Guarantee Company Information
- A company of your own
- The unique quality of a guarantee company
- The advantages and disadvantages of a company
- Forming a guarantee company in practice
- Requirements after registration
- Forming a guarantee company
- The National Business Register range of services
- Useful addresses
Whether to form a Guarantee Company and how to go about it are questions which can be time-consuming and confusing.
This guide will help you understand what a Guarantee Company is all about: The Benefits, Obligations and How to Set It Up. The guide is user-friendly yet comprehensive and covers everything you should know about forming a Guarantee Company.
Guarantee companies are usually run for the benefit of members such as members of an association or club. The 'guarantors' give a personal amount they will pay in the event the company fails and owes debts.
If they wish, Members can even give an unlimited guarantee and be responsible for all debts. Usually the aims and objects of the company are to promote the particular company and no dividends are paid to members, although they can properly take salary, bonuses, expenses, etc. for duties performed.
Guarantee companies are not seen as commercial trading companies and usually exist to raise funds for the benefit of others.
A Guarantee company can obtain charitable status and raise funds if it desires or just operate as a members' company without charitable status.
Guarantee companies can also exist for a group of property owners to provide communal services to their properties and only owners of the properties would be members. It is quite normal for a group of flat owners to run a guarantee company to settle all accounts expenses on behalf of all owners. Often the name of the company is the property, ie. 'Millfield Flats Management Co.'
When a club or association is set up only the original members give the guarantee and it is up to the company if new people join as an ordinary member of the club or association or as a guarantee member. If the latter applies, then they need to be added to the list of company members, otherwise the club or association just maintains its own membership list and rules.
A Guarantee company means that you and your fellow members give a personal guarantee to pay an amount to creditors should the company fail. That guarantee can be as little as £1 each.
If a business fails, a small Guarantee can protect the owners of a Company from personal loss, or even bankruptcy. Unless you have given any separate guarantee for a particular transaction - or acted illegally - the debts are the Company's, not yours.
This advantage increases with the growth in commitments the business makes in order to operate and develop.
When a Company name is registered it has to be unique. For as long as the Company exists, the name can never be copied by another company.
You can choose whether to have 'limited' at the end of the company name or omit it completely, providing the company has objects and aims, which promote commerce, art, science, education, religion or any particular profession.
1. A Unique Name
The Company name must not be identical to any other company.
2. The Right People
A company has to be owned. It need have only one owner but there are normally at least two. Owners are technically Members. All members give a guarantee to clear debts up to a fixed amount.
Managers: 'Officers' or 'Directors'
Owners must appoint Officers to manage the business, which includes operating it according to the requirements of the Companies Acts. These are the Directors. In most Guarantee Companies, Directors are also the Members. A Company must have at least one Director and it may also appoint a Company Secretary. If there are two or more Directors, one of them can also be Company Secretary.
A 'Company Secretary'
A Company Secretary may be appointed by the Members as the Officer of the Company specifically responsible for maintaining all statutory information about the Company.
3. A Specific Location - The Registered Office
This is the legal address of the business (not necessarily its trading address) at which Companies House, HM Revenue & Customs, customers, suppliers and the public can serve documents and assume that they have been received by the Company Directors. Details of Members and Officers must also be available for public scrutiny at this address.
4. Clear Objectives - the Memorandum and Articles of Association
The nature of the business the Company will carry out, along with other details, must be clearly defined in a document called the Memorandum and Articles of Association.
YOUR COMPANY ENTERS THE REGISTER
National Business Register will Register the Company, obtaining a Registration, adding it to the Company Register and providing you with a Certificate of Incorporation. This, or a copy, must be displayed at the Registered Office, and a copy will be required by the Bank.
You are now a Member or Director (or both) of your Guarantee Company, and you can begin to trade under this name.
Once your Company is registered, you must immediately meet a number of further requirements
You must display a Company nameplate at the Registered Office address.
You should obtain a Company Seal for sealing certain documents.
The Company must obtain Statutory Books in which to keep the Register of Members, and later the Minutes of Annual and Extraordinary General Meetings etc.
HM Revenue & Customs will contact you to register for PAYE purposes. Remember that Directors are employees, so you must register even if you do not employ anyone else initially.
You must register your Company for VAT, unless the turnover will be below the minimum level. This can be done by National Business Register or your accountant.
Now you can print your business stationery. The Company Name, Registered Number and Registered Office Address must be shown on all stationery, plus your VAT Registration Number on Invoices and Statements, etc.
The Company Secretary or your accountant can inform Companies House of the Accounting Date, that is, the end of the Company's first Financial Year.
REGULAR & ANNUAL REQUIREMENTS REGULAR AND ANNUAL REQUIREMENTS
Now that your Company is fully established, there are a number of statutory requirements which must be met on an on-going or annual basis. The Company Secretary is responsible for seeing that these are done.
1. Change of Company Details
Companies House must be notified of any changes to Company ownership, Officers or Registered Office address.
The register of Members and Register of Directors must be kept up to date at the Registered Office.
3. Company Meetings
Minutes of Annual and General Meetings must be kept in the Statutory Books.
4. Accounts - Book-keeping
Books must be kept up-to-date which reflect the current financial position of the Company. Check your systems with your accountant early on.
5. Annual Accounts
Annual Audit and Accounts must be prepared for Companies House and the Inland Revenue. These must be signed by a Director and the Company's Auditor. Companies House must have a copy of a Company's accounts within 9 months of the end of the Financial Year or late filing penalties apply.
6. Annual Return
Distinct from Annual Accounts, the Annual Return confirms current details of the Company. Companies House now allows you to file this online for speed.
Most Companies are formed or purchased through a Company formation agent, such as National Business Register, an accountant or a solicitor, who will cover all the necessary specialist details.
The advantage of professionals is that they can advise on Company names, they have proper systems to carry out Company searches, ensure forms are completed correctly, provide Objects, Memorandum and Articles, Company Seals, Nameplates, Statutory Declarations and so on. However, the range of services varies considerably. Be cautious about saving a few pounds on the basic cost - you may have to change things later, and that can prove expensive.
Tailor-made Companies are produced entirely to the client's requirements and can be registered immediately. The advantage is having the Name you want from the start and Objects which are specific to your Company.
Guarantee Companies must be formed with the Members and Directors names and details from the outset, nominees cannot be used.
A 'Company Kit'
National Business Register provides your full 'Company Kit' and these contain the items needed before and after Registration of your new Company. We provide and complete everything as follows:
- Certificate of Incorporation
- 6 sets of Memorandum and Articles of Association
- Statutory Books
- Registered Office
- Company Seal and Press
- Resignation of First Officers
- Advice regarding the first meeting of Directors
The National Business Register Company Kit has been designed to contain all the items you need for Registration of your Company, neatly packed in an attaché case.
In addition, we can supply any other requirements for establishing your Company.
- National Business Register Company Attaché Case
- Certificate of Incorporation
- 6 sets of Memorandum and Articles of Association
- Company Seal and Wallet
- Members' Register
- Minutes of First Meeting
As the leading Company formation agent, National Business Register offers one of the most comprehensive services available.
Guarantee Company Formation
Company formation includes a free Company Name Search, completion of all Registration requirements and provision of a Company Kit - an attractively packed set in a portfolio with all you need to start trading with your new Company.
Registered Office Address Facilities
National Business Register can provide both a Registered Office facility and, if needed, a Company Secretary.
Company Secretary Service
The role of a Company Secretary is a vital one, but the responsibilities can seem daunting. National Business Register can supply an efficient, professional Company Secretary service and advise Companies House of any change of Company particulars.
We can also organise VAT Registration for you.
Company Seal and Name Plate
Our service to new Companies extends to the final details such as provision of your statutory Company Seal and Nameplate. You may select from a wide range of plates.
Business Name and Trade Mark Search and Registration
A simple name check will not guarantee your absolute 'ownership' of a name, nor protect you from possible 'passing off' claims against your chosen name.
National Business Register offers a thorough and comprehensive check of all Business Names, Company Names and Registered Trade Marks. Detailed information on choosing Business Names is also available. We can also arrange to register your trading name, or any product name, as a Trade Mark on your behalf, and we strongly recommend Trade Mark searches.
INTERNATIONAL AND OFFSHORE COMPANIES
National Business Register also forms Offshore and International Companies for worldwide tax efficiency and trading. Ask for our International brochure.
An Offshore Company Network can be cost-effective at surprisingly low levels of turnover.
National Business Register LLP
6070 Birmingham Business Park
0121 678 9000
Institute of Chartered Accountants
P.O. Box 433,
London, EC2P 2BJ
020 7920 8100
The Chartered Association of Certified Accountants
Lincoln's Inn Fields,
London, WC2A 3EE
020 7242 685 5129
The Law Society
113 Chancery Lane,
London, WC2A 1PL
020 7242 1222