Companies Limited by Guarantee

Citation

Taylor, C. (2012), "Companies Limited by Guarantee", International Journal of Law and Management, Vol. 54 No. 2, pp. 165-167. https://doi.org/10.1108/17542431211208577

Jordans claim that this title is the only book currently available which deals exclusively with companies limited by guarantee. Whether this is indeed the case or not, the authors have certainly succeeded in providing a readable and concise overview of this often overlooked area. This is particularly welcome following the full implementation of the Companies Act 2006 and the substantial implementation of the Charities Act 2006, both of which impact on companies limited by guarantee.

The overwhelming prevalence of companies limited by shares means that, for many students and practitioners, their knowledge of companies limited by guarantee is negligible. This is unfortunate when such companies provide a valuable alternative to companies limited by share, particularly in the case of charities and other not‐for‐profit organisations. As the authors make clear in the early chapters of the text, however, this form of company is also commonly used for property management companies, members' clubs and trade associations, as well as for mutual assurance companies. The broad application of such corporate structures makes this explanatory text all the more valuable.

One extremely useful feature of the early chapters of this work is that they offer a comparison between the two forms of company, discussing key aspects such as membership and constitution. This is very helpful for those readers more used to companies limited by shares, enabling them to assess the relative advantages and disadvantages of both types of corporate structure. Companies limited by guarantee are also compared to other related entities, such as friendly societies, trusts, limited liability partnerships and “traditional” partnerships.

In terms of its content, the chapter headings will be instantly recognisable to any student of company law, with sections on key areas such as formation and constitution, membership and directors. On closer inspection, however, it is clear that each is approached from the particular perspective of companies limited by guarantee. In this way, familiar topics, such as objects clause and corporate finance are examined from the standpoint of the various forms of company limited by guarantee. The result is invaluable guidance on specific aspects of the company's operation and constitution.

Two chapters in particular are worthy of attention. Chapter 4 considers the various membership requirements of companies limited by guarantee and examines specific examples such as trade associations, property management companies and mutual assurance companies. Chapter 6 addresses the requirements of company meetings with particular reference to companies limited by guarantee and providing valuable guidance on the requirements and formalities of such meetings. Both topics are rarely addressed in sufficient detail in many company law texts and so their inclusion in this work is especially useful. Similarly, the chapter on directors is especially informative, not least in its consideration of the statutory directors' duties under CA 2006. As with the rest of the text, the examination of this topic from the standpoint of companies limited by guarantee provides a fresh perspective on these increasingly important provisions.

Another welcome feature of this title is the inclusion of extensive checklists and appendices which provide additional clarification on key aspects of managing the company.

In summary, this well‐written and logical text represents a valuable reference work for anyone directly or indirectly concerned with the operation of such companies. Members and directors would benefit equally from this clear overview of their respective rights and obligations and the clear, concise writing style presents often complex principles in an accessible format. For those involved in companies limited by guarantee this text will assist with the everyday management of the enterprise. Similarly, for those whose knowledge is largely confined to companies limited by guarantee, this text provides a welcome introduction to this alternative and under discussed corporate structure.