Company Limited by Guarantee set-up with RAK ICC
A Company Limited by Guarantee (CLG) could be set up with RAK ICC as a company authorised to issue shares or as a company not authorised to issue shares. The name of a limited company shall end with the word “Limited” or “Incorporated” or the abbreviation “Ltd” or “Inc”.
In the case of a Company Limited by Guarantee, whether or not authorised to issue shares, at least one of the members of the company shall be a guarantee member and where the company is authorised to issue shares, a guarantee member may also be a shareholder. The guarantors give an undertaking to contribute a nominal amount in the event of winding up of the company.
The liability of a guarantee member to the company, as a guarantee member, is limited to:
- the amount that the guarantee member is liable to contribute as specified in the memorandum and articles of association
- any other liability expressly provided for in the memorandum or articles of the company
In the event of winding up of a Company Limited by Guarantee, any former guarantee member who was a guarantee member in the period of one year prior to the commencement of the winding up shall be liable to contribute an amount not exceeding the amount guaranteed by such person to the assets of the company for the payment of its debts and liabilities. They are also liable for the expenses of winding up, and for the adjustment of the contributions of that company’s guarantee members and former guarantee members that such former guarantee member would have been liable to contribute had the winding up occurred on the last day of their membership of the company.
Features of a Company Limited by Guarantee
The essential feature of a CLG is that its guarantee members give an undertaking to contribute to the CLG by a specified amount in the event of its liquidation. The liability of a guarantee member is limited to that specified amount. A CLG must have at least one guarantee member. The membership rights of guarantee members are not transferable. A guarantee member remains liable to the company for one year after it ceases to be a member. A CLG may be incorporated as a CLG authorised to issue shares or as a CLG that is not authorised to issue shares. Where a CLG is authorised to issue shares, a guarantee member may also be a shareholder.
Additional optional features:
- Unlimited capacity
- Restricted purpose
- An unlimited or limited duration
- Issue shares (in addition to having guarantee members)
Possible uses of a Company Limited by Guarantee
Incorporated tenant association for real-estate development: RAK ICC companies limited by guarantee are flexible corporate vehicles that can be used for a number of purposes. A classic example is to act as an incorporated association or to confer on apartment owners certain membership rights in the company that manages the real estate development for the apartment owners, as illustrated in the diagram below.