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Question
Explain the following term/concept.
Company limited by guarantee
Solution
(1) A company limited by guarantee is the one in which the liability of members is limited to the amount of guarantee given by them. This type of company may or may not have a share capital.
(2) Each member of the company promises to pay a fixed amount of money specified in the Memorandum of Association in the event of the dissolution of the company for the payment of the liabilities and debts of the company.
(3) Usually, profit-making is not the aim of such companies. They are usually formed to promote activities in art, literature, sports, education, religion, or other such non-trading activities.
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