Under section 5 of the BVI Business Companies Act (as amended)
(the "Act"), a company may be incorporated or continued
under the Act as:
a company limited by guarantee that is not authorised to issue
a company limited by guarantee that is authorised to issue
Companies limited by guarantee are often used for non-profit
organisations, particularly companies limited by guarantee that are
not authorised to issue shares.
Companies Limited By Guarantee Not Authorised to Issue
Companies limited by guarantee and not authorised to issue
shares do not have shares and their members are known as
The memorandum of association of the company
(the"memorandum") must state that it is a company limited
by guarantee that is not authorised to issue shares. A company
limited by guarantee must at all times have one or more guarantee
members, other than during the period from the incorporation of the
company to the appointment of its first directors. A guarantee
member is entitled to one vote on any resolution on which he or she
is entitled to vote, unless the memorandum or articles of
association (the "articles") of the company provide
Under section 9(1)(f) of the Act, a guarantee member is liable
to contribute to the company's assets if the company goes into
voluntary liquidation under the Act or insolvent liquidation under
the Insolvency Act 2003 whilst he or she is a member. However, a
guarantee member's contribution is limited to:
that the company is a company limited by guarantee that is
authorised to issue shares;
the amount stated in the memorandum;
any other liability expressly provided for in the memorandum or
any liability to repay a distribution, where a distribution was
made to the member but at the time of the distribution the company
did not satisfy the solvency test.
Guarantee members are not liable for the debts or obligations of
the company except to the extent of their guarantee upon the
company going into insolvent liquidation.
Companies Limited by Guarantee and Authorised to Issue
Companies limited by guarantee and authorised to issue shares
are hybrid of a company limited by guarantee and a company limited
by shares. The memorandum must contain the relevant clauses for
companies limited by shares and companies limited by guarantee.
Accordingly, the memorandum must state:
the amount which each guarantee member is liable to contribute
to the company's assets in the event that a voluntary
liquidator or an Insolvency Act liquidator is appointed;
the maximum number of shares the company is authorised to issue
or, that the company is authorised to issue an unlimited number of
the classes of shares the company is authorised to issue and,
if the company is authorised to issue two or more classes of
shares, the rights, privileges, restrictions and conditions
attaching to each class of shares.
At least one member of the company must be a guarantee member.
The guarantee member may also be a shareholder of the company. The
guarantee member's liability to the company will be the same as
that set out at paragraph 2 above. As with a company limited by
shares, the shareholders will have no liability for the
company's debt and obligations (unless otherwise specified in
the memorandum or articles of the company). Shareholders will have
the votes attached to their shares, whilst a guarantee member
will have one vote on any resolution on which he or she is entitled
to vote, unless the memorandum or articles provide otherwise.
Incorporation of a Company Limited by Guarantee
Incorporating a company limited by guarantee can be done quickly
and efficiently by the Carey Olsen BVI team. On receipt of
satisfactory "know your client" documents, we can arrange
for a company limited by guarantee (or otherwise) to be
incorporated on the same day. Carey Olsen in the BVI offers a
variety of corporate services including but not limited to
incorporations, corporate director and shareholder services and
registered agent and registered office services.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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