Companies limited by guarantee (“CLGs”) are most often formed by charities or non-profit organisations requiring a corporate status, which will allow them to enjoy a limited liability status.
Once a CLG obtains its charity or Institutions of Public Character (“IPC”) status, it would be regulated by both the Accounting and Corporate Regulatory Authority (“ACRA”) and the Commissioner of Charities (“COC”).
To date, there are more than 2,000 registered charities registered with the COC.
Charities are increasingly venturing into revenue-generating business activities to generate additional income to support their charitable works or to provide goods or services to their members or clients.
Such business ventures are not new in the non-profit sector. What has changed in the past decade is the breadth of interest and increase in such initiatives. Revenue-generating initiatives can be found in almost every non-profit domain, from social services to the environment, regardless of the size of an organisation.
This has given rise to growing concerns on the extent to which charities are getting involved in revenue-generating business activities. Such business activities should not undermine the charity’s focus and distract the charity from its exclusively charitable purpose. A charity should not engage or spend a significant amount of its resources on non-primary business activities.