Companies Limited by Guarantee: get the details right

Jennifer Adams explains what Companies Limited by Guarantee are, how to prepare the accounts and what needs to be submitted to the authorities.

On reading AccountingWEB’s Any Answers it would appear that not many accountants have come across ‘Companies Limited by Guarantee’ (CLG) in their working life, explains Jennifer Adams.

When they do, they are unsure as to what they are, how to prepare the accounts and what needs to be submitted to the authorities. This article therefore tries to answer those queries in one.

What are Companies Limited by Guarantee?

Companies Limited by Guarantee are an alternative form of company entity to the usual one of share capital; its members being guarantors rather than shareholders.



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Paul Scholes's picture

At last!

Paul Scholes | | Permalink

Great article, thanks.  Didn't realise about the "Reserves" rather than "Shareholders' funds" but just spotted that good old Iris does it automatically.

Just one point on distributions, I did come across one company that didn't place a restriction on distributions in its Articles, so presume they could have distrubuted profits to their members?  As it happens they never did but this question has arisen on here in the past.


avmmusic | | Permalink

Can a CLG own other commercial entities legitimately? I have an instance whereby a CLG owns 100% of one commercial entity and a majority of another. Both the other entities are limited by share capital.

As the CLG is the parent company, what are its filing requirements for Companies House and HMRC? Does it submit accounts detailing its own trading results or consolidated accounts?

Limited by Guarantee to Limited

mike.golden | | Permalink

Does anyone know if it is possible to change an Limited by Guarantee company to a Limited company?


Limited by Guarantee to Limited

Mike.James | | Permalink

You are unable to change a Limited by Guarantee into a Limited company. You would need to disolve the Limited by Guarantee and incorporate a Limited Company to achieve the same outcome. However, the assets of the Limited by Guarantee would have to be distributed in accordence with the objects of the company, which probably means distributing them amongst similar asset locked body, such as a charity.


Mike.James | | Permalink

A CLG can own as many commercial entities as it wishes. Of course, any profits distributed to the CLG are subject to the same re-investment requirements and any asset.

I believe the filing requirements are the same as with a Limited and the level of detail required is subject to the size of the business.

Nomination to become a Director of a CLG in Gibraltar

degdoll | | Permalink

I have been approached by board members of a CLG (residential property management company in Gibraltar) to become a director. I recently(Feb 2009) acquired a property leasehold of a studio flat in the estate and later discovered that accounts for the management company had not been presented to the members since 2003 as the Head Lessor (Company Limited by shares) had not provided "vital information" to enable the CLG to produce the accounts. I am quoting the Managing Agents acting for the CLG. To cut a long story short audited Annual Accounts for 2003,2004,2005, 2006 and 2007 were presented to the AGM in September 2009. From 2004 onwards the Income & Expenditure Accounts have shown deficits for the year and the Balance Sheets show the assets are exceeded by liabilities (the latest December 2010 accounts showing excess of liabilities over assets is approx.£70,000 (the only assets of the company are Debtors and Cash in Bank). Total Shareholders' Funds (auditor's description) is (£70,000) i.e a negative amount. It seems technically insolvent to me.

The auditor's report includes a qualified opinion which says that they are unable to obtain third party confirmation of the balance due to Head Lessor shown as in excess of £50,000 in the Creditors note in the Accounts.

Notes to the Accounts describe the company "as incorporated in 2000 as a company limited by guarantee and not having a share capital"


The Accounts have been prepared on the "GOING CONCERN" basis which is dependent on the support of the company's members


"In accordance with clause in the Memorandum of Association, every member of company undertakes to contribute to the assets of the company in the event of it being wound up while he is a member etc...for debts and liabilities of the company and the costs,charges and expenses of winding up for the adjustments of the rights of contributories among themselves such amount as may be required not exceeding £10.

Should I consider accepting the nomination as the committee proposer "believe the knowledge you have would be of great benefit to the committe and in turn to all the other owners within the estate"?


re the name Limited by guarantee

pkhaynes | | Permalink

I wasn't aware that companies limited by guarantee were required to state "limited by guarantee" in their name.  Companies House inform me that all you need is the word limited after the name.

As regards the form NE01 this relates to the removal of the word 'limited'.  The relevant section number number is s60 of the Companies Act 2006.  Section 30 was for the 1985 Companies Act.


Chawlaaandco's picture

Appreciate the good article!

Chawlaaandco | | Permalink

The article is very useful & worthwhile. we indeed appreciate the work.

Just to clarify...

Jordans Limited | | Permalink

Just to clarify pkhaynes is correct, a CLG name ends with the word 'Limited' and not 'Limited by Guarantee' as stated in the article.  Form NE01 removes just the word 'Limited' from the CLG name .

Also there is a reference to a Form 88 (Return of Allotments).  This is the old form reference, the correct form to file on a share company for the allotment of shares is now Form SH01.

Disclosure of Members

joede | | Permalink

I was intrigued to read that "Members are listed in the same format as shareholders in Companies House records" as when i tried to find out who was involved in a CLG this information was not available. As you say there is no Return of Allotments and the Annual Returns do not disclose members. I was told that i would have to inspect the register at the registered office (and this did not fill me with confidence). Is there a requirement to list members at Companies House?

Disclosure of Members

Jordans Limited | | Permalink

Quite right joede, except for the subscribers at the point of incorporation there is no record at Companies House for guarantee members.  There is no form to file when someone becomes a member, and members are not listed on the annual return for a guarantee company.  Therefore the only public record of members for a guarantee company will be the Register of Members which can be inspected at the company's registered office address.

Disclosure of Members

Sandy Ogunbote | | Permalink

Another way to check on the members and directors is to look at the accounts produced.  I know that it is the practice to list all current members for the period of the report including the date of their appointment.

Paul Scholes's picture


Paul Scholes | | Permalink

Accounts will only show the directors who have acted not members.  As mentioned above the only record is the company's register of members.

Paul.  Yes you are right.  I

Sandy Ogunbote | | Permalink

Paul.  Yes you are right.  I was thinking of directors/Management Committee not members.


Sandy Ogunbote

Actually Jennifer’s not wrong

EOAKS | | Permalink

Actually Jennifer’s not wrong when she states that ‘Members are listed in the same format as shareholders at Companies House’ - read the text carefully - she did not say ALL members are listed. Directors are - they are members. The same form APO1 (Appointment) is used for example.

Perhaps the text should have read:

‘Members, when registered, are listed in the same format as shareholders in Companies House records although no SH01 (Return of Allotments - previously form 88) is used as there are no shares to allot.’

This is going off on a tangent slightly but I was hoping

may2011 | | Permalink

for clarification on the question heavily discussed recently on here (with no firm conclusion), as to whether a private property management company needs to disclose its sink fund.  Some people say the fund should be held in a residents' association account, and the company would then file dormant accounts. That would seem to defeat the purpose of having a limited company since if the company is dormant it can hardly offer any protection.

I think the confusion arises between commercially run management companies and private ones.  I think the law may require commercially run companies to hold the residents' money in a separate non-company account for protection in the event of insolvency. This wouldn't be necessary for a private residents-owned company, and there would seem to me to be no reason to hide the sink fund.  It has to be disclosed to potential buyers anyway. 

Another issue which arose recently is that any company "with an interest in land" has to file a CT return, even if that interest is just owning the freehold of a block of flats, the owner-occupiers of which are the members of the company.  HMRC naturally aren't interested in processing CT returns with no tax liability, so if the company passes a special resolution to dispense with collecting ground rent, does this satisfies the "interest in land" clause and free the company from filing CT returns?  It's of academic interest only, because HMRC don't apply the rule strictly in these cases and if they rule that there is no need to file a CT return it's not likely to ever become an issue.

Paul Scholes's picture

May2011 a huge tangent

Paul Scholes | | Permalink

I think you are confusing proposed regulation requiring anyone holding residend's service charge money to put it in a separate trust account with the reason behind the regulation, ie that anyone collecting variable service charges is effectively holding that money in trust, under S42 of the L&T Act 1987.

Consequently, if anyone collects and holds this money it's not theirs and so it should not appear in its books or accounts.  This is why Ltd companies, that do nothing else, can file dormant accounts and so has been the case since the 87 Act.  The Ltd company is set up to make sure there is a legal vehicle requiring all tenants to comply with their lease and make sure the property is looked after.

Have a read of a recent article on here on the topic and HMRC's guidance: 

philhendy's picture


philhendy | | Permalink

For a non charity CLG with exemption from the word Limited one you have mentioned the CT600 is required to be filed. Is there tax payable for any surplus generated. I am presuming not?

Very article and useful comments

zimby | | Permalink

Thanks Jennifer for a very useful article and to all the other "commentators". Just joined today as been approached to account for CLG!

abbreviated balance sheet of CLG

parvez | | Permalink

Hi , This is my first ever post. Could anyone clarify what Companies Acts sections I should quote on abbreviated accounts for a CLG ? Company was active , ie, not dormat accounts. Thanks


Sammendy | | Permalink

Just to follow up on Philhendy's question on tax for a CLG. Is tax payable on the surplus income where a CLG's main source of income is grants and donations.
Do you submit a CT600 stating no accounts attached not subject to corporation tax or do you calculate tax on surplus income.
Can someone help?

Chris Smail's picture

Tax is always due on a corporations profits

Chris Smail | | Permalink

Unless it is registered as a charity or a CASC

andy.partridge's picture

How do you account for donations?

andy.partridge | | Permalink

Sammendy wrote:
Just to follow up on Philhendy's question on tax for a CLG. Is tax payable on the surplus income where a CLG's main source of income is grants and donations. Do you submit a CT600 stating no accounts attached not subject to corporation tax or do you calculate tax on surplus income. Can someone help?

I get that CT is payable on the surplus but where do donations fit into this? Presumably, they are treated as income but deducted in the CT calculation.

Chris Smail's picture

For what purpose were the contributions made?

Chris Smail | | Permalink

PM or email me if you want to talk details 


Chris Smail

CLG's - Accounts Disclosures...

BrunoR03 | | Permalink

Companies Accounts disclosures:

If a CLG company has taken advantage of the exemption and dropped "Limited" from its name:

Is it required to state/disclose - on full financial statements and Abbreviated accounts - below its name, on every page:

(A Company Limited by Guarantee) ?

I have seen some published accounts that make this statement and some that don't, which is correct ?

Does this differ if the company has not taken advantage of the exemption ?


KH's picture

HMRC's online CT600 refuses zero share capital

KH | | Permalink


Just tried to submit a CT600 using HMRC's own online software for this, and whereas in the past I successfully submitted CT600s with zero share capital, this year the form refuses to let you navigate past the page for share capital and reserves unless you put in a positive figure for share capital ... but of course there is no share capital for company limited by guarantee ...  trying to get a workaround from HMRC, but it's a bit like pulling teeth from a chicken.

Any help in the meantime would be appreciated.

Same Here

jennywren100 | | Permalink

KH I am having exactly the same issue, I have asked one of the Tax Officers at HMRC to give me a call back, but will be waiting unto 3 working days, I will let you know the outcome as soon as I have one, would you mind letting e know if you get a resolution in the meantime also, Thanks


timmypunk | | Permalink

On completion of the Online CT600 , I have gone to the reduced accounts submission , but how do you offset the Corporation Tax Calculation to make it zero

zero share capital - hmrc query

CDBIZ | | Permalink

Hi Jennywren100,


Did you manage to find a way to resolve this issue?



Hi KH,

CDBIZ | | Permalink

Hi KH,


Did you manage to find a way to resolve this issue?



Limited by Gaurantee Reserves - Help!

scp4 | | Permalink

Hi I am hoping that somebody can advise on this....

I have a client that had dealt with the incorporation of their own company and actually incorporated a company limited by guarantee. Only a small directors remuneration was withdrawn and the intention was to withdraw the profits by way of dividend. When we became aware of this we incorporated a private limited company with the intention of withdrawing the profits from the original company by way of a management charge, clearly this would have to be dealt with in the following accounting year.

We have come complete accounts for the current year and further profits were made in the company that is limited by guarantee up to the date of that the new company was incorporated. The reserves are too high to withdraw as a management charge all in one go, as this would have VAT implications and both companies have ceased to trade. There are still reserves of about £10k, how can we extract these?

Thanks in advance......