Speaking of setting up a Non-Profit Organisation, the word ‘Charity’ usually pops up in the conversation. Many of our clients get confused between these two terms. Read on this blog to understand more. 
 

What Exactly Is NPO?

Why Would You Want to Set up a NPO?

FAQs on Establishing a NPO

Many people have heard of ‘Limited by Shares’, which is a Private Limited Company, for which there would be director and shareholder in the structure. But here you may ask: “What is a ‘Limited by Guarantee’?” Actually, you might be more familiar with Non-Profit Organisation (NPO), which is the more common name of ‘Limited by Guarantee’, having no shareholder in the structure - only director and member instead. Get a better understanding with a clear comparison chart below :
 

“Contribution Type”

For Limited by Guarantee: Every guarantor has to contribute the same and fixed amount of guarantee if the company is going to be dissolved. Just like when you are joining some sort of clubs and you have to hand in certain amount of membership fees.

For Limited by Shares: Every shareholder has to invest a certain amount of share capital. The capital amount depends on how much he/she is willing to invest or how much the number of shares the board allows him/her to buy. The share capital has to be invested during the initial formation and it can be increased in time if the board decides to do so.

Popular FAQs of the TWO Entities

>> Can We Transform from Limited by Shares to Limited by Guarantee?

No, you CANNOT switch from one entity to another since they serve completely different purposes. In that case, you will need to set up a new Limited by Guarantee entity.

>> What Should I Do If I Want to Set up a Charity?

You will need to set up a Limited by Guarantee (NPO) first. While setting up the Limited by Guarantee, you will have to provide a proposal on the objective and a 1 year upcoming plan of this Charity, and submit to us for further review. After the Limited by Guarantee has been formed, you can file your tax exemption application, for which we will assist in applying for such tax exemption under Section 88 of the Inland Revenue Ordinance via the IRD. After the Charity status is approved, you may or may not wish to remove your company suffix ‘Limited’ - if you prefer to do so, our experienced team can handle such application to the IRD for you by taking care of all paperwork.

>> Do I Have to Prepare Any Annual Filing for Limited by Guarantee?

Yes, you must submit Annual Return to update the Government if there are any changes on director and member information, just like any other Limited by Shares. Profit Tax Return would also be needed to file along with the audited financial statement.

>> Please Give Me Some Examples of Limited by Guarantee & Limited by Shares?

• Limited by Guarantee: Sports Association, Recreational Club, Student Union, etc.
     
• Limited by Shares: Trading Company, IT Consulting Agency, Property Sales Agency, etc.

If you have any further questions on these 2 types of incorporation, please feel free to email our Start-up Advisor Team at info@bridges.hk to know more of our advice. 

Have you ever thought about how a Company Signage could enhance your business image? Or did you know directory signage could help facilitate your official business applications to the government authorities? After reading this blog, you may just be surprised at how this simple tool does great things for your business!
 

Strengthen Company Image

Company signage sets at the entrance of a premier business centre or building in HK could be one of the keys to outrun your competitor. Imagine if you want to acquire a service, when you arrive the building there is nowhere showing where the office is, you will probably turn away, and a business opportunity is slipped away.

Or if you are about to engage in business with another start-up company, they gave you an address so you went up for a visit and tried to look into the directory signage, but the company name is nowhere to be seen. Doesn't it look undependable? In the past years we have seen many visitors stand in front of the directory signage board for a while and they left without a word. Not only does company signage present your services and products, but also helps customers to decide what you are providing is for them or not, especially if you are a foreign entrepreneur and people are new to your name. It is also a guiding tool for your business to people.

Leverage Practical Functionality

When submitting applications to government departments or financial institutions, they always require a registered corporate correspondence address that proves your business presence in HK. Thus, your company directory signage will serve as a good proof in such applications like business license application, HK working visa application, bank account opening, etc.

A survey from FedEx once found during parcels or products delivery, people may get confused or even returned from the location when the company signage is omitted at the entrance, and eventually it cannot be sure whether the products are delivered to the right address. Therefore the reason why people registered for company signage is not for maintaining their company image only but also trying to serve the basic and practical purposes such as ensuring they can send out as well as receive their business materials accurately and efficiently. A proper company signage at the entrance can easily project a good presence to represent the company and people are then able to locate it quickly.