Member register for company limited by guarantee

[RachelMurphy]

HI, I'm new to the forum, but really need some advice regarding converting to a company limited by guarantee.

We are a support group for a very specific group of parents. Many of our existing members (as an unincorporated association) would not want anyone to be able to identify them as a member of our group, and there are currently several hundred of them. We want to set up as a company limited by guarantee, firstly because we have had a significant financial donation, and to increase the amount of income streams from other charities and trusts, who often stipulate they will not fund any group other than charities or companies.

My question is with regard to the register of members. i understand this can be requested by anyone and we will need to go to court top restrict this access. Being visible like this, will put many of our current members off. We have lined up directors and wish for the current management committee to continue. We are thinking that our committee would become the members with voting rights, then have all our other members converted to 'non-voting' members. If they are non-voting, do we need to keep a publicly accessible register, rather than our privately held confidential records? Cold we protect their identities in this way? Is there a template which provides wording for the articles of association which categorises members and their voting rights?

I hope these questions make sense, and that some kind person here can help me with this query, or at least point me in the direction of some answers!

Many thanks!

 

[Scalloway]

My experience of companies limited by guarantee is that beyond the directors the concept of who is a member is a bit nebulous. And I have never come across one where the members have actually been asked to stump up their guarantee money.
Have you thought about setting up a Charitable Incorporated Organisation (CIO)?

 

[Daybooks]

As blatant as it may seem your reasons for wanting to set up a “legal entity” is wholly irrelevant. You have to follow and comply with respective legislation e.g. Companies Act or Charities Act for the chosen entity.

The key issue is “control” of the entity. Visibility of individuals who control an entity is paramount and generally the ability to suppress this is naturally limited. Why should you be allowed to set up an organisation trading in whatever way with others and be allowed to be anonymous? I believe you can apply to the appropriate registrar for suppression of contact details for example where there may be risk to life. You would need to apply as appropriate.

Your constitution document may need to establish the meaning of “members” in terms of exercising control over the entity or otherwise. Please bear in mind that most professional advisors need to identify beneficial owners and or persons with significant control to comply with their anti-money laundering regulations.

If you do not want to use standard articles or constitutional documents then you can either modify or engage professionals to assist.

 

[RachelMurphy]

As blatant as it may seem your reasons for wanting to set up a “legal entity” is wholly irrelevant. You have to follow and comply with respective legislation e.g. Companies Act or Charities Act for the chosen entity.

The key issue is “control” of the entity. Visibility of individuals who control an entity is paramount and generally the ability to suppress this is naturally limited. Why should you be allowed to set up an organisation trading in whatever way with others and be allowed to be anonymous? I believe you can apply to the appropriate registrar for suppression of contact details for example where there may be risk to life. You would need to apply as appropriate.

Your constitution document may need to establish the meaning of “members” in terms of exercising control over the entity or otherwise. Please bear in mind that most professional advisors need to identify beneficial owners and or persons with significant control to comply with their anti-money laundering regulations.

If you do not want to use standard articles or constitutional documents then you can either modify or engage professionals to assist.

Thanks for your reply. We have no issue with the visibility of the directors and those who hold voting rights and significant control. It is our concern that the language around who is a member of a company and whether those we support (who we currently call “members” of our group) may wish to remain anonymous. Members of the group who do not have voting rights, do they have to be on a publicly held register? I suppose the analogy would be a sports club, whose members do not have voting rights, but the organisation that runs the club operates as a company, do the club have to keep a publicly available list of “members” even if they do not have voting rights. I may be fundamentally misunderstanding the legalities of setting up a company, and it is the term member that is causing me confusion as to who would technically be a member of the organisation. I hope that makes my query clearer!!

 

[Scalloway]

The last time I was involved in setting up a company limited by guarantee the members were just the directors. If you look at item 4 on the right of this page official advice is that you need just one guarantor.

Set up a private limited company

Incorporate a private limited company - register it with Companies House and rules on directors, shares, articles of association and telling HMRC about the company

www.gov.uk

 

[Daybooks]

Thanks for your reply. We have no issue with the visibility of the directors and those who hold voting rights and significant control. It is our concern that the language around who is a member of a company and whether those we support (who we currently call “members” of our group) may wish to remain anonymous. Members of the group who do not have voting rights, do they have to be on a publicly held register? I suppose the analogy would be a sports club, whose members do not have voting rights, but the organisation that runs the club operates as a company, do the club have to keep a publicly available list of “members” even if they do not have voting rights. I may be fundamentally misunderstanding the legalities of setting up a company, and it is the term member that is causing me confusion as to who would technically be a member of the organisation. I hope that makes my query clearer!!

I believe the legislation (namely Companies Act) will refer to shareholders as the “members” and for circumstances where there is no share capital then the “members” as in your example would be the guarantors. Your memorandum of association would specify the amount each member must contribute in the event of a winding up. Companies are required to maintain a register of members and make it available for inspection. This does not have to be held at Companies House. The guarantors at incorporation would normally be visible at Companies House on the memorandum.

Companies Act 2006 (legislation.gov.uk)

Therefore if your definition of “member” is one of an individual (or legal entity) guaranteeing a sum of money in the event of it winding up then they should be on the register of members which should be maintained and made available for inspection if properly asked for. You would have to delve deeper into the legislation if you wanted to omit names or prohibit access. If your definition of “member” is not this then be aware that you may be unintentionally misleading people – who may rightly feel they are a guarantor. Sometimes the terms “supporters” or “friends” are used to differentiate from “members”.

You’ve indicated that these “members” are not controlling the company therefore would not need to be on the register of directors nor the register of persons with significant control; providing of course this the case.

The Company registers you need to keep are detailed here:

[Withdrawn] Company registers

www.gov.uk

Irrespective of any "label" of "member" look to see who they are and what they do and determine how that fits into the legislation. Then comply with it.

 

[Gyumri]

I think the solution is indicated above - you incorporate the company with a handful of members but the many other "members" are only such in the sense of friends or "patrons" of the society or club etc.