The Company Limited by guarantee partnership is the ideal business model for individuals or organizations who want to secure the conveniences of a separate legal personality and of limited liability without the need to raise funds from the partners. This legal structure is mostly implemented by charity organizations, trade unions, society-based bodies and clubs dealing with sporting activities. Non-governmental organizations (NGO) and not-for-profit firms also opt for CLG partnership.
Real estate management companies can utilize this type of organization for repairing and maintenance of housing facilities. The lawfully approved name of the company must have the suffix, “Company Limited by Guarantee” or just the abbreviation “CLG” appended to that name. In exceptional cases though, an entity may obtain permission to neglect the suffix provided its mandate promotes business and finance, artistic works, scientific studies, academics, religious practices or any other approved endeavors.
Companies Limited by Guarantee (CLG) are companies operating without share capital and shareholders do not exist in this type of entity. As a replacement for shareholders, the company employs a member who pledges to invest one Euro into the entity to guide against potential losses that occur in cases where a business undergoes liquidation. A standard CLG must have at least two directors and another general member. It is possible for the said directors to be members as well.
How does a CLC apply for Charitable Status
An entity wishing to draft an application for Charitable Status is required to formulate a not-for-profit company structure, without owners entitled to benefits. Furthermore, specific clauses have to be included in the constitution of the firm. The CLG would have to first register with the Charities Regulator in Ireland before it obtains the charitable status. Once the company obtains their charity registration number, they can then provide this to the Revenue, and they will be exempt from all the taxes from all their activities. It is compulsory for CLG entities to organize and prepare a dossier of audited financial statements on a yearly basis, which undergo verification by the Companies Registration Office (CRO). Interested parties can contact our specialists at SIGTAX for more details and clear insights.