About Company Limited by Guarantee in Zimbabwe
What you should know…
Limited by guarantee companies are most often formed by non-profit organisations such as sports clubs, workers’ co-operatives and membership organisations, whose owners wish to have the benefit of limited financial liability.
A company limited by guarantee does not have any shares or shareholders (like the more common limited by shares structure) but is owned by guarantors who agree to pay a set amount of money towards company debts.
Furthermore, there will generally be no profits distributed to the guarantors as they will usually be re-invested in the business to help promote the non-profit objectives of the company. If any profits are distributed to the owners, then the company will forfeit its right to apply for charitable status.
Benefits of Companies Limited by Guarantee
- A company limited by guarantee is a distinct legal entity from its owners and is responsible for its own debts.
- The personal finances of the company’s guarantors are protected. They will only be responsible for paying company debts up to the amount of their guarantees.
- ‘Limited’ status builds trust and confidence amongst clients and investors. This type of professional credibility is valuable and can help a company achieve its objectives more effectively.
Registering a Company Limited by Guarantee Companies
It is easy to set up a company limited by guarantee through Companies Made Easy because we offer a specialist ‘Guarantee Package’ designed for this purpose.
Please make yourself aware of the following requirements and regulations before applying to register company limited by guarantee:
- All companies limited by guarantee must be registered with the Companies Office, the Registrar of Companies in Zimbabwe.
- A company limited by guarantee must have at least 2 directors and at least one guarantor. One person may assume 2 positions, and there can be multiple directors and guarantors. Information held on all directors and guarantors will be available on public record at the Companies Registry.
- All companies limited by guarantee must provide a physical, postal and email addresses of the company. The physical address has to be in the country (jurisdiction) where your company is registered. This should be based in Zimbabawe.
- Business core ojecives should e supplied. These explain the nature of your company’s trading activities.
- All registered companies limited by guarantee require a memorandum of association and articles of association. The memorandum states the name of each owner (guarantor) and their agreement to set up the company and become members. The articles outline the rules and regulations the company must follow. The memorandum and articles of association are prepared by Companies Made Easy.
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Frequently asked questions
Why would I register a company limited by guarantee in Zimbabwe?
The majority of companies limited by guarantee are set up by non-profit organisations such as sports and social clubs, unions, workers’ co-operatives, etc. If you require a company for the purpose of raising money to promote and further the aims of your business alone, rather than taking profits for yourself, a limited by guarantee company is a good choice.
Who owns a company limited by guarantee?
A company limited by guarantee is owned by individuals and/or corporate bodies known as ‘guarantors’. Guarantors do not have any shares in the company and, generally, they do not take any of the profits. The owners of a company limited by guarantee will agree to pay a sum of money, known as a ‘guarantee’, if the company has any debts or becomes insolvent.
Who can be a guarantor?
A guarantor can be any person or a corporate body. Their details will be registered with the Companies Registry and displayed on public record.
How many people will I require to register a company limited by guarantee?
You will need at least two directors and at least one guarantor – but, one person can assume 2 positions. You can also have multiple directors and guarantors. The choice is yours.
Can guarantors take a share of the profits?
Guarantors can certainly take a portion of company profits for themselves, but most of the time this does not happen because limited by guarantee companies are usually set up for non-profit purposes. This means that all of the money generated by this type of company is kept in the business or used to promote its non-profit purpose and activities.
If guarantors do keep any profit for themselves, the company will no longer be considered ‘non-profit’ and it will be ineligible for charitable status. There is nothing to prevent someone setting up this type of company to run a profit-making business in which the guarantors will keep the profits, but a limited by shares structure simply makes more sense for that purpose.
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Companies Made Easy (Private) Limited is a licensed business consultant with the Deeds, Companies and Intellectual Property (DCIP) Zimbabwe's official Registrar of Companies which licenses company registration agents in Zimbabwe to carry on company regstration and/or corporate secretarial services with their office on behalf of clients.
Our DCIP license gives our customers confident that they are dealing with a reputable, qualified and regulated consultant.
Companies Made Easy is a member of ZACRA, the association of company registration agents in Zimbabwe.