VocabularyBasePractice words

Meaning & use

limited by guarantee

phrase·AdvancedbusinesslawBritish

Last updated

UK/ˌlɪmɪtɪd baɪ ɡærənˈtiː/
US/ˌlɪmɪtɪd baɪ ɡærənˈtiː/

Meanings

  1. phrasefixed phrasebusinesslaw

    Describing a company whose owners promise to pay a set amount if the company closes with debts.

    Grammar: Used after a company name or after 'company': a company limited by guarantee; it never takes an object.

    Patterns

    • a company limited by guarantee
    • be limited by guarantee

    The charity was set up as a company limited by guarantee.

    A company limited by guarantee has no shareholders and no share capital.

    If the club closes owing money, each member must pay only the amount they guaranteed.

  2. phrasecountablebusinesslawBritish

    A company of this kind, often used for charities, clubs and other non-profit groups.

    Grammar: Can be used as a noun phrase: 'They formed a limited by guarantee.' This use is common in British business writing.

    Patterns

    • form a limited by guarantee
    • register a limited by guarantee

    Most housing associations in Britain are limited by guarantee.

    The group registered as a limited by guarantee to protect its trustees.

    Unlike a company limited by shares, a limited by guarantee cannot pay profits to its members.

Common combinations

company limited by guarantee
The sports club is a company limited by guarantee.
limited by guarantee and not having a share capital
The old certificate said the body was limited by guarantee and not having a share capital.
register a company limited by guarantee
They paid a lawyer to register a company limited by guarantee.
members' guarantee
Each member's guarantee is usually just one pound.
limited by shares
A normal trading business is usually limited by shares, not by guarantee.

Synonyms and how they differ

non-profit company
A looser everyday term; it says the company does not aim to make profits, while 'limited by guarantee' says exactly how its owners' liability is set.
incorporated association
Used in some countries for a similar body; the legal details differ from country to country.

Opposites

limited by shares

Word family

guarantee noun
A promise that something will be done or paid.
guarantor noun
A person who promises to pay if someone else cannot.
limited adjective
Used in company names to show that owners' liability is capped.
liability noun
The money or legal duty a person or company owes.

Commonly confused: limited by guarantee or limited by shares? limited by guarantee or guaranteed?

limited by guarantee vs limited by shares

This describes a company that issues shares and pays profits to shareholders; a company limited by guarantee has members, not shareholders, and usually no share capital.

limited by guarantee vs guaranteed

'Guaranteed' means promised for sure, as in 'a guaranteed income'; 'limited by guarantee' is a company structure, not a promise about results.

Practice

Which sentence uses 'limited by guarantee' correctly?

Make it your own

Write a sentence using “limited by guarantee”, then check it and compare it with the examples above.

Your sentence stays on this page and is not sent anywhere.

Explore more words