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9. Companies Limited by Guarantee and Hybrid Company
 

The Companies Act 2001 allows for the creation of Companies Limited by Guarantee and Hybrid Companies.

9.1 Companies Limited by Guarantee

A Company limited by guarantee means a Company formed on the principle of having the liability of its members limited by its constitution to such amount as the members may respectively undertake to contribute to the assets of the Company in the event of its being wound up. There is no minimum sum required for the guarantee. The guarantors are referred to as members and their names and addresses are required to be entered in the register of members.

9.2 Hybrid Companies

A Hybrid Company is a Company limited by Shares and by guarantee. The principle of limitation of liability operates as follows:

1.       Members, who are Shareholders, have their liability limited to the amount unpaid, if any, on the Shares respectively held by them.

2.       Members who have given a guarantee, have their liability limited to the amount they have undertaken to contribute, from time to time, and in the event of it being wound up.

In some jurisdictions a Hybrid Company is referred to as a “quasi-trust”. Hybrid Companies or quasi-trusts are common for use where civil law countries are involved as such countries do not normally recognise the legality of Trusts. The Hybrid Company is also a very useful tax planning tool as it may be set up so as not to qualify as a Controlled Foreign Corporation.

A GBC1 or a GBC2 may be set up as a Company Limited by Guarantee or as a Hybrid Company.

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