If you’re setting up a community group, charity, member association, industry body or not‑for‑profit initiative, you’ve probably come across the term company limited by guarantee in Australia.
It sounds technical (and it can be), but the concept is actually pretty practical: it’s a company structure that’s commonly used when you don’t want owners/shareholders taking profits, and you do want a recognised legal entity with clear governance and limited liability.
That said, there are a few traps for new founders. A company limited by guarantee (often shortened to “CLG”) still has serious legal obligations. It needs to be registered with ASIC, it needs directors (and typically a company secretary), it needs rules (a constitution or replaceable rules), and it needs to keep up with ongoing compliance.
Below, we break down how a company limited by guarantee works in Australia, what ASIC expects, and what you should set up from day one so you can focus on running your organisation with confidence.
What Is A Company Limited By Guarantee In Australia?
A company limited by guarantee is a type of public company registered under Australian law, usually used for non‑profits and membership-based organisations.
Instead of shareholders owning the company through shares, a CLG has members.
Those members don’t “own” shares. Instead, they agree to contribute a fixed amount (the guarantee) if the company is wound up.
How The “Guarantee” Works (In Plain English)
The guarantee is usually a small amount, commonly $10, $100, or $500 per member. The key point is:
- Members generally don’t pay the guarantee amount upfront.
- It becomes payable only if the company is wound up and can’t pay its debts.
- Each member’s liability is capped at the guarantee amount (assuming they’ve met their obligations).
This is why the structure is attractive: it provides a form of limited liability while supporting organisations that aren’t built around investors.
Why People Choose This Structure
A company limited by guarantee structure in Australia can be a good fit if you want:
- A separate legal entity that can sign contracts, open bank accounts, and hold assets in the organisation’s name
- Clear governance (directors, members, meetings, decision-making rules)
- Credibility for funding/grants, partnerships, and member trust
- Limited liability for members (up to the guarantee amount)
It’s commonly used for charities, sporting clubs, professional associations, schools, religious organisations, social enterprises (where profits are reinvested), and community groups that have grown beyond an informal committee model.
Does A CLG Have To Be “Not‑For‑Profit”?
Not automatically. A CLG is a company structure, and it can be used for different purposes.
However, it’s most often used for not‑for‑profits, especially where the constitution includes:
- a non‑distribution clause (profits can’t be distributed to members), and
- a winding up clause (any remaining assets go to another similar organisation, not to members).
If you plan to register as a charity (for example, with the ACNC), these clauses are usually essential.
Is A Company Limited By Guarantee Right For Your Organisation?
Choosing the right structure is about balancing liability, credibility, governance, and day‑to‑day admin.
In practice, a company limited by guarantee can be a great option if you’re serious about building an organisation that will outlive its founders and operate with proper governance.
Good Signs A CLG Might Fit
- You’re dealing with grants, donations, or significant funds and want a stronger governance framework.
- You want a structure that’s familiar to government bodies, partners, and major funders.
- You want the organisation to hold assets (like equipment, vehicles, intellectual property, or premises) in its own name.
- You want clearer protections for members through the guarantee model.
When A Different Structure Might Be Better
A CLG isn’t the only option. You might consider alternatives if:
- You’re a small local club and want a simpler setup (for example, an incorporated association may be more appropriate depending on your state and goals).
- You’re building a business for profit and want shareholders and equity investment (a proprietary company limited by shares is often the better fit).
- You want minimal ongoing reporting (CLGs are regulated by ASIC and have ongoing obligations).
If you’re unsure, it’s worth getting advice early, because changing structures later can be time-consuming and may create tax, duty, asset transfer, or governance issues.
How Do You Register A Company Limited By Guarantee With ASIC?
If you’re searching for an ASIC company limited by guarantee, you’re likely looking for the practical setup steps. The main process is registering the company with ASIC and putting your governance documents in place.
Here’s a step-by-step view of what’s involved.
1) Decide On The Organisation’s Basics
Before you lodge anything, get clarity on the fundamentals:
- Name: what will the organisation be called? (You may also need to register a business name if operating under a different name.)
- Purpose: what is the organisation set up to do?
- Membership model: who can be a member, and how do people join/leave?
- Guarantee amount: what amount will members guarantee on winding up?
- Governance approach: how will directors be appointed and removed? How will decisions be made?
These choices will shape your constitution and operational processes.
2) Appoint Directors And Understand Their Responsibilities
A company limited by guarantee must have directors. Even if you’re volunteer-run, directors still have legal duties and obligations.
As a public company limited by guarantee, there are also minimum officeholder requirements to plan for. In most cases, this includes:
- at least 3 directors, and
- at least 1 company secretary (with at least one secretary ordinarily residing in Australia), and
- typically, at least 2 directors who ordinarily reside in Australia.
Make sure directors understand that they’re responsible for governance and compliance - not just attending meetings. For many organisations, setting up clear internal decision-making processes (and documenting them properly) is what prevents disputes later.
Often, organisations will document key board decisions using something like a Directors Resolution Template, especially for important approvals (opening bank accounts, appointing officeholders, adopting policies, entering major contracts).
3) Choose A Constitution Or Replaceable Rules
When registering a CLG, you need to decide whether the company will be governed by:
- Replaceable rules (a default set of rules under Australian company law), or
- A constitution (your organisation’s tailored rulebook).
In the real world, most not‑for‑profits choose a constitution because it lets you tailor things like membership rights, meeting procedures, director appointment rules, and not‑for‑profit clauses.
Depending on how you want to set it up, you might start with a dedicated Company Constitution or formally Adopt A Constitution as part of your establishment process.
4) Register The Company With ASIC
To form the company, you lodge an application with ASIC. Once registered, the company receives an ACN (Australian Company Number).
Registration typically involves providing details like:
- the company name
- the company type (public company limited by guarantee)
- registered office address and principal place of business
- director details (and secretary details, where applicable)
- member guarantee amount
- whether you have a constitution
You’ll also need at least one member at registration (and your constitution will usually deal with how additional members are admitted and recorded).
If you want support getting the company correctly established (and to avoid rework later), many founders choose a structured setup such as a Company Set Up package, especially when governance and membership rules need to be properly designed.
5) Put Your Operational Foundations In Place
Registration is just the beginning. After ASIC registration, it’s common to set up:
- bank accounts and financial controls
- a board meeting schedule and reporting rhythm
- member registers and membership onboarding/offboarding processes
- insurance appropriate to your activities (especially where volunteers or the public are involved)
Even if you’re starting small, having these basics written down can save you from confusion when the organisation grows or leadership changes.
What Ongoing ASIC Requirements Apply To A Company Limited By Guarantee?
It’s easy to assume that once you register the company, the hard part is done. But the reality is that a company limited by guarantee structure in Australia comes with ongoing governance and compliance tasks.
ASIC expects companies to stay up to date and maintain accurate records. If you fall behind, it can create problems ranging from admin headaches to regulatory risk.
Annual Review And Keeping Details Current
Most companies will go through an annual review process. You’ll generally need to:
- review your company details for accuracy
- update ASIC if details change (addresses, officeholders, etc.)
- pay the annual review fee (where applicable)
- maintain your company registers (like members and directors)
Tip: a lot of compliance issues happen simply because organisations change committee members, move premises, or change contact emails without updating ASIC.
Also note: if your CLG is registered as a charity with the ACNC, you may be eligible for reduced or streamlined obligations in practice (for example, some ASIC fees and reporting can be affected), but you still need to ensure the right notifications and processes are followed and that you meet your ACNC obligations as well.
Directors’ Duties Still Apply (Even In Volunteer Organisations)
Directors of a CLG must still comply with directors’ duties. While the specifics depend on your circumstances, the main theme is that directors must act appropriately, with care and diligence, and in the company’s best interests.
If your organisation is handling funds, running programs, employing staff, or signing contracts, good board processes aren’t just “nice to have” - they’re central to risk management.
Financial Reporting And Governance Expectations
Depending on the size and nature of your CLG, your reporting obligations can vary.
Some not‑for‑profits also register as charities and may have additional reporting obligations under charity regulations (separate from ASIC). In many cases, ACNC-registered charities report to the ACNC, and that reporting can interact with (and sometimes reduce) what you would otherwise need to lodge elsewhere - but it doesn’t remove the need for proper internal financial records and governance.
If you’re building funding partnerships or receiving grants, you may also face practical governance expectations (for example, audited accounts, conflict of interest management, and documented decision-making), even where not strictly required.
What Legal Documents Should A Company Limited By Guarantee Have?
One of the fastest ways to reduce risk in a CLG is to document how the organisation works.
Clear documents help you:
- avoid disputes between directors and members
- make decision-making consistent and transparent
- protect the organisation when people join or leave
- show funders and partners that you’re well-governed
Here are the key documents many organisations consider.
Constitution
Your constitution is the organisation’s internal rulebook. It usually covers:
- membership eligibility and member rights
- how meetings are called and run (member meetings and board meetings)
- director appointment and removal
- voting rules
- how conflicts are managed
- not‑for‑profit and winding up clauses (where relevant)
For many organisations, starting with a properly structured Company Constitution is what creates stability and reduces “founder ambiguity” later.
Board Resolutions And Governance Records
Even if you’re small, get used to documenting important decisions. This is especially important when you:
- enter a major contract
- apply for significant funding
- appoint or remove officeholders
- approve budgets or spending thresholds
Having consistent documentation (for example, a Directors Resolution Template) can make governance smoother and easier to hand over when leadership changes.
Volunteer Or Staff Agreements (If You’re Hiring Or Engaging People)
Many CLGs start out volunteer-led, but as you grow you might:
- hire employees (even part-time)
- engage contractors for specialised work
- bring on a CEO, program manager, or admin support
As soon as you have workers, you’ll want to think about clear engagement terms, confidentiality, and workplace expectations. For employees, an Employment Contract helps clarify role duties, pay, and key conditions.
Most non‑profits collect personal information at some stage - member lists, donor databases, event registrations, newsletters, volunteer applications, and website contact forms.
If you’re collecting personal information, a Privacy Policy is often a practical necessity, and in many cases a legal one, depending on your size and activities.
Even where a strict legal obligation may not apply, having clear privacy practices builds trust (especially with donors and vulnerable communities).
Key Commercial Contracts (Funding, Partnerships, Suppliers)
CLGs often operate through relationships - sponsors, funding providers, venues, councils, suppliers, and partner organisations.
Depending on what you do, you may need agreements that clearly set expectations around:
- deliverables and reporting
- how funding can be used (and what happens if it’s not)
- intellectual property ownership (for content, training materials, branding)
- termination rights
- liability and indemnities
This is a common area where “handshake deals” cause stress later, especially when a grant or sponsorship is involved and the parties have different understandings.
Key Takeaways
- A company limited by guarantee structure in Australia is commonly used for non‑profits and member-based organisations because it offers limited liability for members through a set “guarantee” amount.
- A CLG is still a company regulated by ASIC, so you’ll need directors (and typically a secretary), proper governance, and ongoing compliance (it’s not a set-and-forget structure).
- Registering an ASIC company limited by guarantee involves choosing your governance approach (constitution vs replaceable rules), appointing directors/secretary, setting the guarantee amount, and completing ASIC registration.
- Your constitution is one of the most important foundations - it sets the rules for membership, board powers, decision-making, and (where relevant) not‑for‑profit clauses.
- Even small organisations benefit from clear documentation such as board resolutions, staff/volunteer agreements, a Privacy Policy, and well-drafted funding/partner contracts.
- Getting the structure and documents right early can save your organisation significant time and risk as you grow, apply for funding, or change leadership.
Disclaimer: This information is general and doesn’t take into account your organisation’s specific circumstances. CLGs can have additional legal, tax and regulatory requirements (including ACNC obligations if you’re a registered charity), so it’s worth getting tailored advice before you set up or restructure.
If you’d like a consultation on setting up a company limited by guarantee in Australia (or reviewing your constitution and governance documents), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
