Company limited by guarantee

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company (noun, com-pa-ny, \ ˈkʌmpəni \) limited (adjective, lim-it-ed, \ ˈlɪmɪtɪd \) by guarantee (noun, guar-an-tee, \ ˌɡærənˈtiː \)

Definition: is a type of incorporated organization that doesn’t possess share capital, meaning that the liability of its owners is restricted to the amount that each member agrees to contribute once the company is wound up. This type of organization is oftentimes used for establishing non-profit companies, such as charities, societies, and various kinds of community projects. Such companies don’t share profits with their owners and instead use them for organizational purposes or for funding a new project.

In a Sentence:

  1. Mark, Frank, and Bob opened a company limited by guarantee to promote their solar energy community initiative. This way, they won’t be responsible for each other’s mistakes should the organization fail.
  2. I think it’s obvious that we should go for the company limited by guarantee option. Even though our Gift of Knowledge charity organization is for-purpose, it’s still a charity, and we don’t have any financial interest in it.

Synonyms and related words: community interest company, corporation, non-profit organization, company limited by shares