The subscribers in a limited by guarantee company do not take shares, because this type of company is set up without share capital (i.e. the company does not issue shares).<\/p>\n
Subscribers of a company limited by shares<\/h4>\n
In a limited by shares company, the subscribers are the initial shareholders. Upon taking at least one share during the company formation process, each subscriber becomes a founding member of that company.<\/p>\n Issuing shares when setting up a company – know your options<\/span><\/a>\n \n Why would I set up a limited by guarantee company?<\/span><\/a>\n \n What rights do shareholders of a company have?<\/span><\/a>\n \n The share(s) that each subscriber agrees to take determines how much of the company they own, their profit entitlement, their decision-making power, and the limit of their liability for business debts.<\/p>\n In a limited by guarantee company, the subscribers are the initial guarantors. When they add their names to the memorandum during the incorporation process, they become founding members of that company.<\/p>\n Since this type of company does not issue shares, the subscribers (and any future members) do not actually \u2018own\u2019 the company in the way that shareholders own stock in a company limited by shares.<\/p>\n\t\t Rather, guarantors control and participate in the company. This entails appointing directors to run the business, voting on important decisions, and providing a \u2018guarantee\u2019 to pay a specified sum of money if the company becomes insolvent.<\/p>\n In most limited by guarantee companies, the subscribers and future members do not receive any share of the profits.<\/p>\n The rights and responsibilities of limited company subscribers are set out in a governing document known as the articles of association<\/a>. Some limited by shares companies also include this information in a shareholders\u2019 agreement.<\/p>\n Since it is the subscribers who form a company and make the initial decisions on company rules and members\u2019 rights, they have a great deal of freedom in this respect. This is provided that all such matters are in accordance with the Companies Act 2006 and any other legislation applicable to the company.<\/p>\n Typically, all limited company members (including subscribers) have the right to:<\/p>\n Whilst the members of a limited by shares company normally receive a share of the profits, this is not usually the case in a limited by guarantee company.<\/p>\n There is no statutory prohibition on distributing profits to guarantors, unless the company includes provisions to that effect in its articles. However, most limited by guarantee companies reinvest their surplus income in the business instead.<\/p>\n In a limited by shares company, the voting rights and dividend rights of subscribers depend on the class of shares they own, and how many. This means that a company can either:<\/p>\n In a limited by guarantee company, the subscribers have equal voting rights under the Model articles of association<\/a>. That is, one vote per person when making decisions on company matters.<\/p>\n However, it is possible to vary the rights of guarantors by creating different classes of membership in bespoke articles – e.g. voting members and non-voting members.<\/p>\n Like all members, limited company subscribers are only responsible for the debts and liabilities of a company up to:<\/p>\n The nominal value of shares and the sum of guarantees are usually just \u00a31. If a company becomes insolvent or is wound up (dissolved), the members have no legal obligation to contribute any more than the amount unpaid on their shares or the guarantee sum they have promised to pay.<\/p>\n Are shareholders and directors liable for company debts?<\/span><\/a>\n \n If any subscriber is a member of a limited by guarantee company at the time that it is wound up, or they ceased to be a member within the past year, they must contribute the specified amount of their guarantee toward:<\/p>\nSubscribers of a company limited by guarantee<\/h4>\n
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\n\t\t\t<\/a>\n <\/div>\n \nThe rights and responsibilities of limited company subscribers<\/h3>\n
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Do all subscribers have equal rights?<\/h4>\n
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\n <\/a>\n <\/div>\n \nAre subscribers responsible for the debts of the company?<\/h4>\n
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