ABIBLO LAW - COMPANY (8)

Companies limited by guarantee. 
Companies carry on a not for profit activity is considered appropriate to fall under company limited by guarantee rather than company limited by shares ( which is suitable for profit making company).
Companies Act 2006 not allowed a company to be created where the members are free from any liability but besides limiting the contribution to the amount payable by shares, the companies Act allowed the companies to agree in the event of liquidation they will if required subscribed an agreed amount. 
The limited guarantee company is useful for charitable and quasi charitable companies such as college or schools. 
Limited liability is less risky and more convenient than a trust. 
Division of the undertaking into shares is not important since no sharing of profit contemplated.