Types of Companies in Hong Kong
Types of Companies in Hong KongUpdated on Friday 07th August 2020
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Choosing the right type of company
Investors who want to open a company in Hong Kong must first choose the right type of company according to their business needs. The choice will depend on a series of factors and investors should be well informed when making this decision. Each type of legal entity in Hong Kong has its own particularities and can be more advantageous for one business type or another.
Our lawyers in Hong Kong can help you with specialized counselling so that you can choose the right business form. Typically, the following factors are taken into consideration when choosing the company type in Hong Kong:
- the nature of the business;
- the size of the business;
- the available capital;
- the business needs.
Legal entity types in Hong Kong
The four most common types of companies in Hong Kong are:
- the limited liability company;
- the sole proprietorship;
- the partnership; and
- the foreign company office.
The limited liability company can be a private limited company, a public limited company or a public company limited by guarantee. Our lawyers in Hong Kong can help you incorporate any type of company and give you detailed information as to how each business type can be good for your business plans.
Corporations can also open a representative office in Hong Kong. However, this business structure does not have legal capacity and may be used for a limited scope of business, such as promotional activities or market research.
Limited liability companies in Hong Kong
A limited liability company in Hong Kong is a separate legal entity that has a legal identity separate from its members. According to its type, a limited liability company can be suited for small or medium sized businesses or for large corporations. Any company in Hong Kong needs to be registered at the Companies Registry.
The private limited company in Hong Kong is one of the most popular business forms because the liability of its members is limited only to the amount of investment in the company and the member’s personal assets are not endangered if the company goes into bankruptcy. This type of company is suited for small and medium sized companies.
The public limited company is suited for larger businesses, as the number of shareholders can be larger than 50. These companies are usually listed on the Hong Kong stock exchange and thus hey have to observe different regulations for public disclosure of information.
The public company limited by guarantee does not require a minimum share capital and is thus preferred by some foreign investors. This is a type of company that has the highest degree of liability for its shareholders and it might be suited for charity businesses, clubs or societies.
Foreign companies that want to open an office in Hong Kong can choose to incorporate a branch or a subsidiary in Hong Kong,. There are a number of differences between a branch and a subsidiary and out attorneys in Hong Kong can give you detailed information about each one. Also, our law firm in Hong Kong can give you complete details about the taxation method for each type of company.
Trademark registration in Hong Kong is advisable for those companies that wish to distinguish themselves on the market.
Sole proprietorships and partnerships in Hong Kong
The sole proprietorship is the simplest form of business in Hong Kong and also the easiest to set up. The business is owned and conducted by a single individual who is liable will all his or her assets. Because there is no distinction between the individual and the sole proprietorship, this type of business can be seen as a riskier one but it also has the great advantage of complete ownership.
Partnerships in Hong Kong are set up by two or more individuals who will run a business and will share the profits made. The general partnership is formed between individuals who become liable for the debts of the partnership. It is easy to set up and this type of business can benefit from the experience brought together by the founding partners. Unlike in a general partnership, in a limited partnership, not all of the members are fully liable for the debts of the business, the liability of the limited partner is only as extensive as the amount of the capital investment. The limited partner cannot manage the partnership.
If you want to know more about the advantages and disadvantages of each type of company in Hong Kong, you can contact our attorneys in Hong Kong, we will help you make the best business decision.