Guarantee Company
Candlefocus EditorThe goal of a guarantee company is to provide limited liability protection to its members while allowing the respective company’s activities to be carried out without overextending or overexposing the members’ finances. When setting up the company, the members dedicate part of their allotted assets to the guarantee company. This setup is beneficial because the company’s assets are managed separately from personal funds and assets. This is largely attractive to property management companies and other related businesses whose services may benefit from limited liability protection.
A guarantee company does not operate as an ordinary limited company and it also does not have the same structure as an ordinary limited company. All members are members of the company and are jointly liable for any personal debts. This unique form of company structure is most commonly used in the United Kingdom though by no means limited to this area.
The decision to set up a guarantee company is beneficial for businesses who anticipate potential legal claims for services rendered. It is often attractive in industries where the individual overseeing the operation holds responsibility for contractual obligations. Work including pensions, trustee investments, and debt collection have been some of the more popular services to use this company structure. This type of company is important in that it is usually able to provide limited liability protection in the event of legal claims, disputes or other evitable consequences because of contractual obligations of the members.
By making the switch to a guarantee company, each associate into the company obtains a far superior level of protection. Moreover, if the business goes bankrupt, anyone else’s assets that were not dedicated to the company will not be at risk. This offers a higher level of financial protection to members who, while they’re allowed to take part in the company’s activities, would not endure the same financial risks in the event of any legal proceedings.
In conclusion, a guarantee company provides much needed protection for businesses operating within the United Kingdom, Ireland, Scotland, and Wales who would otherwise be exposed to potential legal claims. It is a specific type of limited liability entity that shields both individuals and groups of members from having to surrender a high portion of their personal assets in the event of any legal dispute or action. Businesses looking to expand into the United Kingdom and who require a higher level of personal protection should consider setting up a guarantee company structure.