UK Company Limited by Guarantee (CLG)
The ideal legal structure for charities, non-profit organisations, trade associations, clubs, and social enterprises in the UK — members guarantee a nominal amount rather than holding shares.
No Share Capital Required
A CLG has no shareholders and no share capital. Members provide a nominal guarantee (typically £1–£10) instead of buying shares.
Charitable Status Ready
A CLG registered with Companies House can apply to the Charity Commission for full charitable status, unlocking Gift Aid and tax exemptions.
Limited Liability
Members' liability is limited to the amount of their guarantee — typically £1. Personal assets are fully protected.
Who is this for?
A Company Limited by Guarantee is the standard legal structure for organisations that operate for a purpose rather than profit. It provides legal personality and limited liability without issuing shares.
Ideal Profiles:
- Charities & Charitable Foundations (registered with the Charity Commission)
- Trade Associations & Professional Bodies
- Sports Clubs & Community Organisations
- Social Enterprises & Not-for-Profit Organisations
- Academic, Cultural & Arts Organisations
Not Suitable If:
- You intend to distribute profits to members → Use a Private Ltd instead
- You need to issue shares or raise equity → Use a Ltd or PLC
- You are a solo trader or consultant → Use Sole Trader or Ltd
Formation Requirements
- Minimum Members: At least one member (individual or corporate body). No maximum limit.
- Guarantee Amount: Each member guarantees a nominal amount (usually £1) in the event of winding up.
- Registered Office: A UK address in England, Wales, Scotland, or Northern Ireland.
- Articles of Association: Must clearly state the CLG purpose and that no profits will be distributed to members.
The Roadmap to Launch
Typical timeline: 24 hours – 1 week (Companies House online)
Define Purpose & Draft Articles
Agree on the CLG’s objectives and name. Draft bespoke Articles of Association that state the non-profit purpose and include a non-distribution clause — surplus reinvested, not paid to members. This is the legal constitution of the CLG.
Confirm Members & Directors
Appoint at least one director (any nationality). Confirm founding members and guarantee amounts. No residency requirement.
File Form IN01 (CLG)
Submit the IN01 form online to Companies House (£50 fee). Select “Limited by Guarantee” as company type. Approved same day or within 24 hours.
Certificate of Incorporation
Receive your Certificate of Incorporation and unique Company Registration Number (CRN) confirming CLG status.
HMRC Registration
Register with HMRC for Corporation Tax. CLGs may qualify for full tax exemption if registered as a charity - apply to the Charity Commission.
Open a Bank Account
Open a UK corporate or charity bank account. Many banks offer tailored non-profit accounts with reduced fees.
VAT & Employer Registration
Register for VAT if taxable turnover exceeds £90,000/year (charities may benefit from VAT reliefs on certain supplies). If employing staff, register as a PAYE employer with HMRC and set up auto-enrolment workplace pension where applicable.
Annual Compliance
File annual Confirmation Statement (£34 online) and Annual Accounts with Companies House. Charitable CLGs also submit annual returns to the Charity Commission. Retain accounting records for at least 6 years.
Company Limited by Guarantee vs. Other Structures
| Feature | CLG (Non-Profit / Charity) | Private Ltd (For-Profit) |
|---|---|---|
| Governing Legislation | Companies Act 2006 + Charities Act 2011 | Companies Act 2006 |
| Ownership / Members | Members (Guarantors) — no shares issued | Shareholders — hold shares |
| Profit Distribution | None — surplus reinvested in objectives | Dividends paid to shareholders |
| Member Liability | Guarantee amount only (typically £1) | Limited to value of shares held |
| Tax Treatment | Tax-exempt on charitable activities (if registered charity) | Corporation Tax 19–25% on profits |
| Charitable Status | Can register with Charity Commission → Gift Aid eligible | Not eligible for charitable status |
Frequently Asked Questions
Do CLG members receive profits?
No. A CLG cannot distribute profits or assets to its members. Any surplus must be reinvested into the organisation’s stated objectives.
Do I need a UK address?
Yes. A registered office address in England, Wales, Scotland, or Northern Ireland is mandatory. A virtual office address is acceptable.
Can a CLG apply for charitable status?
Yes. If the CLG has exclusively charitable purposes and annual income over £5,000, it must register with the Charity Commission. This unlocks Gift Aid, mandatory rate relief, and tax exemptions.
What are the annual compliance obligations?
Every CLG must file an annual Confirmation Statement (£34 online) and Annual Accounts with Companies House. Charitable CLGs also submit annual returns to the Charity Commission.