They are formed by two or more people who agree to come together to achieve a common goal and has a separate legal existence to its founders, ie it can own property, borrow money, sue and be sued, etc. They are subject to the rules and regulations stipulated in the Companies Act and follow all the same procedures that a company limited by shares has to follow, for example: submitting a Memorandum and Articles of Association as well as Form 10 and 12 to Companies House and awaiting a Certificate of Incorporation; electing a board of directors to oversee the organisation’s activities; filing Annual Accounts and Reports to Companies House. However, there are significant differences, for example: members do not contribute share capital as they do not purchase shares in the business; members cannot take any benefits; funds must be for charitable purposes only; members guarantee they will pay a fixed sum towards the liabilities of the company which they will pay in the event the company is wound up; if the company is wound up, the funds cannot be distributed to the members and must be transferred to another NPO.