Concept
A company limited by guarantee (CLG) is, in British, Australian, Bermudian, Gibraltan, Hong Kong and Irish company law and in the Canadian provinces of Alberta and Nova Scotia (and previously in New Zealand), a type of corporation used primarily but not exclusively for non-profit organisations that require legal personality. A company limited by guarantee does not usually have a share capital or shareholders, but instead has members who act as guarantors of the company's liabilities: each member undertakes to contribute an amount specified in the articles (typically very small) in the event of insolvency or of the winding up of the company. A company limited by guarantee can distribute its profits to its members, if allowed to by its articles of association, but then it would not be eligible for charitable status. Like a private company limited by shares, a company limited by guarantee must include the suffix "Limited" in its name, except in circumstances specifically excluded by law. One condition of this exclusion is that the company does not distribute profits. Until 1981, it was possible in the United Kingdom to form a company limited by guarantee with share capital. Under section 5 of the Companies Act 2006, new companies cannot be formed as a company limited by guarantee with a share capital. Some uses of companies limited by guarantee include clubs, membership organisations, including students' unions, residential property management companies, sports associations (such as the PGA European Tour), workers' co-operatives, other social enterprise, non-governmental organizations (NGOs) and charities (such as Oxfam), and at least one political party (the UK Independence Party). The railway infrastructure provider Network Rail, domain name registry Nominet UK, England and Wales Cricket Board and IXPs LINX (London Internet Exchange), and LONAP (London Access Point) are also companies limited by guarantee. Australia and Hong Kong also have companies limited by guarantee, Cricket Australia and the World Wide Fund for Nature Hong Kong being examples.
