The following question and answer session details a real live query in which a non UK resident person enquired about the distinctions of forming a company limited by guarantee. Some of the elements of the query relate to similarities and differences between companies limited by shares whilst others deal specifically with attributes relevant to people living abroad.
Is it true that a company limited by guarantee can have only one member who is also director?
A company limited by guarantee can (as frequently is) set up with only one person as both director and member. One of the numerous changes enacted from the Companies Act 2006 reduced the effective number of persons required to form a UK company from two to one.
The personnel requirements for companies limited by guarantee and those limited by shares are now uniform, negating the mandatory obligation for a company secretary and permitting a single individual to act as both sole director and member/shareholder.
Does the company limited by guarantee need a VAT number?
The same rules regarding VAT registration apply to both companies limited by shares and guarantee. If the company’s taxable supplies exceed the VAT threshold then VAT registration is required.
In most cases however, companies limited by guarantee are likely to have fewer taxable sales, if any. Grants and other donations which might represent a significant portion of such a company’s income are not usually applicable to VAT.
Companies limited by guarantee can avail themselves of the various VAT reliefs which exist where they do make taxable supplies. An example of such a scheme might include the Flat Rate scheme.
Can be the company limited by guarantee used from another country like other company ltd
As is the case with companies limited by shares, directors and members of a company limited by guarantee can reside anywhere in the world and thus run the business from that location.
Does a UK company limited by guarantee need to open a bank account or can one be opened in the native country?
A UK company does not require an UK bank account. One can be set up in the native or another country. It is usual for a foreign bank to require proof of the UK company’s existence and of the main directors and members. A certificate of good standing is normally accepted for this purpose and can be apostilled for greater authenticity.