; Company Ltd by Guarantee

Company Limited by Guarantee

One of the main reasons that groups may decide to become a Company Limited by Guarantee is that adopting this legal form provides greater protection to the people involved in the group.

In relation to the finances of the group, becoming a Company Limited by Guarantee means that individual members have ' limited liability' if the company goes into liquidation - whereby each of the members"guarantees" to pay a nominal sum ( usually £1) towards the company's debts if it goes into liquidation.

Becoming a Company Limited by Guarantee also means that the organisation has its own legal identity, seperate from that of its members and that it can take on contracts, employ staff etc in its own right.

However, becoming a Company Limited by Gurantee also requires organisations to undertake a number of formal registration and regulatory procedures which can be complex, time-consuming and expensive.

The introduction of Scottish Charitable Incorporated Organisations now provides an alternative legal form for many organisations. It is likely that many youth groups looking to become incorporated for the first time will opt to become SCIO's rather than Companies Ltd by Guarantee but you need to consider carefully what the most appropriate legal structure for your group is. Visit SCVO's Choosing a Legal Structure section for more information.

You may also wish to contact  Your Local Council for Voluntary Service (CVS)  for more information and support with choosing a legal structure for your group.

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