Limited by Shares and Limited by Guarantee are two common types of company structures. Here’s how they differ:
Aspect | Limited by Shares | Limited by Guarantee |
Ownership | Shareholders own shares | Members act as guarantors |
Purpose | Profit-making enterprises | Non-profit, charitable organizations |
Liability | Limited to unpaid share value | Limited to a guaranteed amount |
Capital Structure | Shares issued to raise capital | No shares, relies on contributions |
Profit Distribution | Dividends to shareholders | Surpluses reinvested in the company |
Common Use | Commercial businesses | Non-profits, charities |
Each structure serves different organizational needs, depending on whether the focus is on profit-making or fulfilling social objectives.
Both Limited by Shares and Limited by Guarantee provide limited liability, but they are designed for different purposes. A Limited by Shares company is best suited for for-profit businesses seeking to distribute profits to shareholders, while a Limited by Guarantee company is ideal for non-profits that prioritize social, educational, or charitable objectives. Choosing the right structure depends on the nature of your organization and its long-term goals.
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