A company limited by guarantee is a unique corporate structure commonly used by non-profit organizations, charities, and associations in Hong Kong. Unlike companies limited by shares, a company limited by guarantee does not have shareholders; instead, it has members who agree to contribute a predetermined amount to the company’s assets in the event of liquidation. This structure is ideal for organizations that do not intend to distribute profits to members but instead aim to promote a specific cause or purpose.
RD Escrow offers comprehensive services to assist in the incorporation, management, and compliance of companies limited by guarantee in Hong Kong. Our expertise in this area ensures that your organization is set up and operates in accordance with the legal requirements and best practices.
What is a Company Limited by Guarantee?
A company limited by guarantee (CLG) is a legal entity that is typically established for non-profit purposes, such as charitable activities, professional associations, or social enterprises. The key features of a CLG include:
- No Share Capital: Unlike companies limited by shares, a CLG does not have a share capital and therefore does not issue shares. Members do not hold equity in the company.
- Limited Liability: The liability of the members is limited to the amount they have agreed to contribute to the company’s assets in the event of liquidation. This amount is usually nominal, such as HKD 1 or HKD 10.
- Non-Profit Objective: A CLG is typically formed for non-profit purposes, and any surplus income is reinvested into the organization to further its objectives. Profits are not distributed to members.
- Governance: The governance of a CLG is typically overseen by a board of directors or trustees, who are responsible for ensuring that the company operates in accordance with its constitution and legal requirements.
Incorporation of a Company Limited by Guarantee
Incorporating a company limited by guarantee in Hong Kong involves several steps, and it is important to ensure that the process is carried out in compliance with the Companies Ordinance. RD Escrow provides end-to-end services to assist with the incorporation process, including:
- Drafting the Articles of Association: The Articles of Association outline the governance structure, objectives, and rules of the CLG. We assist in drafting the Articles to ensure that they reflect the non-profit nature of the organization and comply with legal requirements.
- Registration with the Companies Registry: We handle the registration process with the Companies Registry, including preparing and filing the necessary documents, such as the incorporation form and the Articles of Association.
- Obtaining Licenses and Permits: Depending on the nature of the CLG’s activities, additional licenses or permits may be required. We assist in identifying and obtaining the necessary approvals from relevant authorities.
- Appointment of Directors and Officers: We assist in the appointment of directors, trustees, and other key officers, ensuring that the governance structure is in place and compliant with legal requirements.
Ongoing Compliance and Governance
Once a CLG is incorporated, it is important to ensure ongoing compliance with legal and regulatory requirements. RD Escrow provides a range of services to support the management and governance of your CLG, including:
- Company Secretarial Services: We provide company secretarial services to ensure that your CLG meets its statutory obligations, including filing annual returns, maintaining statutory registers, and holding board meetings.
- Corporate Governance Advisory: We offer advice on corporate governance best practices, helping your CLG implement effective governance structures and processes that promote transparency, accountability, and ethical conduct.
- Financial Management and Reporting: Our team assists with financial management, including bookkeeping, accounting, and preparation of financial statements. We ensure that your CLG’s financial records are accurate and compliant with Hong Kong Financial Reporting Standards (HKFRS).
- Tax Compliance: While CLGs are generally exempt from profits tax if they meet certain criteria, it is important to ensure compliance with tax laws. We provide tax advisory services to help your CLG navigate the tax implications of its activities and maintain its tax-exempt status.
Charitable Status and Tax Exemption
In Hong Kong, a CLG that is established for charitable purposes can apply for recognition as a tax-exempt charity under Section 88 of the Inland Revenue Ordinance. RD Escrow assists with the application process, including preparing the necessary documentation and liaising with the Inland Revenue Department.
To qualify for tax-exempt status, a CLG must demonstrate that its activities are exclusively charitable and that its income is used solely for charitable purposes. We provide guidance on structuring your CLG to meet these requirements and maintain compliance with the conditions of tax exemption.
Why Choose RD Escrow for Company Limited by Guarantee Services?
RD Escrow has extensive experience in assisting non-profit organizations, charities, and social enterprises in Hong Kong. Our comprehensive services are designed to support the unique needs of companies limited by guarantee, from incorporation to ongoing compliance and governance.
By partnering with RD Escrow, you gain access to a team of experts who are dedicated to helping your organization achieve its mission while ensuring compliance with legal and regulatory requirements. We provide personalized service, practical solutions, and expert advice to help your CLG operate effectively and achieve its goals.
Whether you are establishing a new CLG or managing an existing organization, RD Escrow is here to support your success in Hong Kong’s dynamic non-profit sector.