how a guarantee company works
guarantee companies are common in the united kingdom they often form to protect the assets of non profit organizations unions and membership organizations they often use the word limited in their name although they may be exempt from doing so guarantee companies are also a popular choice for property management companies which are created to hold an interest in property that is divided into units guarantee companies are incorporated by having at least one director and one member similar to a traditional corporation limited by share if the company has any funds remaining from contributions from members these are often used according to the purpose of the guarantee company such as funding a museum or other public service projects a unique feature of guarantee companies is their limited liability members have legal protection to shield them from cases in which transactions might fail however each member will be responsible for a nominal sum of money if the guarantee dissolves this nominal amount set out in the company s articles is usually 1 but it can be tailored to any amount that is fit for the situation because a guarantee company doesn t have any shareholders receiving profits its members are all equally responsible for paying creditors if the company goes under example of a guarantee companyone example of a guarantee company is cricket australia the central administrative body for cricket in the nation cricket australia s full name is cricket australia company limited by guarantee it consists of six member associations cricket new south wales queensland cricket south australian cricket association cricket tasmania cricket victoria and western australian cricket association and has nine independent directors under its constitution the liability of each cricket australia member is limited to 1 000 each cricket australia receives all gate and signage revenue from international matches and distributes revenue to states under its minimum guarantee financial model this de risks states against volatile movements in gate revenue that might arise from the timing and duration of matches weather and other external factors 