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If you’re setting up a not-for-profit organisation, a Company Limited by Guarantee (“CLG”) may be a suitable structure for you.
What Is A Company Limited By Guarantee?
A Company Limited by Guarantee (CLG) is a legal structure that is particularly common among organisations that are also planning on registering as a charity.
The CLG is a “separate legal person” that can enter into contracts, be sued and own property.
In the event that the CLG cannot meet its debts, the liability of the members is limited to the amount that the member agreed to contribute if the CLG is wound up. This amount is usually fairly insignificant, so members often aren’t liable to pay a large sum of money if things don’t go as planned.
A CLG is governed by its constitution, which is an internal document setting out how the CLG is to be run, how decisions are made, what the organisation’s charitable purpose is, and other important matters related to the CLG’s operation.
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