English Company Formation – LBG

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English Company Formation – LBG

English Company Formation – LBG (Limited by Guarantee)

Ideal for Clubs, Non-Profit Organizations, Membership Organizations, Associations


LBGs, also known as “Guarantee-based companies” are companies that do not have share capital but have limited liability.

The members of the Guarantee Company are known as “Guarantors”, as their liability is limited to the nominal amount specified in the Articles of Association in order to ensure that each of them guarantees the liquidation of the Company’s debts.

LGB is most often used by non-profit organizations, charities, clubs, professional associations and educational institutions.

As there are no shares, LBG members generally believe that the Articles of Association prohibit the distribution of assets to members. Instead, the company’s profits should be used to further increase the company’s goals or, in the case of liquidation with the remaining assets, to be transferred to a similar non-profit organization.

(There may be employees in the company that can hire salaries. Otherwise, LGB can only take out the accumulated goods if it establishes a LTD, which can only operate under the control and control of the LGB. so the owner can make a dividend there.)


If the goal is to create a charity organization
If the purpose of registering the company to be founded as a charitable organization is to set up the LGB first, you can only apply to the authority for charitable status. LGB as a corporate form is ideal because it can be designed for non-profit purposes. The “guarantors” are replaced by the shareholders and the company operates normally without dividends.

The memorandum explicitly states that dividends will not be distributed among the owners. From this it follows straight away that the company can only use the accrued profit or profit for its own (or for what it was created) purposes.

These clauses may also be removed or modified by members to allow members to distribute profits, but this would mean that the company would lose its non-profit status and the company would not be able to continue as a charity.


Exemption from Limited Word
The Guarantee Company may be exempt from the use of the word “Limited” on its behalf, provided that the Company aims to promote or regulate trade, art, science, education, religion, charity or any other occupation. It is also necessary for the founding charter to include the above-mentioned non-profit distribution clauses. The company name does not include the word “Limited”, which indicates that the company is not in the public interest and not for the benefit of its members.




Company formation and company registration takes place within 7 to 14 days. The company needs to define an English operating address, the Registered Office Address.

It is also necessary to define the ownership structure of the company. An English LGB must have an owner and be a Director. The Director is the one who opens the company’s bank account and his name will be added to the company’s bank card. The owner will not have any access to the company’s bank account.


SIC codes
When the company is founded, the main activities of the company are classified into the SIC-Code (Standard Industrial Classification).

The maximum number of activities you can specify is 4. You can choose this by using the following link: http://www.siccode.com or the table on the English court page: https://www.gov.uk

For our non-English speaking clients, we recommend the Hungarian SIC code system, given that the definitions are roughly the same. You can choose this by using the following link: http://www.teaorszamok.hu/


At the end of the tax year, the company will provide a company bulletin on Companies Data, Capital, and Directors’ Data to Companies House.

Here in English the Confirmation satement. Annual Accounting produces an annual account statement and corporate tax returns to Corporation HMRC, ie Corporation Tax. (CT600) In the current tax year, the corporation tax rate of the Corporation Corporation is 19%! In the future, this tax will gradually decrease until 17 April 2020! decrease.

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