Company Limited By Guarantee Members: Roles, Rights And Responsibilities In The UK

If you’re running (or setting up) a not-for-profit, charity, club, community group, or membership-based organisation, there’s a good chance you’ve come across the “company limited by guarantee” structure.

It’s a popular option because it can give your organisation a separate legal identity and limited liability, without needing shareholders or share capital.

But there’s one part of this structure that often gets misunderstood (and can cause real governance headaches later): the members.

In this guide, we’ll break down what members are in a company limited by guarantee, what they do, what they’re entitled to, and what they may be responsible for - in plain English, from the perspective of a small organisation trying to stay compliant and run smoothly.

What Is A Company Limited By Guarantee (And Why Members Matter)?

A company limited by guarantee (often shortened to “CLG”) is a type of UK company most commonly used where profits aren’t paid out to shareholders. Instead, any surplus is typically reinvested into the organisation’s purpose (for example, to fund services, maintain facilities, or expand activities).

Unlike a “normal” limited company, a CLG usually has:

• No shareholders and no share capital
• Members instead of shareholders
• A guarantee amount (a fixed amount members agree to contribute if the company is wound up)

Members matter because, in many CLGs, they are the ultimate decision-makers. Directors manage day-to-day operations, but members often hold the “big picture” powers - like appointing or removing directors, changing the company’s constitution, and approving major structural decisions.

If you’re still deciding whether this is the right structure, it helps to understand how it works in practice, including the governance side of things. Many organisations start by reading about company structures like CLGs before committing.

What Does “Limited By Guarantee” Actually Mean?

It means the members’ liability is limited to a pre-agreed guarantee amount (for example £1, £10, or £100), rather than being liable for all the company’s debts.

Importantly, this guarantee is typically only payable if the company is wound up and has outstanding debts.

That said, limited liability doesn’t mean “no liability in any scenario”. Directors can still have personal exposure in certain situations (for example, if they breach duties). Members are generally protected too, but can still take on personal liability in specific, exceptional cases - for example, if they give a personal guarantee, commit fraud, or otherwise incur personal obligations outside the company’s normal limited liability protections.

Who Are Company Limited By Guarantee Members (And How Does Membership Work)?

In a CLG, the members are the people (or sometimes organisations) whose names are recorded on the company’s register of members.

You can think of members as broadly similar to shareholders in a company limited by shares - except members don’t own shares and typically don’t receive dividends.

Who Can Be A Member?

In many small organisations, members may be:

• Founders of the organisation
• Community representatives (for a community interest project)
• A committee group
• Supporters or stakeholders with voting rights (for clubs and associations)
• Another organisation (for umbrella structures or federations)

Your Articles of Association set out eligibility rules, how people become members, and what membership means in your organisation. This document is effectively your company’s rulebook, and it’s worth getting it right early. Many organisations formalise this through properly drafted Articles of Association.

How Do You Add Or Remove Members?

This depends on your Articles of Association, but typically membership changes happen through:

• Application/nomination (for example, someone applies and the board approves)
• Automatic membership (for example, all trustees/directors are also members)
• Member vote (particularly for larger associations)
• Termination (resignation, non-payment of fees if applicable, or removal for misconduct)

From a practical standpoint, your organisation should keep:

• A clear register of members
• Written records showing how and when someone became (or ceased to be) a member
• Minutes/resolutions that support major membership decisions

This isn’t just admin. If you ever have a dispute about voting rights or governance, clear membership records can make the difference between “straightforward” and “costly mess”.

What Rights Do Company Limited By Guarantee Members Have?

The rights of members in a company limited by guarantee mostly come from:

• The Companies Act 2006
• The company’s Articles of Association
• Any additional membership rules (if your constitution allows them)

While the details vary, here are the most common rights members have in a UK CLG.

1) The Right To Vote On Key Decisions

Members will often have voting rights on “reserved matters”, which can include:

• Appointing or removing directors
• Approving changes to the Articles of Association
• Approving winding up or restructuring
• Approving certain significant transactions (depending on the Articles)

In smaller CLGs, it’s common for the members and directors to be the same people. But as an organisation grows, you might deliberately separate them (for checks and balances) - meaning the members become an important accountability layer.

2) The Right To Attend General Meetings

Members typically have the right to receive notice of, attend, and vote at general meetings.

Your Articles should set out how meetings are run - including notice periods, quorum requirements, and voting thresholds. If your CLG holds annual general meetings, your processes should be consistent and properly documented, which is why clear AGM rules matter in practice.

3) The Right To Certain Company Information

Members often have rights to receive certain information, such as:

• Copies of the company’s accounts (depending on the set-up and legal obligations)
• Notice of resolutions and meetings
• Access to the Articles of Association

Be careful here: “access” doesn’t necessarily mean a member can demand every internal email or every operational document. You’ll want a sensible governance approach that balances transparency with confidentiality and practicality.

4) The Right To Take Action If Governance Goes Off-Track

Members may have the power to step in if directors aren’t running the company properly. Depending on the situation, that could include:

• Calling a general meeting
• Voting to remove directors
• Voting to change the company’s constitution

These are serious powers. If you’re setting up membership rights from scratch, it’s worth thinking ahead: you want members to be able to protect the organisation, but you don’t want governance to become so fragile that a small disagreement paralyses the business.

What Responsibilities And Liabilities Do Members Have?

When people hear “member”, they sometimes assume it’s purely an honorary role. In reality, members of a CLG can have important legal commitments - even if they don’t manage the day-to-day operations.

1) The Guarantee Amount (And When It Applies)

Members agree to contribute a fixed amount if the company is wound up (for example, £1). This is usually stated in the Articles of Association.

In most well-run organisations, this amount is symbolic and never actually called upon. But it’s still a legal commitment, and members should understand what they’re signing up for.

2) Acting In Line With The Constitution

Members must follow the rules set out in the Articles of Association and any valid member policies. For example, they should:

• Vote properly and honestly (no fraud or sham votes)
• Comply with meeting and notice requirements
• Avoid abusing rights to disrupt the organisation

If a member’s conduct becomes a serious problem, your Articles may provide a process for suspension or removal. If they don’t, you can end up stuck with a member who has voting power but is actively harming governance.

3) Avoiding Personal Guarantees And Informal Commitments

This is a practical risk we see: someone involved in a CLG (member or director) tries to “help out” by making commitments to suppliers, landlords, or funders without properly documenting that the company is the contracting party.

Even where the CLG offers limited liability, you can accidentally take on personal exposure if you:

• Sign documents in your personal name
• Give a personal guarantee (for example, for rent)
• Blur the lines between your role and the company’s obligations

As your organisation grows, it’s worth getting legal advice on signing authority and internal approval processes, so commitments are made by the right person, in the right way, with the right records.

4) Members vs Directors: Don’t Confuse The Roles

In many CLGs, members are not the same as directors.

That separation can be helpful, but it also means you need clarity on:

• What decisions directors can make independently
• What decisions require member approval
• How disputes are resolved

If you don’t clearly define this, you can end up with members trying to “manage” the business informally, or directors making major strategic decisions without proper authority - both of which create risk.

How Do Members Make Decisions In A Company Limited By Guarantee?

In a UK CLG, members generally make decisions through:

• General meetings (including AGMs if your organisation holds them)
• Written resolutions (where a formal resolution is circulated and signed/approved)

Exactly how this works should be set out in the Articles of Association, but there are some common issues small organisations should plan for.

General Meetings: Notice, Quorum, Voting

Your Articles typically cover:

• Notice periods (how much warning members must receive)
• Quorum (minimum number of members needed for valid decisions)
• Voting rights (one member one vote, weighted votes, chair’s casting vote, etc.)
• Proxy voting (whether members can vote via proxy)

One of the easiest ways to reduce disputes is to keep clean records. That means agendas, attendance logs, and properly drafted minutes. Even though member meetings are not the same as board meetings, good governance habits carry across - and clear meeting minutes are often where organisations either protect themselves or expose themselves.

Written Resolutions: Faster, But Still Formal

Written resolutions can be a practical option when:

• You need a decision quickly
• Your members are dispersed geographically
• It’s hard to get everyone together at the same time

However, written resolutions still need to be done properly - including correct wording, the right approval threshold, and clear evidence of who approved what and when.

Many organisations use standardised formats so that resolutions are consistent and easy to follow. This is where having a clear Company Resolution process can save you time (and reduce confusion) across the year.

Changing The Articles Of Association

Changing the Articles is a major step. It can affect:

• Who can be a member
• Voting rights and thresholds
• How directors are appointed/removed
• How the organisation handles disputes
• What happens to assets on winding up

Most changes require a special resolution (often a 75% approval threshold), but your exact requirements will depend on your current Articles and the type of change.

This is one of those situations where DIY templates can be risky. A small change in wording can have a big impact on governance - especially for member rights - so it’s worth getting proper legal help before you adopt amendments.

Appointing And Removing Directors

Members often have the power to appoint and remove directors, either:

• Directly by member vote, or
• Indirectly by approving appointment rules in the Articles

From a small business perspective, this is one of the biggest reasons members matter. If your board changes, if there’s a breakdown in trust, or if the organisation is growing and needs stronger governance, member powers can be the mechanism that keeps things functioning.

Winding Up And Where Assets Go

Many CLGs (especially not-for-profits and charities) include provisions about what happens to assets if the organisation closes, and may restrict distributions to members. Often, remaining assets must be transferred to another organisation with similar purposes.

This isn’t just a legal technicality. It affects funding, stakeholder trust, and long-term planning.

If you’re setting up a CLG from scratch, it’s worth ensuring you register it properly and set your governance up cleanly from day one - many organisations start with a straightforward company registration process and then tailor their constitution and internal governance as they grow.

Key Takeaways

• A company limited by guarantee has members (not shareholders), and those members often hold important “ultimate control” powers.
• Members in a company limited by guarantee commonly have rights to vote on major decisions, attend general meetings, and appoint/remove directors (depending on the Articles).
• Members usually have limited liability through a guarantee amount, but personal liability can still arise in specific situations (for example, if someone gives a personal guarantee or commits fraud).
• Your Articles of Association are the key document that defines membership rules, voting, meetings, and how decisions get made.
• Good governance is practical risk management - keep clear member records, follow notice/quorum rules, and document decisions through minutes and resolutions.
• If your membership structure is unclear (or copied from a generic template), it can create disputes and slow your organisation down as it grows.

This article is general information only and isn’t legal advice. If you’d like advice on your specific situation, speak to a lawyer.

If you’d like help setting up a company limited by guarantee, updating your Articles of Association, or clarifying the rights and responsibilities of members in your organisation, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.