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The Circle is the guiding council of The Companions. Since the Companions have no leader, the Circle serves the function of teachers, administrators and advisers of the organisation. The Circle is headed by a Harbinger which is to the Circle what the Circle is to the Companions.
Every member of the Circle possesses the Beast Blood, and to be inducted into the Circle, the Dragonborn must take on the Beast Blood as well, as seen in The Silver Hand.