Private Limited by Guarantee vs Public Limited by Guarantee

Private company limited by guarantee and the public company limited by guarantee: as someone that is already considering their options for the incorporation of a company limited by guarantee, you may be looking at public and private options. There are benefits and drawbacks with each type of incorporation, and the team of dedicated company experts at Coddan can provide you with the necessary insights that will enable to make the decision that is right for your business. Organisations in this field often have a charitable or community-minded element, and this makes it extremely important to come to the right decision - particularly when your assets and members are in need of full protection from personal financial liability.

In both instances, a company limited by guarantee has members that are only financially liable for accrued debts up to a certain limit - this is often set to a nominally low value of £1. In terms of the number of actual members, a private company limited by guarantee can be started with just one individual member, while the public equivalent must have at least two. In terms of the overall time that it will take to get up and running, a public company will need to wait for the necessary certification to arrive from Companies House, while a company that is set up privately will be able to begin operations straight away.

There are also differences between private and public companies of this nature in terms of the financial reporting processes that are required. There needs to be a higher level of transparency with a public company limited by guarantee, but this can be an advantage if there is an amount of investment and fundraising that needs to take place. At the same time, there is also a longer list of rules and regulations that public companies need to adhere to, and the extra paperwork that is involved may encourage an organisation to go down the private route.

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