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Companies

Setting Up a Company Limited by Guarantee in Australia

If you're starting a charity, a community group, a sports club or a family foundation, you'll probably need a legal structure. The structure most funders, banks and government bodies expect is a public company limited by guarantee. Registering a company limited by guarantee with ASIC is only the first step. Your constitution, your membership structure and your board decide who controls the organisation and whether it qualifies for ACNC charity registration and tax concessions. They also decide whether it can receive tax-deductible donations. Getting these settled before registration costs far less than fixing them later. At Abbots Legal, our not-for-profit lawyers set up your organisation properly from the start, so you can focus on your cause.

Consider this if…

  • You are starting a charity, community group, sports club or family foundation
  • You want limited liability for members and national recognition
  • You need ACNC charity registration and tax concessions
  • You want a structure that works across state borders and outlasts founders

How it works

  1. Initial consultation

    We learn about your purpose, your people and your funding plans.

    At the first conversation

  2. Structure and constitution

    We confirm the right structure and draft a constitution tailored to your organisation.

    Before ASIC registration

  3. ASIC registration

    We lodge the application and deliver your company documents.

    After the constitution is settled

  4. ACNC and ATO registrations

    We apply for charity registration, tax concessions and an ABN.

    After company registration

  5. Governance handover

    We brief your board on its obligations so you start with confidence.

    Before the board meets

Fee

Quoted in writing before we start

GST inclusive

The scope, fee and expected timing are confirmed in writing before work begins.

What is a company limited by guarantee?

A company limited by guarantee (CLG) is a type of public company designed for not-for-profit purposes. It differs from a Pty Ltd company in several ways:

  • It has members, not shareholders, and no share capital
  • Each member guarantees a small nominal amount, set in the constitution, which is all they can be asked to contribute if the organisation is wound up
  • It cannot pay dividends to its members, and any surplus must go back into the organisation's purpose
  • It is registered under the Corporations Act and can operate Australia-wide

Why choose a company limited by guarantee?

Limited liability for members. The organisation is a separate legal entity. It signs the leases, employs the staff and holds the funds, and the committee members do not do these things personally. A member's exposure is limited to the guarantee amount.

National recognition and credibility. A CLG is regulated by ASIC, and by the ACNC if it's a registered charity. Grant makers, philanthropic trusts, corporate sponsors and government funders often prefer or require this structure.

It works across state borders. An incorporated association is registered in one state. A company limited by guarantee can operate, fundraise and employ people nationally without extra registration.

Access to charity tax concessions. A properly structured CLG can apply for ACNC charity registration, income tax exemption and GST and FBT concessions. Where eligible, it can also apply for deductible gift recipient (DGR) status, which lets donors claim a tax deduction.

Built to last. The organisation continues as board members, volunteers and founders come and go. This gives donors and the community confidence that it will continue.

Checklist: what you need to register a company limited by guarantee

  • An available company name, which must end in "Limited" or "Ltd" unless an exemption applies
  • At least three directors, with at least two ordinarily living in Australia
  • At least one company secretary who ordinarily lives in Australia
  • A Director ID for each director, obtained before appointment
  • At least one member, and a decision on who can become a member in future
  • A registered office in Australia
  • A constitution setting out your not-for-profit purpose, the members' guarantee amount, the governance rules and the winding-up clause
  • Written consents from each director, secretary and member

What's included in our company limited by guarantee service

  • Advice on whether a CLG or an incorporated association is the right structure for you
  • A tailored not-for-profit constitution drafted to meet ASIC, ACNC and ATO requirements
  • ASIC company registration and Certificate of Registration
  • Director, secretary and member consents, and first board minutes
  • Register of members and officeholders
  • ACNC charity registration application and tax concession endorsements
  • Advice on DGR eligibility and state fundraising licences
  • Governance guidance for your first board, including directors' duties, conflicts of interest and record-keeping

How to set up a company limited by guarantee with Abbots Legal

Initial consultation. We learn about your purpose, your people and your funding plans.

Structure and constitution. We confirm the right structure and draft a constitution tailored to your organisation.

ASIC registration. We lodge the application and deliver your company documents.

ACNC and ATO registrations. We apply for charity registration, tax concessions and an ABN.

Governance handover. We brief your board on its obligations so you start with confidence.

Start your not-for-profit on the right footing

Call (03) 9427 7641 or book a consultation to speak with a not-for-profit lawyer. We'll explain your options in plain English and make sure your organisation is set up properly the first time.

Frequently asked questions

Should we set up a company limited by guarantee or an incorporated association?

An incorporated association is registered under state law. It is generally simpler to run and suits a small local group that will only ever operate in one state. A company limited by guarantee suits organisations that plan to operate or fundraise across state borders, apply for significant grants, employ staff or grow over time. Many funders and government departments also prefer it. Converting later is possible but adds cost and disruption, so choose the structure based on where you expect the organisation to be in five years.

We're founding this organisation. Do we own it, and can we keep control of it?

Nobody owns a company limited by guarantee. It has no shares, you can't sell it, and if it's ever wound up, any surplus must go to another organisation with a similar purpose. It can't go back to the founders. Control comes through membership and the board. The members appoint and remove the directors, and the directors run the organisation. The constitution decides how open or closed the membership is, and founders often get this wrong. If membership is too open, the organisation can be taken over at a general meeting. If it's too closed, regulators and funders may question its independence. We design the membership structure to strike the right balance.

Can we or our family members be paid for working in the organisation?

Yes, within limits. Not-for-profit means the organisation can't distribute profits to its members. It doesn't mean everyone must work for free. The organisation can employ staff, including founders and their relatives, provided the pay is reasonable for the work actually done and any conflicts of interest are properly managed and recorded. Payment of directors' fees is more restricted and depends on your constitution. If you want to drop "Limited" from the organisation's name, the constitution generally must prohibit directors' fees altogether. We'll help you settle this before registration.

We're volunteers. Are we personally liable if the organisation runs into trouble?

Members are only liable for the small guarantee amount. Directors are in a different position. Volunteer directors of a company limited by guarantee owe much the same legal duties as directors of any company. They must act with care and diligence, act in the organisation's best interests, manage conflicts of interest and make sure the organisation doesn't trade while insolvent. Being unpaid is not a defence. The practical protections are good financial oversight, clear board minutes and directors' and officers' insurance. We cover these in your governance handover.

Once the company is registered, is it automatically a charity with tax-deductible donations?

No. This misunderstanding catches out more new organisations than any other. Registering with ASIC creates the company and does nothing else. Charity status requires a separate application to the ACNC. Tax concessions require endorsement from the ATO. DGR status, which allows donors to claim a tax deduction, has a separate and stricter set of requirements that many charities don't meet. Your constitution must contain the right purpose, not-for-profit and winding-up clauses for each of these applications to succeed, so the legal drafting at the start matters.

Related services

Call (03) 9427 7641 or send an enquiry to speak with a not-for-profit lawyer.

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