register one, and what running it correctly requires.

What Makes a CLG Different from a Shares Company?

A standard private limited company (Ltd) issues shares. Shareholders own the company, receive dividends from profits, and on winding up receive a distribution of surplus assets. The profit motive is central.

A CLG has no share capital. Its members’ financial exposure is limited to the guarantee — typically £1 or a nominal sum — which only becomes payable if the company is wound up with insufficient assets to meet its debts. Members cannot ordinarily receive distributions of surplus income or capital. Any surplus must be applied to the organisation’s objects.

This non-distribution constraint is what makes the CLG appropriate for organisations that exist to advance a purpose — whether commercial (a trade association), community (a residents’ management company), or charitable (a grant-making body) — rather than to generate returns for owners.

Comparing Structures: CLG vs CIO vs CIC vs LLP

Choosing the right structure requires understanding the key differences:

Feature CLG CIO CIC LLP
Legal personality Yes Yes Yes Yes
Members / owners Members Members/trustees Shareholders or members Partners
Limited liability Yes Yes Yes Yes
Registered at Companies House Charity Commission only Companies House + CIC Regulator Companies House
Can be a charity? Yes (if purposes charitable) Yes (purpose-built) No No
Can distribute profit? No (usually) No Yes (capped) Yes
Filing obligations Companies House + Charity Comm (if charity) Charity Commission only Companies House + CIC Regulator Companies House
Corporation tax Exempt if charitable; otherwise standard Exempt if charitable Standard Pass-through to partners
Suitable for Charities, trade bodies, clubs, associations Charities Social enterprises Professional services, joint ventures

The CLG vs CIO question is particularly common for charities. A CLG-charity requires dual registration and dual filing; a CIO does not. For a new domestic charity, the CIO usually wins on simplicity. However, the CLG remains preferable where international recognition matters, where debt finance is sought, or where the organisation wants access to a Company Voluntary Arrangement as an insolvency tool. See our CIO guide for a fuller comparison.

Common Uses for a CLG

Charitable organisations: Any charity with income over £5,000 in England and Wales must register with the Charity Commission. An incorporated charity can choose either CLG or CIO structure. Historic charities are often CLGs; new charities increasingly choose CIOs.

Trade and professional associations: Bodies representing an industry or profession — a trade association for construction firms, a professional membership body for accountants — use CLGs to provide legal personality without a profit motive.

Management companies for leasehold properties: Residents’ management companies for blocks of flats are commonly CLGs. Flat owners become members, the company manages the building and common areas, and any surplus from service charges is applied to maintenance rather than distributed as profit.

Sports clubs and leisure organisations: Amateur sports clubs, community arts organisations, and leisure clubs use CLGs to protect committee members from personal liability while operating without commercial objectives.

Schools and academies: Academy trusts are CLGs, as are the governing bodies of many independent schools.

Social enterprises: Where the founders want a recognisable legal structure without charitable status and without the specific community interest test of a CIC, a CLG can operate as a social enterprise, with the memorandum or articles restricting distributions and requiring surplus to be applied to social purposes.

Registration: Step by Step

Registering a CLG at Companies House involves the following steps:

1. Choose a Company Name

The name must be unique — it cannot be identical or confusingly similar to an existing registered name. It must end in “Limited” or “Ltd” (though charities exempt from using “Limited” can apply for an exemption). Companies House’s name availability checker confirms availability before submission.

If the company intends to be a charity, note that using words like “charity,” “charitable,” “benevolent,” or “fund” in the name may require Charity Commission confirmation.

2. Appoint Directors and a Company Secretary (Optional)

A CLG requires at least one director, who must be a natural person (an individual, not a company). There is no requirement for a company secretary since the Companies Act 2006 removed this obligation for private companies, though many membership organisations appoint one as a matter of good governance.

Directors must not be disqualified under the Company Directors Disqualification Act 1986 and must be at least 16 years old.

Companies Limited by Guarantee

3. Draft the Articles of Association

The articles of association are the constitutional document of the CLG. Companies House provides a model form of articles for CLGs (Model Articles for Private Companies Limited by Guarantee), but these are minimal and most organisations adopt tailored articles.

Key provisions the articles must or should address:

  • Objects clause — what the company exists to do. For charities, this must set out exclusively charitable purposes. For other CLGs, the objects clause defines the permitted activities.
  • Non-distribution clause — prohibiting members and directors from receiving income or capital distributions
  • Membership provisions — how members are admitted, their rights, and how they can be removed
  • Board composition — number of directors, election procedure, quorum, and decision-making
  • Amendment procedure — CLG articles can be amended by special resolution (75% majority) unless the articles themselves require a higher threshold
  • Dissolution clause — what happens to assets on winding up. For charitable CLGs, assets must be transferred to another charity with similar purposes.

4. Complete the IN01 Form

Registration is completed via Companies House’s online portal (www.gov.uk/limited-company-formation) or by filing form IN01 by post. The IN01 requires:

  • Proposed company name
  • Registered office address (must be in England/Wales, Scotland, or Northern Ireland — the registered office determines where the company is registered)
  • Details of directors (including date of birth, nationality, residential address)
  • Details of the guarantee (the amount each member guarantees, typically £1)
  • Statement of compliance
  • Memorandum of association (a brief prescribed form signed by the initial members)
  • Articles of association

The registration fee is £50 online (same day) or £71 for a postal application (5–10 days). The “Same Day” service costs £78 and is processed within 24 hours.

5. Register for Charity (if Applicable)

If the CLG has charitable purposes and income above £5,000, it must also register with the Charity Commission for England and Wales. This involves a separate application including the articles, financial projections, and a public benefit statement. The Charity Commission reviews the constitutional documents and may require amendments.

Membership Structure

Unlike shareholders in a company limited by shares, CLG members have no financial stake in the organisation. Their rights are those set out in the articles — typically the right to vote at general meetings, elect directors, and receive notice of meetings.

The articles can create different classes of membership — for example, full members with voting rights and associate members without — or can restrict membership to individuals meeting specific criteria (profession, geography, activity).

Members can be removed under the procedure in the articles; the company can also have a minimum and maximum membership. There is no concept of “share transfers” in a CLG — membership is personal and non-transferable unless the articles provide otherwise.

A CLG with no members is technically possible but legally unusual. For most CLGs, maintaining a meaningful membership body is both constitutionally required and practically important for legitimacy.

Directors’ Duties Under the Companies Act 2006

Directors of a CLG are subject to the same statutory duties as directors of any company. The codified duties in ss.171–177 Companies Act 2006 require directors to:

  • s.171 — Act within powers (within the articles and for a proper purpose)
  • s.172 — Act in good faith to promote the success of the company for the benefit of its members as a whole. For a CLG this means promoting the organisation’s objects, not personal interests.
  • s.173 — Exercise independent judgement
  • s.174 — Exercise reasonable care, skill and diligence
  • s.175 — Avoid conflicts of interest
  • s.176 — Not accept benefits from third parties
  • s.177 — Declare interests in proposed transactions

For charitable CLGs, these duties are supplemented by trustee duties under the Charities Act 2011 (directors of a charitable company are also charity trustees). The interaction between company law and charity law is an important reason to seek legal advice when drafting the articles and governance procedures of a charitable CLG.

Filing Obligations at Companies House

A CLG, like any private company, must comply with annual filing obligations:

  • Confirmation statement (formerly annual return): Filed at least once every 12 months confirming key company information — registered office, directors, articles. Fee: £34 online.
  • Annual accounts: Filed within 9 months of the financial year end. Small companies (turnover below £10.2m, balance sheet below £5.1m, fewer than 50 employees) can file abbreviated accounts. Companies under the micro-entity threshold (turnover below £632k) can file micro-entity accounts.
  • Change notifications: Changes to directors, registered office, or articles must be notified to Companies House promptly (typically within 14 days).

Failure to file accounts or confirmation statements on time results in automatic fines and, ultimately, Companies House striking off the company from the register — at which point its assets vest in the Crown as bona vacantia.

If the CLG is also a registered charity, accounts must also be filed with the Charity Commission within 10 months of the year end, using charity-specific accounting standards (the Charities SORP).

Winding Up and Dissolution

Voluntary Strike-off

A dormant CLG with no assets or liabilities can be dissolved by voluntary strike-off under s.1003 Companies Act 2006. Directors apply to Companies House on form DS01. The company must have ceased trading for at least three months. The process takes approximately three months.

Members’ Voluntary Liquidation

Where the company is solvent but winding up formally is desired — for example, where there are assets to distribute — a members’ voluntary liquidation (MVL) is appropriate. Directors make a statutory declaration of solvency; members pass a special resolution to wind up; a liquidator is appointed. For a charitable CLG, the liquidator must distribute surplus assets to another charity with similar purposes.

Insolvent Liquidation

If the CLG cannot pay its debts, an insolvency procedure (creditors’ voluntary liquidation or compulsory liquidation) is required. Directors should not allow a CLG to continue incurring debts when they know it is insolvent — this can lead to personal liability for wrongful trading under s.214 Insolvency Act 1986.

Tax Implications

A non-charitable CLG is subject to corporation tax on any trading income, investment income, and chargeable gains in the ordinary way. The current main corporation tax rate is 25% for profits over £250,000; the small profits rate is 19% for profits up to £50,000.

However, many CLGs are membership organisations and their primary income is membership subscriptions. Subscriptions from members for mutual benefits are not normally trading income — they are treated as mutual receipts not subject to corporation tax, under the mutuality principle. This is a significant tax benefit for trade associations and sports clubs.

A charitable CLG is exempt from income tax, corporation tax, capital gains tax, and inheritance tax on charitable activities, subject to compliance with HMRC’s charity tax rules (mainly that income and gains are applied solely for charitable purposes). Gift Aid applies to qualifying donations.

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