Irish Companies Limited by Guarantee CLG : Liability for Non-Profits

Thinking about starting a non-profit in Ireland? You’re in the right place! Let’s explore why a Company Limited by Guarantee (CLG) could be your ideal choice. In this friendly guide, we’ll dive into the world of CLGs, uncover their fantastic benefits, and see how they stack up against other Irish business structures.

What is a Company Limited by Guarantee (CLG)?

Companies Limited by Guarantee are commonly used for non-profit organisations that require a legal corporate status. This form of company is preferred by those who wish to create an organisation for charitable or professional purposes, while simultaneously benefiting from limited liability and a separate legal entity.

Under the Companies Act 2014, a company limited by guarantee can be incorporated with as few as one member and no maximum number of members, although the exact number of members must be confirmed in the Company constitution. A Company Limited by Guarantee must appoint a minimum of two directors however, there is no maximum number. 

Companies Limited by Guarantee do not have a share capital, and there is no requirement for the members of the company to provide funds to the organisation. Instead, members act as guarantors, agreeing to contribute a nominal amount (typically €1) in the event of the company’s dissolution.

To summarise, the key features of a CLG are:

• Limited liability protection for members

• Separate legal entity status

• No share capital requirement

• Suitable for non-profit and charitable purposes

• Governed by the Companies Act 2014

Benefits of Forming a CLG in Ireland

1. Limited Liability Protection

One of the primary advantages of a CLG is the limited liability it offers to its members. This means that personal assets are protected in case of company debts or legal issues.

2. Separate Legal Entity

As a distinct legal entity, a CLG can:

• Enter into contracts

• Own property

• Sue or be sued in its own name

• Continue to exist despite changes in membership

3. Credibility and Trust

CLGs are often perceived as more credible and trustworthy, especially in the non-profit sector. This can be beneficial when seeking funding, partnerships, or public support.

4. Flexibility in Membership

CLGs can be incorporated with as few as one member, with no maximum limit on the number of members. This flexibility allows for easy scaling of the organisation as needed.

5. Tax Benefits

Many CLGs qualify for tax exemptions or preferential tax treatment, particularly those with charitable status. This can significantly reduce the financial burden on the organisation.

A possible disadvantage in forming a company such as this, particularly in relation to charitable causes, is the costs associated with maintaining compliance with company law regulations. These costs should be considered before incorporating a Company Limited by Guarantee.

Who Should Consider a CLG Structure?

CLGs are ideal for organisations that:

• Operate on a non-profit basis

• Require a formal legal structure

• Want to limit personal liability

• Need to build trust with stakeholders

Types of Organisations Suited for CLG Structure:

• Charities and philanthropic organisations

• Educational institutions and associations

• Sports clubs and community groups

• Professional societies and trade associations

• Residents’ associations

• Cultural organisations

• Environmental groups

Suggested article: To compare CLGs with other company structures, such as Private Limited Companies (LTD) and Public Limited Companies (PLC), explore the guide: Register a Company in Ireland: Step-by-Step Guide (2025).

How to Set Up a CLG in Ireland

Are you looking to set up a CLG structure in Ireland? Here are the key steps to follow:

Step 1: Choose a Unique Company Name

Select a name that reflects your organisation’s purpose and ensure it’s not already in use. The name must end with “Company Limited by Guarantee” or “CLG”.

Step 2: Appoint Directors and a Company Secretary

• Minimum of two directors required

• At least one director must be a resident of the European Economic Area (EEA)

• Appoint a qualified company secretary (can be one of the directors if there are two or more)

Step 3: Draft the Constitution

Create a constitution document that outlines:

• The company’s objectives

• Membership rules and procedures

• Governance structure

• Dissolution process

Step 4: Register with the Companies Registration Office (CRO)

Submit the following to the CRO:

• Form A1 (company incorporation form)

• Company constitution

• Statement of guarantee

• Statutory declaration

Step 5: Set Up Proper Governance Structures

Establish:

• Board of directors

• Consistent meeting timetables

• Financial management procedures

• Compliance monitoring systems

For detailed information on company formation services at Nathan Trust, including CLGs, visit: Company Incorporations.

Compliance Requirements for CLGs

To maintain good standing, CLGs must:

1. File annual returns with the CRO

2. Maintain proper financial records

3. Conduct annual general meetings (AGMs)

4. Update the CRO on any changes in company structure or leadership

5. Comply with relevant charity regulations if applicable

CLGs vs. Other Business Structures in Ireland

CLG vs. Private Limited Company

• CLGs lack shareholders and do not distribute dividends.

• CLGs are centered on non-profit activities.

• In contrast, private limited companies aim to generate profits and have shareholders.

CLG vs. Sole Trader

• CLGs provide limited liability protection, whereas sole traders face unlimited personal liability.

• CLGs possess a distinct legal identity, unlike sole traders.

• CLGs can include multiple members, while sole traders work alone.

Expert Tip: Choosing the Right Structure

Are you looking for an expert tip when deciding between a CLG and other business structures? These are the points to consider for your organisation:

• Long-term goals

• Funding needs

• Governance requirements

• Liability concerns

For personalised advice on selecting the best structure for your non-profit or charitable organisation, reach out to our team of experts at Nathan Trust. 

Is a CLG Right for Your Organisation?

Imagine having a rock-solid foundation for your non-profit in Ireland – that’s what Companies Limited by Guarantee (CLGs) offer. They’re like a protective shield, giving you credibility and a clear roadmap for running your organisation smoothly. But let’s be honest, they do come with some homework in terms of compliance and admin tasks.

Thinking about setting up a CLG? Feeling a bit overwhelmed by Irish company structures? Don’t worry, we’ve got your back! At Nathan Trust, we’re not just advisors, we’re your partners in this journey. Our team is here to walk you through every step, making sure you’re making choices that’ll set your organization up for success. Let’s work together to bring your non-profit vision to life!

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