CLG Memorandum UK: What It Is & How It Works
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If you're forming a Company Limited by Guarantee (CLG) in England or Wales, the Memorandum of Association is one of the foundational pieces of paperwork you'll need to get right. It's a short document, but it carries real legal weight: it records who the founding members are and confirms their agreement to contribute a set amount if the company is ever wound up.
Unlike a company limited by shares, a CLG has no share capital, so the guarantee provided by each member is what sits at the heart of this document. This guide walks through what a CLG Memorandum actually does, how it interacts with the Articles of Association, and the points founders most often trip over when putting one together. It's written for directors, trustees of incorporated charities, and anyone setting up a non-profit or membership body.
What this document is
The Memorandum of Association for a Company Limited by Guarantee is the legal statement signed by the initial members (known as subscribers) when the company is first registered at Companies House. Each subscriber confirms their wish to form the company and agrees to become a member of it.
They also undertake to contribute a specified sum, often a nominal amount such as one pound, towards the company's assets if it is wound up while they are a member, or within a year of them ceasing to be one. Since the Companies Act 2006 came into force, the Memorandum's role has been stripped right back.
It no longer sets out the objects of the company or the internal rules, those now live in the Articles of Association. What remains is essentially a snapshot of the founding moment: a record of who started the company and the guarantee they committed to.
Once the company is incorporated, the Memorandum cannot be amended. It simply stands as a historical record of formation.
How to use this document
- Identify the subscribers. Work out who will be the founding members of the company. For a CLG this is often a small group of directors, trustees, or founding committee members. Every subscriber named in the Memorandum must sign it, and each one will be treated as a member from the date of incorporation.
- Decide on the guarantee amount. Each member needs to agree the sum they are willing to contribute if the company is wound up. Most CLGs use a nominal figure, commonly one pound per member, because the guarantee is intended to give creditors a minimum level of assurance rather than to fund the business. This figure should be consistent across subscribers unless there is a clear reason to vary it.
- Use the prescribed statutory wording. The Memorandum for a CLG must follow the format set out in regulations made under the Companies Act 2006. The wording is short and largely fixed, so the task is less about drafting and more about completing the prescribed statements correctly with the company name and subscriber details.
- Pair the Memorandum with suitable Articles. The Memorandum works alongside the Articles of Association, which govern how the company is actually run. Founders should decide whether to adopt the model articles for a CLG, adopt them with modifications, or use entirely bespoke articles. Charitable CLGs in particular often need tailored articles that satisfy Charity Commission requirements.
- File with Companies House on incorporation. Submit the Memorandum together with form IN01 and the Articles of Association when applying to register the company. Once incorporation is granted, the Memorandum is fixed and forms part of the company's permanent public record. Keep a signed copy with your statutory company records.
Common questions
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £89.
Common questions
Q Is a Memorandum still needed under the Companies Act 2006?
Yes, but its role is much narrower than under previous legislation. For companies incorporated on or after 1 October 2009, the Memorandum is a short statement confirming that the subscribers wish to form a company and agree to become members. It no longer contains the objects clause or internal rules, which now sit in the Articles of Association.
Q What's the difference between the Memorandum and the Articles of Association?
The Memorandum is a one-off formation document recording who founded the company and the guarantee they gave. The Articles are the ongoing rulebook, covering how directors are appointed, how decisions are made, how members are admitted, and similar governance matters. The Articles can be amended after incorporation; the Memorandum cannot.
Q Can the Memorandum be changed after the company is registered?
No. Once the company is incorporated, the Memorandum is fixed as a historical record of the formation. If you need to change how the company operates, for example its governance rules or membership provisions, those changes are made to the Articles of Association through a members' resolution rather than by altering the Memorandum.
Q How much should each member guarantee?
There is no legally required minimum or maximum. Most Companies Limited by Guarantee set the amount at a nominal figure such as one pound per member. The purpose is to provide a small fund for creditors in the event of insolvency, not to capitalise the company. Some organisations choose slightly higher figures, but this is uncommon.
Q Do charitable companies use the same type of Memorandum?
A charitable CLG uses the same statutory Memorandum format, but the Articles of Association need to be carefully drafted to meet Charity Commission requirements, including appropriate objects, a non-distribution clause, and a dissolution clause. Many charities adapt model charity articles rather than relying on the standard Companies House model articles for a CLG.
Q What happens if a member stops being a member of the CLG?
A member remains liable for their guarantee amount while they are a member and for up to one year after ceasing to be a member, if the company is wound up during that period. After that window closes, former members have no further obligation under the guarantee. This is a key reason many CLGs keep the guarantee amount nominal.
Q Can I set up a CLG without professional help?
You can, and many small non-profits do register directly with Companies House. However, because the Articles of Association shape how the company runs for years to come, it is often worth getting input before you file, particularly if the company will seek charitable status, have multiple classes of member, or hold significant assets.
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £89.
Sources
This guide is based on primary UK law and official guidance.
- LegislationCompanies Act 2006legislation.gov.uk
- Guidance · UK GovCompanies House – Register a Private or Public Company (IN01)gov.uk
- Guidance · UK GovModel Articles for Companies Limited by Guaranteegov.uk
- Guidance · UK GovCharity Commission – Setting Up a Charitygov.uk
Legal helpline
Unsure how a CLG structure should work for you?
The Memorandum is only half the picture, the Articles of Association are where the day-to-day governance of your company is set. An experienced legal adviser can talk through how a CLG structure fits your plans based on what you describe on the call.
- A plain-English explanation of how the Memorandum and Articles work together for what you describe
- Practical perspective on whether a CLG suits your specific situation
- What to watch out for when choosing or modifying model articles in your case
- Answers to your specific questions about setting up a guarantee company
Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.