Company Limited by Guarantee

May 1, 2023

The YREF, a company limited by guarantee, received a subsidy of Rs 2 crore through the National Dairy Development Board (NDDB). The organization is purportedly operated by Sanjay Prakash Rai Sherpuria, who was detained on charges of deceiving individuals and obtaining funds by falsely presenting his alleged connections within the government.

About Company Limited by Guarantee

A company limited by guarantee is a type of company owned by a group of individuals who pledge to pay a certain amount if the company is wound up. In this type of company, the liability of the members is limited to the amount they have pledged to pay. This means that if the company becomes insolvent or is closed down, the members are only liable to pay the amount they pledged and nothing more. This type of company is commonly used for non-profit and charitable organizations where any profits earned are reinvested into the business.

Not for Profit or Charitable Company

A company limited by guarantee is referred to as a ‘not for profit’ or ‘charitable company.’ This is because its purpose is to serve a social cause and not to generate profits for the members. The company’s primary objective is to serve a particular cause, such as education, healthcare, or social welfare, and any profits earned are reinvested into the business. It often enjoys certain tax benefits and exemptions from certain regulations.

Members as Guarantors

In a company limited by guarantee, the members act as guarantors. This means that they pledge to pay a certain amount in the event of the company being wound up or becoming insolvent. However, the members do not own any shares in the company, and they are not entitled to any profits or dividends.

Understanding Youth Rural Entrepreneur Foundation (YREF) and BMF Initiative

Youth Rural Entrepreneur Foundation (YREF) is an organization that aims to promote entrepreneurship among rural youth in India. The organization provides training and financial assistance to young people who want to start their own businesses. YREF runs several programs, including the Breed Multiplication Farm (BMF) initiative.

The Breed Multiplication Farm (BMF) program aims to provide farmers with heifers of cattle and buffalo breeds that have high genetic value. This program was granted financial aid in the form of a Rs 2 crore subsidy that was authorized by the Union Ministry of Fisheries, Animal Husbandry & Dairying.

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