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Introduction to Hong Kong companies

Limited Liability Company
Limited Liability Partnership 
General Partnership
Sole Proprietorship

 

Limited Liability Company


Limited Liability Company
Separate legal entity status
 
One Director & Shareholder required
 
50 shareholder maximum
 
One secretary must be Hong Kong resident
 
Must have Hong Kong registered  address
 
No par value shares allowed
 
Minimum registered capital  not required
This type of company is the most desired form of business entity and there are formalities required to complete for a company to be incorporated in Hong Kong. A company limited by shares has a separate legal status from its members and liabilities of its members are limited by subscription to the shares. Subscriptions of shares are limited to 50 members (members also known as shareholders). It has all the powers as a natural person. It may enter into any contract to conduct any legal business and can own any type of properties. It required at least one director and one shareholder of any nationality and domicile and a secretary must be Hong Kong resident. A limited company in Hong Kong must have Hong Kong address (no postal box address is accepted) but directors and shareholders do not required to have Hong Kong address. No minimum paid capital required and no par value shares allowed. It cannot offer any share to public. The limited company incorporated in Hong Kong cannot migrate.

Note:  A sole shareholder can be appointed as director. A sole director of a company cannot hold the position of being a company secretary and in such case company needs two directors or shareholder. A corporate entity is allowed to be shareholder or secretary but  a company must appoint at least one natural person for the post of director. Limited company does not mean it has limited liability itself but it is the liability of its members or shareholders are limited, in case of default.
 

Limited Liability Partnership Company


Limited Liability Partnership
No separate entity status
 
Formalities required 
 
Must be at least one general partner
 
No cap on the number of partners
 
In case of default, general partner's personal bankruptcy
 
Limited liability option for partners. 
This type of company also required formalities. It is required by the law that there must be at least one general partner (without any limited personal liability) and all other partners may limit their personal liability (any amount agreed among partners) must be registered with Registrar. This concept of personal limited liability similar to Limited Company’s shareholders, partners with personal limited liability are committed to paying the firm debt to the extent of their registered liability but general partner(s) are personally liable for remaining the debt of the Limited Liability Partnership Company. If a general partner cannot pay the debt of the company he may apply for personal bankruptcy.
 
Note: No separate legal entity status concept like a limited company. Limited partners' liability is limited but each general partner is personally liable for debt of the firm. Even though the debt or damage is occurred by the conduct of any other partner. It is better to have deed of partnership or articles of partnership to assign duties and limit powers of partners. 
 

General Partnership Company

General Partnership
No separate entity status
 
No cap on the number of partners
 
No formalities required
 
No option to limit liability
 
All partner liable for debt
 
Not easy to raise capital 
 

General Partnership Company could be formed by oral or written agreement between 2 or more persons (unlimited number of persons). It is similar to Sole Proprietorship Company but instead of one person having a trade name, in partnership two or more persons are having a trade name and may known as ‘a firm’. It does not require any formality, but advice to draft a ‘deed of partnership’ or ‘articles of partnership” to outline the conditions and duties to be agreed among all the partners. To obtain a business registration certificate of partnership, all partners must mention their names in the business registration application and must be duly signed by each partner.
 
Note: It does not have any separate legal entity status. All partners are personally liable for firm’s debt. 

Besides, a partnership can be between one or more corporations known as a joint venture.
 

Sole Proprietorship Company


Sole Proprietorship

No separate entity status

Single trader
 
A single trader himself liable for all the debt of Company
 Sole Proprietorship Company may conduct any trade. A person wishes to trade would apply for a trade name instead of using his own name for business dealings. A person simply has to fill business registration form by mentioning his trade name, business address and nature of the business. No other formalities are required and business registration certificate can be obtained within one working day.
 
Note: This type of company does not have any separate legal entity status from its sole trader. A sole founder is personally liable for his company’s debt. In case of death of its proprietor then the Company will come to end.
 
We provide company incorporation prst-incorporate services, assist in setting up a partnership company and sole proprietorship company. 

If you have any further question, please don't hesitate to contact us.
 
 
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