Guarantee Company FAQs

WHAT IS THE DIFFERENCE BETWEEN A GUARANTEE AND A LIMITED COMPANY?

A Guarantee company does not have shareholders who receive the benefit of the profits. ‘The Guarantors’ just guarantee that they will pay a certain amount to creditors should the company fail.

HOW MUCH IS THE GUARANTEE FOR EACH MEMBER?

That is up to you, the higher the amount, the higher the guarantee. Most members only give £1 guarantee meaning they are only liable for that amount.

WHAT ARE GUARANTEE COMPANIES USED FOR?

They are not seen as commercial trading companies and can be charities, members clubs, Associations, or as communal property owners i.e., a block of flats with each owner as a member.

IF NO SHARES ARE ISSUED HOW CAN ANY PROFITS BE TAKEN?

Directors are still appointed, and they can properly take any expenses, salary, bonuses etc. that the company decides to give them.

CAN A GUARANTEE COMPANY BECOME A CHARITY?

Yes, many Guarantee companies are formed as charities to raise money from the public to benefit the charity.

CAN A GUARANTEE COMPANY RAISE FUNDS?

Yes, for example 50 people paying £1000 into a company could then elect to buy a premises for their “club” or “association” to be run from.

DO ANY MEMBERS HAVE DIFFERENT AMOUNTS OF GUARANTEE?

They can, however we recommend all members guarantee the same amount.

DO ALL MEMBERS HAVE TO GIVE A GUARANTEE?

No, say an association is formed with 4 original guarantors then it is up to them to decide whether new members become guarantor members or not. An association of 10,000 members may only have a few as actual guarantors.

HOW ARE DIRECTORS APPOINTED?

By vote of the members, or in a new company the first members may decide to be the first Directors.

Guarantee Company FAQs

WHAT IS THE DIFFERENCE BETWEEN A GUARANTEE AND A LIMITED COMPANY?

HOW MUCH IS THE GUARANTEE FOR EACH MEMBER?

WHAT ARE GUARANTEE COMPANIES USED FOR?

IF NO SHARES ARE ISSUED HOW CAN ANY PROFITS BE TAKEN?

CAN A GUARANTEE COMPANY BECOME A CHARITY?

CAN A GUARANTEE COMPANY RAISE FUNDS?

DO ANY MEMBERS HAVE DIFFERENT AMOUNTS OF GUARANTEE?

DO ALL MEMBERS HAVE TO GIVE A GUARANTEE?

HOW ARE DIRECTORS APPOINTED?

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