A hybrid Company is a company limited by shares and by guarantee. The principle of limitation of liability operates as follows;
Members who are shareholders, have their liability limited to the amount unpaid, if any, on the shares respectively held by them.
Members who have given a guarantee, have their liability to the amount they have undertaken to contribute from time to time, and in the event of it being wound up.
In some jurisdictions a Hybrid company is referred as a ‘quasi-trust”. Hybrid Companies or quasi-trusts are common for use where civil law countries are involved as such countries do not normally recognize the legality of trusts. The Hybrid Company is also a very useful tax planning tool as it may be set up so as not qualify as a Controlled Foreign Corporation. A GBC1 or GBC2 may be set up as a company Limited by guarantee or as a Hybrid Company.