English Important Things to Know About Limited Companies in Hong Kong
After Hong Kong company formation, there are some important things to know about limited companies in Hong Kong. First, limited companies are characterized by the limited number of shares for each member and its one of the most widely adopted types of juridical entities in Hong Kong. Second, a limited company has to be included in the Companies Registry and must obtain a Business Registration Certificate within a period of 30 days after commencing its operation.
Legal Status
A Hong Kong company has its own separate legal identity which is independent of its owners. Possession of legal status has the following effects:
- The company can enter into an agreement with its members
- The company can sue or be sued based on the contract or agreements entered into
- The company can sue or be sued under its own name
- The company enjoys perpetual succession unless there will be winding up or dissolution of business affairs
- The company can incur obligations on its own behalf
- The company can own properties as well as vested rights
This type of business is formed by registering under the Companies Ordinance. Hence, certain formalities have to be complied with, including the preparation of the articles of association, written memorandum and payment of registration fee.
Transfer of Ownership
The ownership of a public company can easily change hands; consequently, its shares can be freely transferred. On the other hand, shares in private companies are restricted due to certain limitations that were embodied in their articles. In terms of ownership, the same can change easily.
Size and Management
Limited companies in Hong Kong are composed of 2 to 50 persons, excluding their members. Unless elected as a director, a member has no automatic right to meddle in managing the company. If one wants to assist in managing the business, the best thing to do is to obtain a directorial seat. Members were given the right to approve or disapprove certain company resolutions, including board appointees. In practice, the owner of a small private business serves as the manager, as well.
A company should have the following:
- 2 directors
- 2 shareholders
- 1 company secretary
Overlapping capacities are generally allowed for these 3. For instance, one can both be a director and a shareholder at the same time. One of them could also serve as the company secretary.
Shareholders and directors need not be a resident of Hong Kong. However, the secretary has to be a resident of the place or a body corporate with its place of business or registered office in Hong Kong.
Taxes and Liabilities
Limited companies are subject to profits tax with no right to individual assessment. When it comes to the obligations of its members, the amount is restricted to the amount left unpaid on their shares. This is what the term “limited liability” means.
It does not pertain to the business itself which remains entirely responsible for its obligations but to the extent of its assets. In cases where winding up of business affairs would ensue, the owners cannot be made to answer for the debts that were incurred by the company.
Source:
Bizformation.org
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