This package allows you to take advantage of the limited exemption provision by providing you with Articles of Association that you can edit during the application process. You will be asked to download the articles and insert the objects of your company at clause 4.1.1 . A simple sentence setting out the objects of your LBG will be sufficient. Once you have done that you will be able to upload the edited version which will be submitted with your application to Companies House.
There is a provision in the Companies Act that allows for the omission of the suffix” LTD” or “Limited” from a company’s name. Companies taking advantage of this exemption are sometimes called “S30” companies referring to the provision in the 1985 Companies Acts. The provision is now replaced by S60 of the 2006 Companies Act.
To qualify for exemption from using the suffix ltd or limited from your company name your Articles of Association need to:
- State that the company’s objects (aims) are the promotion or regulation of any of the following: commerce, art, science, education, religion, charity or any profession and anything incidental or conducive to those objects.
- Contain the following provisions:
- A statement that any profits or other income should be applied to the promotion of the objects of the company
- A prohibition of the payment of dividends or other distributions to the members.
- A statement that in the event of the business being wound up, all of the company’s assets will be transferred to another body with similar charitable objects.
Please note the following:
- This product provides a “not-for-profit” LBG, not a registered charity or Charitable Incorporated Organisation (CIO).
- This product exempts you from using the suffix “LTD” or “Limited” in your company name.
- Companies Limited by Guarantee are liable to corporation tax on any profits or surpluses, even if they are run as non-profit organisations. Once they register with the Charity Commission they are entitled to various tax exemptions and reliefs.
- An unregistered charity with income below £5,000 threshold can benefit from tax relief by registering with HM Revenue and Customs (HMRC). The Articles of Association would need to be amended and other HMRC conditions met. To explore this option you should seek the advice of an accountant.
- Members do not have to be directors of a company and directors do not have to become members.
- The Articles of association are drafted for a small membership and suitable for up to 5 or 6 members. If you membership is larger you should edit the articles accordingly.
- We do not provide an editing or drafting service. However, we are happy to offer support relating to the insertion of the objects at clause 4.1.1
When you make your application with us, you will be asked to state the following:
- The Limit of each members liability; most applicants choose £1 but it can be more.
- The directors of the company.
- The members/guarantors of the company. In small organisations, they usually are also the directors.
- You will have to state if there are any Persons of significant control (PSCs). This is anyone who controls more than 25% of the company. Given that the Articles of Association only allow for 1 member 1 vote. A company with 4 or more members will not have any PSCs. A company with a membership of 3 or less will state they are each PSCs.
- The Standard Industrial Classification (SIC) code. At least one needs to be selected from the drop-down list we make available to you.
- The address of the Registered office. This will be the official address of the company and will be available to members of the public. It will need to be displayed on websites, letters, invoices and other communications.
- Each director’s and member’s service address. You will also have to supply each directors personal address to Companies House. A service address for the directors is the only way to avoid displaying their home address.
- The objects of your company, which you will have to insert in the downloaded Articles of Association.
Obtaining Charitable status:
To be a charity a company needs to be registered with the Charity Commission. LBGs are a suitable structure for a charity but the Articles of Association we provide need to be amended.
Annual Compliance Requirements:
- Like all companies registered with Companies House, your LBG will have to file annual accounts made up to the accounting reference date.
- An annual confirmation statement is also required stating details of directors, PSCs and any changes to the total guaranteed. Companies House charge a filing fee of £13.
- You will be required to submit a Corporation tax return each year, even if no tax is payable.
General Compliance Matters:
All limited companies are governed by the regulations of the Companies Acts 2006 and the directors of your company will need to ensure compliance with that Act. In particular:
- You are required to maintain statutory books giving details of the company, its directors, members, PSCs , any debentures issued, mortgages etc.
- The statutory books will also need to be made available to the public if they request access.
- Changes of directors and PSCs (registerable events) will need to be notified to Companies House within prescribed periods.
Articles of Association:
The company can agree to change the Articles of Association. The new Articles and the Resolution adopting the amended Articles will need to be sent to Companies House
Changes in Membership:
The company can admit new members. They will not appear on the original Memorandum of Association but, unless the Articles state otherwise , they will have exactly the same rights as the original members.
Naming your LBG:
Companies House have rules about the names that companies can be given. This is to ensure the public are not mislead about a company’s bonafides. A list of sensitive and regulated words are published on their website. Their website also states what evidence should be provided with an application in order to have a name approved. If you are using a sensitive word, our system will allow you to upload the supporting evidence with your application.
The following is a sample of words that are more commonly used in the names of LBG companies which require additional information before Companies House will accept them.
More information about supporting evidence is given on the Companies House website
Becoming a registered charity:
It will be possible for your LBG company to be registered with the Charity Commission. In order to do so you will have to
- Amend your Articles of Association or adopt new ones as recommended by the Charity Commission.
- Demonstrate that you have gross income in excess of £5000 per year.
- Complete a lengthy application to the Charity Commission.