A Company Limited by Guarantee is ‘a company having the liability of its members limited by the memorandum to such amount as the members agree may respectively thereby undertake to contribute to the assets of the company in the event of it being wound up.’ Therefore, the members of the company do not have to pay anything unless the company is wound up and the amount is limited to the amount agreed on the memorandum. In the majority of cases these companies are incorporated as non-profit making organisations under Section 20 of Cap 113.
The so called 'guarantee companies' are often used for charitable causes as profits arising are not distrributed to the members but are kept and used for the purposes of the company. A company limited by guarantee has members rather than shareholders.
Section 20 provides the following:
(1) Where it is proved to the satisfaction of the Council of Ministers that an association about to be formed as a company is to be formed for promoting commerce, art, science, religion, charity or any other useful object, and intends to apply its profits, if any, or other income in promoting its objects and to prohibit the payment of any dividend to its members, the Council of Ministers may by licence direct that the association may be registered as a company with limited liability, without the addition of the word limited to its name and the association may be registered accordingly and shall, on registration, enjoy all the privileges and be subject to all the obligations of limited companies.
A licence under this section may at any time be revoked by the Council of Ministers, and upon revocation the registrar shall enter the word limited at the end of the name and the body shall cease to enjoy the above mentioned exemptions and privileges. In such case, the Council of Ministers shall give to the body notice in writing of his intention and shall afford it an opportunity of being heard in opposition to the revocation.
The articles of association must state the number of members, with which the company proposes to be registered. Where such company has increased the number of its members beyond the registered number, it shall within 15 days after the increase was resolved on or took place, to notify the Registrar of such increase.
The annual requirements for such a company are the following:
Annual Returns: The Annual Returns must be submitted once a year to the Registrar of Companies. This is the responsibility of the corporate secretary.
Audited Accounts: The audited accounts of a Cyprus Company
must be submitted to the Cyprus Registrar of Companies on the 31st of December following the tax year audited together with the submission of form HE32 (annual returns).
Annual Government Levy: €350
: Annual income tax returns based on audited accounts. Also, a number of other tax forms and tax related documents need to be submitted to the Inland Revenue Dept. accordingly.
For more information on how to register a company limited by guarantee (a non-profit making organisation), please contact us at email@example.com