ExpertACCA · Question 52 · Corporate and Business Law
SCENARIO: Global Water Initiative (GWI) is an NGO transitioning into a formal corporate structure. The founders decide to incorporate as a private company limited by guarantee. They submit their registration documents to Companies House. Before the certificate of incorporation is issued, one of the founders, Sarah, signs a lease for office space in the name of 'GWI Ltd'.
In a company limited by guarantee, what is the extent of the members' financial liability?
SCENARIO: Global Water Initiative (GWI) is an NGO transitioning into a formal corporate structure. The founders decide to incorporate as a private company limited by guarantee. They submit their registration documents to Companies House. Before the certificate of incorporation is issued, one of the founders, Sarah, signs a lease for office space in the name of 'GWI Ltd'.
In a company limited by guarantee, what is the extent of the members' financial liability?
Answer options:
They have unlimited personal liability for all company debts.
They are liable for the unpaid amount on their shares.
They are liable only for the amount they agreed to contribute to the company's assets if it is wound up.
They have absolutely no financial liability under any circumstances.
How to approach this question
Full Answer
Common mistakes
Practice the full ACCA LW — Corporate and Business Law Practice Exam 1
60 questions · hints · full answers · grading