A group of promoters approach you for advise regarding the formation of a Guarantee Company. Advise them briefly about the types of organizations for which it is suitable to form a Guarantee Company and the advantages that can be derived by registering a Guarantee Company
A company limited by guarantee means a company which, by its memorandum of association, restricts the liability of its members to a certain fixed amount, for payment of the debts and liabilities of the company in the event of its winding up. A past member shall not be liable to contribute if he had ceased to be a member for 1 year or upwards before the commencement of the winding up. Further, a past member shall not be liable in respect of any debt or liability of the company contracted after he ceased to be a member.
A guarantee company may also have a share capital, wherever necessary. In that event, the members will be liable for the amount, if any, remaining unpaid on the shares subscribed by them, in addition to the above guaranteed amount.
A guarantee company has all the features of a limited company except those related to liability of members, as explained above.
A guarantee company has all the features of a limited company except those related to liability of members, as explained above.
A guarantee company is a convenient from of organization for associations such as clubs, chambers of common trade associations, societies set-up for carrying on charitable work incorporated under section 25. The advantages of a guarantee company are as follows :
A guarantee company may also have a share capital, wherever necessary. In that event, the members will be liable for the amount, if any, remaining unpaid on the shares subscribed by them, in addition to the above guaranteed amount.
A guarantee company has all the features of a limited company except those related to liability of members, as explained above.
A guarantee company has all the features of a limited company except those related to liability of members, as explained above.
A guarantee company is a convenient from of organization for associations such as clubs, chambers of common trade associations, societies set-up for carrying on charitable work incorporated under section 25. The advantages of a guarantee company are as follows :
(i) A guarantee company is an incorporated body having a legal personality, perpetual succession and a common seal. It can own property, enter into contracts, can sue and can be sued by others.
(ii) Unless a guarantee company also has a share capital, the liability of the members arises only in the event of its winding up.
(ii) Unless a guarantee company also has a share capital, the liability of the members arises only in the event of its winding up.
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