Understanding the Concept of Company Limited by Guarantee in Kenya
Company limited by guarantee is a unique form of business structure in Kenya. A company limited guarantee shareholders share capital. Instead, it is typically used by non-profit organizations, charities, clubs, and associations.
Key Features of a Company Limited by Guarantee
Let`s take look Key Features of a Company Limited by Guarantee Kenya:
| Feature | Description |
|---|---|
| Members | Instead of shareholders, the company has members who act as guarantors, agreeing to contribute a nominal amount (usually a token sum, such as Ksh. 100) event company wound up. |
| Profit Distribution | Any profits generated by the company are usually reinvested in the company`s operations or used to further its charitable or non-profit objectives. |
| Regulation | The operations of a company limited by guarantee are regulated by the Companies Act, the Companies Regulations, and any other relevant laws and regulations in Kenya. |
Benefits of a Company Limited by Guarantee
There are several benefits to choosing a company limited by guarantee structure:
- Separate Legal Entity: Just like company limited shares, company limited guarantee separate legal entity, means its members enjoy limited liability.
- Tax-Exempt Status: Non-profit organizations charities often eligible tax-exempt status, can result significant cost savings.
- Enhanced Credibility: Operating company limited guarantee enhance credibility professionalism organization, especially dealing donors, partners, stakeholders.
Case Study: The Kenya Red Cross Society
The Kenya Red Cross Society is a prominent example of a company limited by guarantee in Kenya. Founded in 1965, the organization operates under the company limited by guarantee structure and is dedicated to humanitarian activities, disaster management, and community empowerment.
Company limited by guarantee is a valuable and versatile business structure for non-profit organizations, charities, clubs, and associations in Kenya. By understanding its key features and benefits, entrepreneurs and social entrepreneurs can make informed decisions about the most suitable legal structure for their organizations.
Top 10 Legal Questions About Company Limited by Guarantee Kenya
| Question | Answer |
|---|---|
| 1. What is a company limited by guarantee in Kenya? | A company limited guarantee Kenya type corporate structure members` liability limited amount agreed contribute event company wound up. This type of company is commonly used by non-profit organizations, charities, and social enterprises. |
| 2. What are the requirements for setting up a company limited by guarantee in Kenya? | Setting up a company limited by guarantee in Kenya involves registering the company with the Registrar of Companies, drafting a memorandum and articles of association, appointing at least two directors, and obtaining a certificate of incorporation. |
| 3. Can a company limited by guarantee in Kenya make a profit? | Yes, a company limited by guarantee in Kenya can make a profit, but it must be used for the organization`s charitable or social purposes rather than distributed to its members. |
| 4. What are the advantages of a company limited by guarantee in Kenya? | The advantages of a company limited by guarantee in Kenya include limited liability for its members, tax benefits for non-profit activities, and the ability to apply for grants and donations as a registered charity. |
| 5. What are the responsibilities of directors in a company limited by guarantee in Kenya? | Directors of a company limited by guarantee in Kenya have a duty to act in the best interests of the company, avoid conflicts of interest, and ensure compliance with legal and regulatory requirements. |
| 6. Can a company limited by guarantee in Kenya be converted to a company limited by shares? | Yes, a company limited by guarantee in Kenya can be converted to a company limited by shares by passing a special resolution and filing the necessary documents with the Registrar of Companies. |
| 7. What is the process for winding up a company limited by guarantee in Kenya? | The process for winding up a company limited by guarantee in Kenya involves appointing a liquidator, settling any outstanding debts and liabilities, and distributing the remaining assets to other non-profit organizations with similar objectives. |
| 8. Can a company limited by guarantee in Kenya own property? | Yes, company limited guarantee Kenya property name, land, buildings, assets, used charitable social purposes. |
| 9. What are the reporting requirements for a company limited by guarantee in Kenya? | A company limited by guarantee in Kenya is required to file annual returns, financial statements, and other documents with the Registrar of Companies and the Non-Governmental Organizations Coordination Board. |
| 10. Can a foreign company limited by guarantee operate in Kenya? | Yes, a foreign company limited by guarantee can operate in Kenya by registering as an external company and complying with the legal and regulatory requirements for foreign entities. |
Company Limited by Guarantee Kenya Contract
This contract entered on [date], between [Company Name], referred “the Company”, [Party Name], referred “the Guarantor”.
1. Definition Terms
In contract, unless context requires otherwise:
| Term | Definition |
|---|---|
| Company | Shall mean the [Company Name]. |
| Guarantor | Shall mean the individual or entity agreeing to guarantee the liabilities of the Company. |
| Liabilities | Shall mean any debts, obligations, or responsibilities incurred by the Company. |
2. Guarantee
The Guarantor hereby agrees to guarantee the liabilities of the Company under the laws of Kenya, including but not limited to the Companies Act of Kenya.
3. Limitation Liability
The liability of the Guarantor shall be limited to a specified amount as agreed upon by the parties in a separate agreement.
4. Governing Law
This contract shall be governed by and construed in accordance with the laws of Kenya. Disputes arising connection contract settled through arbitration Nairobi, Kenya.
5. Entire Agreement
This contract constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements, whether written or oral, relating to such subject matter.
6. Execution
This contract may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this contract as of the date first above written.