Setting up a limited/unlimited company
Under the Business Registration Ordinance (Chapter 310), all persons doing business in Hong Kong, except those who are specially exempted, are required to register for business. Regardless of its representation of size, physical store or online store, a limited/unlimited company should be established within one month after the operation of any business or activity with an aim for profits.
The simplest way to remember the difference is to add the word “responsibility”. While a company has financial liability or litigation, shareholders of a limited company have limited liability, whereas shareholders of an unlimited company have full liability (unlimited liability). In deciding whether to set up a limited or unlimited company, it is important to consider the size of the business and your level of commitment to the business. If it is a business involving more assets and debts, the application for a limited company can protect your personal property. If it is a small business, the money and time costs of starting an unlimited company will be less.
|Being a corporate body with independent legal status. Capable to own assets and sign contracts in the name of the company.
|No independent legal status. Capable to sign contracts in the name of the company, but ultimately the person-in-charge will be the shareholder himself.
|To enter in contracts and debts in the name of the company. If the company is ultimately insolvent, it can choose to liquidate. Shareholders will only lose the amount of investment in the company, without affecting their own personal property.
|Company shareholders have unlimited liability. If the company eventually becomes insolvent, the shareholders must use their own private property to pay the debts of the company.
|Continuation of “life”
|Can last forever unless the company is wound up.
|In the absence of any other agreements, the company must be wound or dissolved if one of its shareholders becomes bankrupt or dies.
All particulars of the company and the changes have to be also disclosed to the Company Registry.
After registration, you only need to renew the business registration and file tax returns as your personal tax returns. No auditing is necessary.
|Documents required for application
- Determine whether a limited company or an unlimited company;
- Draw up the company name;
- Go to the Companies Registry’ Internet Search Centre * to check if the name has be registered before.
- File the company’s application documents and fees.(Online application, in person or by post)
- Collect the Business Registration Certificate;
- Collect the Company Registration Certificate ( for limited companies only)
- Depending on the business requirements, to obtain other necessary licenses, permits, certificates or approvals **
*Website for online registration checking centre: https://www.icris.cr.gov.hk/csci/
** For details, please refer to the website of the Industry and Trade Department:: https://www.tid.gov.hk/tc_chi/aboutus/form/publicform/others/allforms.html
Although one can submit the application in person at the Companies Registry ( 14/F., Government Offices) or by post, yet it will be quicker and more convenient to submit the application online through the “eRegistration”.
For details: https://www.cr.gov.hk/tc/services/register-company.htm
Registration link: https://www.eregistry.gov.hk/icris-ext/apps/uam01?execution=e1s1&m=n
Only to complete a business registration.
For details and application demonstration:
The company’s Green Box
Although the “Green Box” is not a tool required by law, it is usually provided by secretarial companies to ensure that clients have important company documents on hand. The company’s Green Box include :
- Documents required to be kept : Register of Controlling Persons of Significant Persons, Articles of Company, Registration Certificate of the company’s establishment, Business Registration Certificate, copies of the government documents (e.g. NNC1 and NNC3), Statutory Register ( which can be recorded electronically);
- Daily business use : company signature seal, company circle seal;
- Not necessary but occasionally used : company seal, stock book.
Companies that do not have a business address ( such as online stores or Freelance) can register their business with their personal addresses ( including public housing). For the purpose to protect privacy, however, it is recommended that one purchases a Virtual Office service to obtain a company address.
An unlimited company to become a limited company
Many people choose to start an unlimited company because of being a small business and to save the cost. However, as the scale of business turns bigger and bigger, they want to convert to a limited company. In this case, the proprietor is still required to submit an application to the Companies Registry for incorporation of a limited company. After establishment, it is possible to :
- Use the limited company to “buy” the unlimited company business;
- Establish an unlimited company under the name of a limited company;
- Transfer the whole business of the business registration of an unlimited company to a limited company.
For details, please refer to:
Business Registration Office website: https://www.ird.gov.hk/chi/tax/bre_abr.htm#a3
(Ordinances for the business transfer (Creditor Protection)) : https://www.elegislation.gov.hk/hk/cap49