Company Limited by Guarantee under Companies Act 2013

The Companies Act, 2013 ("the Act").

Definition of a Company Limited by Guarantee

A "company limited by guarantee" is defined in clause (21) of section 2 of the Act as "a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up".

A company formed for any lawful purpose can be registered as a company limited by guarantee. Ref: Section 3(2)(b) of the Act.

Types of Company limited by guarantee

A company limited by guarantee can be formed either as:

(1) a company limited by guarantee and having a share capital, or

(2) a company limited by guarantee and not having a share capital.

Memorandum of Association

The Memorandum of Association of a company limited by guarantee can be as per:

  Table B (for companies not having a share capital); and

  Table C (for companies having a share capital).

Tables B & C are given in Schedule I of the Act.

Articles of Association

The Articles of Association of a company limited by guarantee can be as per:

  Table G (for companies having a share capital); and

  Table H (for companies not having a share capital).

Table G and Table H are given in Schedule I of the Act.

Participation in the Divisible Profits

• In case of a company limited by guarantee and not having a share capital,

• any provision in the Memorandum of Association (MoA) or Articles of Association (AoA),

• purporting to give any person otherwise than as a member a right to participate in the company's divisible profits,

• shall be considered as void.

Ref: Section 4(7) of the Act.

Number of Active Companies Limited by Guarantee in India

As on 30th June, 2020, there were a total of 7,535 companies limited by guarantee out of the total 1,215,973 active companies in India.

Stats on number of newly incorporated companies limited by guarantee:

Category	Government		Non-Government		Grand Total
Month	Public	Private	Public	Private
June, 2020	0	0	2	49	51
April, 2020	0	0	0	10	10
March, 2020	0	0	1	21	22

During the financial year 2019-20 (i.e. from 1st April, 2019 to 31st March, 2020), a total of 646 companies limited by guarantees were registered with collective authorized capital of Rs. 2.15 crore. [2 government companies limited by guarantees and 644 non-government companies limited by guarantees]

Ref: MCA portal.