Non-profit-making organisation is usually registered as a company limited by guarantee, meaning the company is not limited by shares - the company has no share capital indeed and the liability of members is limited by the articles of association to the amount that the members respectively undertake to contribute to the assets of the company in the event of its being wound up. In practice, the amount is merely nominal, e.g. HK$10 or HK$100. A company limited by guarantee is often used as a device to set up a club, association or charitable body, while there is a group of members but not shareholders. Such company does not distribute its profits to the members but either retain them within the company or use them for some other purposes. If a guarantee company would like to be a charity and exempt from tax, it must be established for purposes which are exclusively charitable according to law and submit a tax exemption application to the Inland Revenue Department (IRD) for approval.
Service Package
Company name search
Certificate of Incorporation (includes HK$170 Government fees for number of members not exceeding 25)
Business Registration License (includes HK$2,250 Government fees)
20 copies of Articles of Association in English
Company chop, authorized signature stamp and common seal
Green Box with company name printed on
Note:
Service fees: HK$12,000 for number of members not exceeding 25; if number of members exceeds 25, additional fees would be applied.
Minimum Requirements
2 members
2 directors
1 company secretary
* The same person can act as the role of member, director and company secretary at the same time.
Processing Time
Approx. 1 month upon signed confirmation.
With the growing number of non-profit organisations in Hong Kong, yet the public is still not quite familiar with this type of entity - a company limited by guarantee. Below please find some popular questions that you may ask for learning more about a guarantee company:
Why set up a guarantee company?
Generally, company limited by guarantee is set up for the purposes of enhancement of education / training (like society or association), religion, relief of poverty, environmental protection, trust and foundation, betterment for the community, etc. Most companies established by this structure are not for profit-marking but they may not be charitable. The main reason to form a guarantee company for a community project or charity is to protect people running the company from personal liability for the company's debts, just as a business may be formed as a company limited by shares for the same reason.
What is the difference between a company limited by guarantee and a company limited by shares?
A guarantee company does not have shares, and is usually formed by a group of members (e.g. 25 members), which means those members do not own the company but are the decision makers. The company’s profits cannot be distributed to the members through dividends and they do not have any claim upon the assets of the company. The members’ liability is limited to the amount that they agree to contribute to the assets of the company in the event of its being wound up. The amount is merely nominal in practice, e.g. $10 or $100.
Can my company limited by guarantee be granted tax exemption?
For an institution or a trust to be a tax-exempt charity, it must be established for purposes which are exclusively charitable according to law, while ‘voluntary’ or ‘non-profit-making’ purposes are not covered. A popular way of establishing a charity is to form a company limited by guarantee under the Companies Ordinance of Hong Kong (Cap 32) that allows for greater transparency and legitimacy. To apply for tax exemption status, it is required to submit the application to the IRD for review under Section 88 of Inland Revenue Ordinance and the result is subject to the Government’s final decision.
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