British Virgin Islands Companies Limited by Guarantee
Under section 5 of the BVI Business Companies Act (as amended) (the “Act”), a company may be incorporated or continued under the Act as:
- a Company Limited by Guarantee that is not authorised to issue shares; and
- a Company Limited by Guarantee that is authorised to issue shares.
Companies Limited by Guarantee are often used for non-profit organisations, particularly Companies Limited by Guarantee that are not authorised to issue shares.
Companies Limited by Guarantee not Authorised to Issue Shares
The Memorandum of Association of the company (the “Memorandum”) must state that it is a Company Limited by Guarantee that is not authorised to issue shares.
A Company Limited by Guarantee must at all times have one or more guarantee members, other than during the period from the incorporation of the company to the appointment of its first directors. A guarantee member is entitled to one vote on any resolution on which he or she is entitled to vote, unless the memorandum or articles of association (the “Articles”) of the company provide otherwise.
Under section 9(1)(f) of the Act, a guarantee member is liable to contribute to the company’s assets if the company goes into voluntary liquidation under the Act or insolvent liquidation under the Insolvency Act 2003 whilst he or she is a member. However, a guarantee member’s contribution is limited to:
- the amount stated in the memorandum;
- any other liability expressly provided for in the memorandum or articles; and
- any liability to repay a distribution, where a distribution was made to the member but at the time of the distribution the company did not satisfy the solvency test.
Guarantee members are not liable for the debts or obligations of the company except to the extent of their guarantee upon the company going into insolvent liquidation.
Companies Limited by Guarantee Authorised to Issue Shares
Company Limited by Guarantee and authorised to issue shares are hybrid of a company limited by guarantee and a company limited by shares. The memorandum must contain the relevant clauses for companies limited by shares and companies limited by guarantee.
Accordingly, the memorandum must state:
- the amount which each guarantee member is liable to contribute to the company’s assets in the event that a voluntary liquidator or an Insolvency Act liquidator is appointed;
- the maximum number of shares the company is authorised to issue or, that the company is authorised to issue an unlimited number of shares; and
- the classes of shares the company is authorised to issue and, if the company is authorised to issue two or more classes of shares, the rights, privileges, restrictions and conditions attaching to each class of shares.
At least one member of the company must be a guarantee member. The guarantee member may also be a shareholder of the company. The guarantee member’s liability to the company will be the same as that set out at paragraph 2 above. As with a company limited by shares, the shareholders will have no liability for the company’s debt and obligations (unless otherwise specified in the memorandum or articles of the company). Shareholders will have the votes attached to their shares, whilst a guarantee member will have one vote on any resolution on which he or she is entitled to vote, unless the memorandum or articles provide otherwise.
Incorporation of a Company Limited by Guarantee
Incorporating a Company Limited by Guarantee can be done quickly and efficiently by our Firm, on receipt of satisfactory “know your client” documents, we can arrange for a Company Limited by Guarantee (or otherwise) to be incorporated on the same day. Atrium in the BVI offers a variety of corporate services including but not limited to incorporations, corporate director and shareholder services and registered agent and registered office services.