A Company Limited by Guarantee in Nigeria is a type of corporate structure typically used by non-profit organizations, where the liability of its members is limited. The members’ commitment is to contribute a predetermined amount to the company’s assets if it’s wound up. This structure is common for clubs, charities, and similar organizations. Unlike companies limited by shares, it doesn’t have share capital or shareholders, but rather members who guarantee a fixed amount for company liabilities. This format suits entities focused on non-commercial activities with no profit distribution among members.

A Company Limited by Guarantee differs from a Company with Shares primarily in structure and purpose. The former is usually adopted by non-profit organizations, with members guaranteeing a fixed amount to cover liabilities, rather than shareholders. In contrast, a Company with Shares is profit-oriented, with ownership divided into shares held by shareholders. Profits are often distributed as dividends among shareholders, which is not the case in Companies Limited by Guarantee.

A Company Limited by Guarantee and Incorporated Trustees differ mainly in structure and purpose. A Company Limited by Guarantee is used by non-profit organizations, where members guarantee a contribution towards the company’s liabilities. Incorporated Trustees, however, are formed by a group of people (trustees) who come together for a common non-profit goal, often for religious, educational, literary, scientific, social development, or sporting purposes. The key difference lies in their legal and operational structures, with Incorporated Trustees typically being more suitable for groups aiming to exist perpetually, managing property and funds dedicated to their specific non-profit goals.

There is no maximum limit set by CAMA but it states that each member shall guarantee to pay a sum not less than 10,000 naira