Public Company Limited by Guarantee (CLG) Registration

A Company Limited by Guarantee is a legal structure commonly used by:

• charitable organisations that aim to be exempt from paying income tax.
• not-for-profit organisations that is not a charity but which can self-assess as exempt from paying income tax. Examples of relevant organisations include: a community service organisation, a sporting organisation, an educational institution, a religious organisation and recreational or sporting clubs, etc

CLG is a type of public company established "on the principle of having the liability of its members limited to the respective amounts that the members undertake to contribute to the property of the company if it is wound up" - Corporations Act 2001 (Cth). This contributed amount is outlined in the company’s constitution and is generally nominal. Due to limited by guarantee companies being public companies that are registered in accordance with the Corporations Act 2001 (Cth), they must comply with the sections of the Act that apply to them.

A Limited by Guarantee Company must have at least three (3) directors (of which two (2) must reside in Australia), one (1) secretary (must reside in Australia) and one (1) member (can reside in Australia or overseas). There is no upper limit on the number of directors, secretaries or members but it is advisable to limit the number of directors and secretaries to 10 and the number of members to 50. It must also have a members guarantee amount and should have its objectives listed in its constitution.

You will need to have the Constitution ready for ASIC to review before the company registration. Because it is a public company, ASIC is required to review the Company’s constitution. Patricia Holdings provide two types of Constitutions for a Public Company Limited by Guarantee, one is for Not-for-profit Public Company Limited by Guarantee and the directors can still be paid; the other one is for Special Purpose Not-for-profit Public Company Limited by Guarantee where the directors cannot be paid. For both types of Constitution, you will need to provide us with the objectives of the company and the guaranteed amount so we can tailor them into the constitution for your company.

You can also provide your own constitution via email or our online order form and we will lodge it with ASIC to register your Public Company Limited by Guarantee.

No, the company does not have a share capital and its funding comes from the public. CLGs have members whose liability is limited to an amount that will be paid on the winding up of the company if the company’s assets are less than its liabilities. This is known as the Members Guarantee. There are no shares allotted thus no share certificates issued.

A Not-for-profit Public Company Limited by Guarantee is not permitted to distribute profits or assets to its members. The company must comply with all obligations of public companies under the Corporations Act 2001 (Cth).

The constitutions that we provide when registering a Public Company Limited By Guarantee (CLG) are suitable if you wish to establish a not-for-profit organisation (NFP), including if you are thinking of registering your NFP organisation as a charity with the Australian Charities and Not-for-profits Commission (ACNC).

Please note however that using any of our constitutions does not guarantee that your application for registration as a charity will be successful because there are a number of factors that the ACNC must consider beyond just your constitution. For more information on the requirements for registration as a charity you can visit the ACNC website at www.acnc.gov.au.

A public company limited by guarantee that is registered as a charity with the ACNC does not have to pay any annual renewal fees to the Australian Securities and Investments Commission (ASIC).

If your CLG is not registered as a charity then it will need to pay an annual renewal fee. The amount of this fee will depend on whether or not it is a ‘special purpose’ company (see below question for more detail).

If you will be registering your company with the ACNC (and wish to be eligible for reduced annual ASIC fees) or if you would like to operate your CLG without the word ‘Limited’ or ‘Ltd’ in its name, you will have to meet the requirements set down for what is called a ‘special purpose company’. In the context of a charity, this means that your CLG will need to be established for charitable purposes and must contain wording in its constitution that prevents Directors from being paid in their capacity as Directors.

If you choose not to register as a charity, but still meet the ‘special purpose’ company requirements, then your annual renewal fee with ASIC will be reduced by around $61.

So, if you do want to operate without the word ‘Limited’ or ‘Ltd’, or if you want to prevent payments to Directors for whatever reason, then our constitution entitled "Limited by Guarantee – special purpose not-for-profit" is the one for you.
If you do want to pay Directors, then the constitution entitled "Company Limited by Guarantee- standard constitution" is for you.

Please note - if you want to operate without the word ‘Limited’ or ‘Ltd’ you must first incorporate your company, then register as a charity with the ACNC and then later apply to ASIC for removal

Warning: While paying Directors in their capacity as Directors does not in and of itself prevent you from being registered as a charity, or even from receiving deductible gift recipient endorsement, it can result in other consequences. For example, requiring ministerial approval to obtain a charitable fundraising authority in NSW, loss of protection under the Civil Liability Act (or equivalent) and being treated differently for the purposes of work health and safety and superannuation laws. We recommend you seek professional advice if you are planning to pay directors in their capacity as directors.

To be eligible to apply for DGR endorsement you must, except in some very limited circumstances, first be registered as a charity with the ACNC.

Please note: Not all charities are eligible for DGR endorsement – i.e. you are not automatically granted DGR endorsement if you are registered as a charity.

To become endorsed as a DGR you must also meet the specific requirements set out for the particular category of DGR that you are seeking. Note there are approximately 50 different categories of DGR.

While each of our Company Limited by Guarantee’s constitutions have been prepared with the fundamental and common requirements for DGR endorsement, we strongly recommend that you seek professional advice about the exact requirements for the DGR category that best suits your purposes and activities before lodging a DGR application.

Unfortunately, no.  ACNC registration requirements can be somewhat complex. While our special purpose not-for-profit constitutions are suitable for registration with the ACNC, Patricia Holdings does not participate in the registration of your charity beyond registering it with ASIC.

A charity is an entity:

• that is not-for-profit;
• all of the purposes of which are charitable purposes for the 'public benefit', or incidental or ancillary to, and in furtherance or in aid of, such purposes;
• which does not have any 'disqualifying purposes'; and
• which is not an individual, a political party or a government entity.

The entity can be (but doesn't have to be) a company limited by guarantee.

However, for an entity to enjoy the tax benefits of being a charity, it must be:

• registered as a charity with the Australian Charities and Not-for-profits Commission; and
• endorsed by the ATO for tax concessions.

For endorsement as a charity, the company must be established for one of the following purposes:

• advancing health;
• advancing education;
• advancing social or public welfare;
• advancing religion;
• advancing culture;
• promoting reconciliation, mutual respect and tolerance between groups of individuals in Australia;
• promoting or protecting human rights;
• advancing the security or safety of Australia or the Australian public;
• preventing or relieving the suffering of animals;
• advancing the natural environment;
• any other purpose beneficial to the general public that may be reasonably regarded as analogous to, or within the spirit of, the above purposes; and
• promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, a territory or another country, in furtherance or protection of one or more of the above purposes.

A company is a "non-charitable not-for-profit" company if:

• it is not carried on for the profit or gain of members; and
• its Constitution (or other governing document) prohibits the company from making distributions of any kind (money or property) to its members; but
• the company does not carry on its business for charitable purposes.

These kinds of companies do not need to apply for endorsement as income tax exempt. Instead, they self-assess their status. However, before doing so they should seek legal advice to ensure the company fits into one of the required categories. Examples of relevant organisations include: a community service organisation, a sporting organisation, an educational institution, a religious organisation. 

The Not-for-profit Pty Ltd Company Registration has been developed mainly for use as the trustee of an ancillary fund (whether a public or private ancillary fund). It can also be used for other not-for-profit purposes, such as a charity if it seeks and obtains charity status. 

The Public Company Limited by Guarantee has been developed for use as a not-for-profit organisation, which may also seek charity status. 

The main differences between the companies are:

• the Not-for-profit Pty Ltd Company Registration product establishes a proprietary company, limited by shares. It has a share capital as per any other proprietary limited company, that is, its funding comes from shareholders and, in limited circumstances, the public. Given the entity is not-for-profit, it is not permitted to distribute profits or assets to its shareholders. The company must comply with all obligations of proprietary companies under the Corporations Act 2001 (Cth).
• the Public Company Limited by Guarantee product establishes a public company, limited by guarantee. The company does not have a share capital and its funding comes from the public. The limit of a member's liability is called a 'guarantee' — a nominal amount the member agrees to pay in the event that the company is wound up. It is not permitted to distribute profits or assets to its members. The company must comply with all obligations of public companies under the Corporations Act 2001 (Cth).

There are various other types of structures that may also be suitable for not-for-profit entities, such as incorporated associations. You must seek your own legal advice about what kind of structure is best for you.