By provisions of Section 26(1) of CAMA 2020, a company limited by guarantee is a company formed for the promotion of commerce, art, science, religion, sports, culture, education, research, charity or other similar objects. The income and property are to be applied solely towards the promotion of its object and no portion is to be paid or transferred directly or indirectly to the members of the company.  Some notable features of a company limited guarantee include:

  • A company limited by guarantee is typically set up for non-profit purposes. Any profit generated by the company is reinvested and used for promoting its non-profit activities.
  • A company limited by guarantee is separate from its owner and is considered as a unique legal entity.
  • A company limited by guarantee does not have share capital.
  • There are no shareholders in a company limited by guarantee and as such it is not possible to own a company limited by guarantee in the way that a company with a share capital is owned.
  • It has the liability of its members limited by the memorandum of association to the amount the members respectively undertake to contribute to the assets of the company in the event of its being wound up.
  • The total liability of a member to contribute to the assets of the company in the event of its being wound up shall not be at any time less than N100, 000.
  • The name of a company limited by guarantee shall end with the words “Limited by Guarantee” and with the abbreviation “Ltd/Gte”.
  • The memorandum of a company limited by guarantee shall not be registered without the consent of Attorney-General of the Federation.

Just like any other type of company in Nigeria, a company limited by guarantee must be registered in accordance with the guidelines laid down by Corporate Affairs Commission (CAC). Below are the procedures for registering a company limited by guarantee:

  • Check for availability of the chosen name in the online portal of Corporate Affairs Commission (CAC). Upon finding the availability, reserve the said name.
  • Fill the form online using the CAC registration portal.
  • Pay the appropriate Stamp duty fee to the Federal Inland Revenue Service (FIRS) and also pay the required filing fee to the Corporate Affairs Commission (CAC).
  • After filing the CAC form , it is necessary to scan all the required documents such as ;
  • Memorandum and Articles of Association.
  • Any recognised form of identification for the Directors and Secretary.
  • After scanning the above documents, they should be uploaded for processing.
  • After all the documents have been scanned and uploaded, the Commission must obtain approval of the Attorney General of the Federation for the company to be registered.
  • The Attorney General will then grant authority to the promoters within 30 days where there are no objections to the memorandum or other cogent reasons for not granting approval for the company to be registered as one being limited by guarantee.
  • However, where no decision has been made by the Attorney General within thirty days the promoters of the company shall place an advertisement on three daily newspapers and invite objections as to why the company may not be incorporated.
  • If there are any objections, the grounds for which it has been made must be stated after which it will be forwarded to the Commission within twenty eight days from the date of the last publication in the newspapers.
  • The Commission may consider the objection and ask the applicant to furnish further information or may reject the objection as it deems fit.
  • Where there is no objection and the Commission is satisfied that the Memorandum and Articles of Association of the company has complied with the provisions of CAMA, then it shall register the company and issue a Certificate of Incorporation.

However, it is important to note that if a company limited by guarantee carries on a business for the purpose of distributing profit to its members, all officers and members who are fully aware that it is doing so will be jointly and severally liable for the discharge and payment of all debts and liabilities of the company incurred  in carrying on such business and the company and every of such member shall be liable to a penalty as prescribed the Commission for every day during which it carries on such business.

On the winding up of a company limited by guarantee, if any property remains after the discharge of its debts and liabilities, such property must not be distributed to its members but must be transferred to some other company limited by guarantee with similar objects or applied to some charitable objects. The decision is to be made by the members of the company prior to the dissolution of the company.





Written by Eunice Ndenati

For: Starlion Legal


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