A company limited by guarantee has no share capital. Instead of shareholders it has members, each of whom agrees to contribute a fixed amount – often £1 – towards the company's debts if it is wound up while they are a member or within a year of leaving. Charities, clubs, trade bodies and many community interest companies are set up this way. This note records that guarantee in the accounts.
What this note shows
A single paragraph. The default wording is:
The company is limited by guarantee and does not have a share capital. Every member has undertaken to contribute such amount as may be required, not exceeding £1, to the assets of the company in the event of it being wound up while they are a member, or within one year after they cease to be a member.
The note is part of FRS 102 Section 1A accounts. For a guarantee company the balance sheet total is headed "Members' funds" rather than "Shareholders' funds", and the statutory information note describes the company as "a private company limited by guarantee".
Where the wording comes from
Whether the company is limited by guarantee is taken from the organisation's company details (company structure and "limited by" setting – see Company details for your accounts).
- Limited by guarantee: the first time the accounts load, the note is switched on with the default wording above. The default dividends note, which refers to shareholders, is not used.
- Limited by shares: the default wording is suppressed. The note editor is empty and switched off, and even if the note were switched on with the untouched default wording, it would not print. Nothing prints unless you type your own text.
If a guarantee company shows the default wording for the wrong company type, check the company details first and then reopen the accounts.
Completing the note in Tax Optimiser
Open the period, choose View Accounts, then Notes in the left Actions menu. Select Company limited by guarantee in the list.
- For a guarantee company, check Show this note in the accounts is Yes and read the wording.
- If your articles of association set a guarantee other than £1, change the amount in the text.
- Click Save changes to save the note and rebuild the accounts preview.
The demo company, Example Notes Ltd, is limited by shares, so the editor is empty and the note is switched off. Use Additional note for Company limited by guarantee if you want to add more, such as the number of members at the year end. There are no wording templates for this note; the default text serves that purpose.
This note is about the members' guarantee to the company. A guarantee the company has given for a director's personal borrowing is disclosed in the guarantees provided on behalf of directors note.
How it appears in the accounts
The note prints its heading, "Company limited by guarantee", followed by the paragraph as plain text, with any additional note beneath. The demo company is limited by shares, so there is no printed example.
Frequently asked questions
What does "limited by guarantee" mean?
The company has no shares. Each member promises to contribute a fixed sum, often £1, to the company's debts if it is wound up while they are a member or within a year of leaving. That promise limits the members' liability.
Why is the note empty for my company?
The company is set up as limited by shares in its company details, so the default guarantee wording does not apply. If the company is actually limited by guarantee, correct the company details.
Our guarantee is £10, not £1. Can I change it?
Yes. Edit the amount in the text box and click Save changes. Your own wording is kept.
Does a community interest company need this note?
Only if the CIC is limited by guarantee. A CIC limited by shares has a share capital note instead.