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. 

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

Trademark is important. Even the Romans used a ™ for their swords thousands of years ago.

Getting a trademark for your business is definitely a smart move because the business name or appearance of your product is a valuable asset. Let us explain what a trademark can do for your company and the tips of the trademark application in HK. Ready to safeguard your names / products that could be the swords of your company?
 

What Can Trademark Do for You?

Trademark, the mark “™” is usually used for distinguishing products and services of a particular company / an individual owner from those of others in the market.

Yet, bear in mind that the HK Companies Registry and HK Trade Marks Registry are 2 different authorities. Some of our clients get confused with these two departments, but having the company registered does not mean it would automatically register for your trademark or you will be entitled to any trademark rights.

In other words, if you would like to enjoy the exclusive right to use your company’s name or logo, it is inevitable to get a trademark, by which you can use it in relation to the products / services / inventions of yours and it will save you a lot of hassles when your products or services provision get more popular in time. In fact, some clients might come late (they just ignored this part from the start and suddenly remembered after a couple of years of the incorporation), then found out their business / product name has already been taken by others in their preferred category (i.e. a class of trademark, like machine tools; cooking; telecommunications; etc.) and so they couldn’t register in that category now. Because some businesses may have ignored the importance of trademark and eventually suffered from the plagiarising behaviour at the end, realising they should have taken this step earlier. 

Talking about the exclusive trademark right, many people mix up “™” and  “®”. Generally, the “™” symbol can be used whether the trademark is registered or not.  But the “®” symbol means this trademark is a registered one, and you are entitled to the exclusive trademark right provided by the Trade Marks Registry. In other words, by obtaining this right, your company can then apply the “®” symbol next to your company’s name or logo as an identification. You can take legal actions against any parties that violate the trademark law, such as using your trademark without your consent / agreement, to prevent anyone to take your trademark’s benefits (could be company name, products, inventions, ideas, etc).

Be the First-Mover in Your Market

Moreover, having a trademark can also be a first-mover advantage for your company, you can easily dominate the market if you have a newly-invented product or service. Any newcomers would then be hard to get an identical trademark anytime soon. In essence, it gives you a chance to become the market leader if you act quickly with the trademark registration.

According to our years of experience, if a HK company owns a registered trademark, it will be a lot easier to cooperate with her mainland China partners because those Chinese companies tend to believe you are a reputable company and they are willing to pay extra for your products / services, which makes the whole trademark registration very worthwhile.

Easy-to-Prepare Materials for Registration

Before kicking off the registration, you just have to provide :

• The trademark you would like to register graphically
   
• What products / services will be covered by this trademark? (i.e. baby foods, hygienic and beauty care, etc.)
   
• Would you like an official search / non-official search first? (to ensure your trademark is available for registration)
   
• Information of the trademark’s owner

5 Steps for HK Trademark Registration

Trademark registration sounds complicated yet it is not as hard as you thought. Our experienced advisor will guide you step by step throughout the whole process, whether you are a local or overseas firm. Here we’ll give you some ideas :

1. File the Application

Gather all necessary information of your product / creations / services and we will assist you in submitting the application. In general, the application procedure can take as little as 6 months.

2. Deficiencies Checking

The Trade Marks Registry will conduct a thorough check on the application and provided documents. The authority will get in touch with us if further information is required.

3. Search and Examination

The Trade Marks Registry will then perform a proper search to see if any identical or similar trademark has already been registered. The authority will also review and see if the submitted trademark is proper and fits the Trademark Ordinance’s requirements.

4. Objections (possible to occur)

If the requirements are not met, the Trade Marks Registry has the authority to object to the application. Yet, applicants are granted 6 months for amendments in order to meet the requirements.

5. Registration

Once your trademark has been accepted for registration, it will be published in the Hong Kong Intellectual Property Journal. If no opposition by a 3rd party is made, the Trade Marks Registry will enter your trademark into the trademarks register and you will be issued with a certificate of registration, meanwhile, the notice of the registration will be published in the Journal too. As the owner of a registered trademark, your rights take effect from the filing date of the application, which allows you to use it for 10 years.

How to Make Your Trademark Stand Out?

- Be creative, emphasise the uniqueness of your trademark, for instance, in the food industry, using “MEAT FOOD” instead of “MEET FOOD” might be objected by the Trade Marks Registry since the chance of getting a similar trademark is massive.

- No description of the products in terms of quantity or quality like “100 Chicken Wings” or “Quality Chicken Wings”.

- No geographical name like “Milano Fashion”.

- Use your invented product name would be the best since as it would most likely be innovative.

If you are not sure whether you are having a trademark idea similar to others, shoot us an email at info@bridges.hk or call +852 2159 9666. Our on-site Trademark Team will help ease the application process and smoothen your journey.