A company limited by guarantee (CLG) is a corporation that does not have a share capital and whose legislation states that the members’ liability is restricted to the amount that the members agree to donate to the CLG’s assets if it is wound up.
Charities, sports teams, social groups, and management firms are among the clients of these firms. Their primary distinctive characteristic is the lack of a share capital, which prevents their members from being stakeholders and gives them no clear economic stake in their capital.
A person’s participation in a CLG terminates with death or filing for bankruptcy, however subject to those conditions, the CLG constitution may allow for transferable membership. Typically, each member only has one vote. Certain debentures issued by a CLG might be listed on an exchange. The Charities Act of 2009 must also be followed by a CLG that receives a charitable exemption from the Revenue Commissioners (the “Revenue”).
A CLG will be governed by the same laws as applying to private companies limited by shares (the “LTD”), except for any instances in which Part 18 of the Act displaces, amends, or otherwise supplements rules about an LTD. Some CLGs may be affected by the multi-unit developments Act of 2011, which has unique criteria that are not included in the Act.
Directors
A person may hold no more than twenty-five (25) directorships in CLGs or other forms of business. A CLG must have at least 2 directors, each of whom must be at least 18 years old and one of whom should establish in the EEA (subject to certain group-related exceptions). It will be possible for one of these directors to serve as the corporate secretary.
A CLG’s members should decide on the compensation of any of its directors at general meetings, except if its by-laws state otherwise. The Charity Act of 2009 and current revenue rules limit how much directors can be paid by charities.
Proceedings of Directors
Unless the charter of a CLG specifies otherwise, a director of a CLG I is not permitted to vote on any agreement in which he or she has a financial interest and is not included in the calculation of the quorum, (ii) is not permitted to hold any position in addition to that of director, and (iii) must retire by rotation.
Members
Only if its bylaws specifically forbid it, a CLG may exercise the Act’s power to approve majority motions of its members instead of holding formal meetings. A CLG may not forgo the requirement for an annual general meeting if it has two or more members.
In its charter, a CLG may eliminate the power of members to select proxies and may forgo using the majority of its members’ written resolutions.
Organizational types that could benefit from incorporation a Company Limited by Guarantee
• Nonprofits Organization.
• Academic Organizations.
• Athletic clubs.
• Residents’ Organizations.
• Organizations for professionals.
• Groups of Volunteers.
Attributes of a Company Limited by Guarantee
The guarantee members’ commitment to contribute to the CLG by a certain amount in the case of its liquidation is the crucial component of a CLG. A guarantee member’s responsibility is constrained to that particular sum. A minimum of one guarantee member is required for a CLG. Guarantee members’ membership privileges cannot be transferred.
One year after ceasing to be a member, a guaranteed member is still obligated to the corporation. A CLG could be incorporated as either a CLG with the ability to issue shares or as a CLG without this ability. A guaranteed member could also be a shareholder in cases where a CLG is permitted to issue shares.
Additional optional features
• Limitless capability.
• Restricted intent.
• Either limitless or finite.
• Publish shares in addition to having guarantee members.
Possible usability of a Company Limited by Guarantee
Tenant association with corporate status for real estate development: RAK ICC companies limited by guarantee (CLG) are adaptable business entities that can be used in a variety of ways. As shown in the picture below, one traditional instance is to function as an combined association or to grant apartment owners specific membership rights in the business that oversees the real estate development for the unit owners.
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