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In a company limited by shares, each shareholder's loss in the event of the company being wound up is limited to the value of his/her shareholding. In a company limited by guarantee, the amount of loss is limited to the (usually nominal) amount that the members guarantee to pay (as stated in the company's Memorandum of Association). Since the guarantee already limits the amount of the members' liability, it is not necessary to further limit it according to the number of shares that the member holds. Companies limited by guarantee are also most often used for clubs, associations, etc. where all member votes count as equal and not according to the number of shares held.

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Q: Why company limited by guarantee does not have share capital?
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Related questions

What is a company limited by shares?

a company limited by share has no share capital.

Difference between company limited by shares and company limited by guarantee?

The main diffrerence between a company limited by guarantee and a company limited by shares is that the company has no share capital. A company limited by guarantee has members, rather than shareholders, the members of the company guarantee/undertake to contribute a predetermined sum to the liabilities of the company which becomes due in the event of the company going under.

Why a private limited company might be converted in public limited company?

Conversion of a private limited company to a public limited companyBoth a private company limited by shares and an unlimited company with a share capital may re-register as a plc., but a company without a share capital cannot do so. A private company must pass a special resolution that it be so re-registered and deliver a copy of the resolution together with an application form to the Registrar. The resolution must also:alter the company's memorandum so that it states that the company is to be a public limited company,increase its share capital to the statutory minimum of £50,000,make any other alterations to the memorandum so that it conforms to that required for a public limited company,make any required alterations to the articles of association of the company.The private company if it does not already have sufficient issued share capital must issue £50,000 in shares a minimum of 25% part paid.

Authorized and issued share capital?

Authorized share capital is that maximum amount of share capital a company can do it’s business and return in article of association of company and company cannot raise more capital then this limit unless changes the limit of authorized capital.Issued share capital is that amount of capital which is issued to public for purchase or invest in company.

What is nominal share capital?

Nominal share capital is like an authorized share capital. The share capital that the company allowed (the maximum amount) to issue as registered capital when the company is incorporated. It can be changed later by the approval of the shareholders.

What is equaty share?

Equity share is one share from all share capital of company and it is basic non devisable unit of measure of capital of company.

Why would a private limited company change to public?

There are various reasons why a private limited company would change to public company. The main reason would be to raise more share capital so as to expand the operations of the company.

Difference between share and share capital?

Shares are units into which the capital of a company is divided. Share Capital is the total amount of money contributed by the shareholders of the company, over which they will have claim at the time of liquidation of the company.

What are the differences between a private limited company and a guarantee company?

A private limited company is an incorporated firm which offers limited liability to its shareholders but places certain restrictions on its ownership. These restrictions are meant to prevent any hostile takeover attempt. The major restriction are: (1) stockholders (shareholders) cannot sell or transfer their shares without offering them first to the other stockholders for purchase, (2) stockholders cannot offer their shares or debentures to the general public over a stock-exchange, (3) number of stockholders cannot exceed a fixed figure.A company limited by guarantee, or guarantee company, lacks share capital and possesses liability limited to the individual involvement of each member participating in its operation. Guarantee companies generally comprise the category of non-for-profit companies or charities.

How do you calculate ordinary share in the capital of the company on payment?

recording share capital in accounting

What are the difference between equity share capital and preference shares capital and examples?

Preference share capital is type of capital which has preference on other type of share capital as preference share capital may have more profit ratio than other and it is paid first from profit of company and preference share holders get there share even if company has earn no profit. Equity share capital is share capital on which share holders get share from profit in the last after paying every other obligation on company. Detail answer available in related link.

What does the word Limited stand for in Private Limited Company and Public Limited Company?

The word "limited" stands for "limited liability". This means that the liability of a shareholder in a company for the company's debts (for example, in an insolvency or liquidation scenario) is "limited" to any unpaid capital on their shares. In most cases, there will be no amount unpaid (ie. a fully paid share) and so no liability of a shareholder for the company's debts.

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