
A company limited by guarantee is a popular structure in Hong Kong for corporations, charitable organization and non-profit associations. The organization does not distribute profits to its members. Instead, they will be reinvested in operations. This guide covers the key steps to setting up a Company Limited by Guarantee in Hong Kong and their advantages.
What is a Company Limited by guarantee?
A company limited by guarantee is an organization in which the payments of members are limited to a specific amount in the company’s articles of association. Unlike a limited shareholding company, it does not have share capital. It is for organizations that focus on promoting cultural, educational, and charitable causes.
Interests of a Company Limited by Guarantee in Hong Kong
Separate legal entity: The company has the legal capacity to enter into contracts. Own property and prosecute on their own behalf
Limited Liability: A member’s liability is limited to the amount of the security contribution.
Credibility: Structure provides legitimacy and transparency. This is often necessary for grants and donations.
Tax Exemption: Eligible organizations can request tax exemption from the Internal Revenue Department (IRD).
How to Establish a Company Limited by Guarantee
- Choose a Name
Choose a unique name for your company that meets the company registration requirements. Avoid using sensitive words like “charity” and “trust” that require prior approval.
- Prepare Documents
You will need the following:
Articles of Association: This defines the goals and activities of the company.
Form NNC1G: States the particulars of the company limited by guarantee
Registered Office Address: It has to be a physical address in Hong Kong.
- Appoint Directors and Members
There must be at least one director and one member. It can be a person or an organization. But at least one director must be a natural person.
- Register with the company registry
Submit the necessary documents along with the registration fee to the Company Registrar. After approval, you will receive a company registration certificate.
- Apply for Business Registration
Register with the IRD and get your Business Registration Certificate, renewable annually.
- Open a Bank Account
Create a bank account in your company name to receive donations. Aid and other receipts
- Apply for tax exemption (if any)
If your company’s purpose is for charity, file an application with the IRD for tax exemption.
Compliance Requirements
After registration, companies limited by guarantee must meet ongoing compliance obligations.
Annual Returns: File with the Companies Registry to update company information.
Audit Reports: Prepare annual audited financial statements.
Meetings: Hold regular meetings with members to discuss operations and compliance.
Final Thoughts
Setting up a Hong Kong Company Limited by Guarantee is easy. But it is important to give careful attention to company formation and legal and compliance requirements. Whether it is donations or non-profit establishments, this structure provides a good framework to achieve your objectives.
Need Help?
If you are seeking professional help, let FastLane HR provide you with the best solution for smooth establishment.