- A hybrid company is a company limited by guarantee and having a
The Hybrid Company is a fusion of the two standard forms of
Limited Company, namely a Company Limited by Guarantee and a
Company having a Share Capital.
- The members of the former type of company undertake to
contribute capital to the company (as defined in its Memorandum
of Association) in the event that the company becomes insolvent
or goes into liquidation. The members of the latter type of
company contribute capital to become a member (i.e. to become a
- Companies Limited by Guarantee typically are used to establish
mutual associations, charities, clubs and non-profit making
organisations as the members own the company in common but no
individual member has any personal right or interest therein.
Companies Limited by Guarantee and having a Share Capital have a
variety of uses by virtue of the flexibility offered by
- Furthermore there are advantages in using such an entity in
preference to a trust or a foundation. Hybrid Companies can have
two or more classes of member.
- The first class will be the registered members (or shareholders)
who will be the controlling members. These are registered
members who will not have any right to distributions of profits
but will have voting and administrative powers. The
principle power of the shareholders is to elect directors to
manage the company.
- The second class will be the beneficial members whose identities
are not in the public domain and who are the only persons
entitled to share in the profits of the company although
distributions from the company can only be authorised by the
- Subsets of members with different rights can be created through
the addition of other classes of beneficial members.
Advantages of the Hybrid
The major advantage of a Hybrid over a normal Private Limited
is that it can be structured so that economic interest
is separate from control.
The major advantages of a Hybrid over a Trust are that a Hybrid
is not subject
to the rule against perpetuities, for example an Isle
of Man Trust has a
maximum life of 150 years, and it can trade.
The major advantage of a Hybrid over a Foundation is that of
cost. A hybrid
company is comparatively less expensive compared to a
The articles of association of a Hybrid can provide for the
appointment of a
Protector (in the same manner as trusts) where the
the directors and whose authority is required, inter
alia, to elect members
and to dispose of assets.