Hong Kong Company Limited by Guarantee: Requirements, Uses, and Key Features
Learn about Hong Kong company limited by guarantee: requirements, uses for non-profits, and how it differs from a company limited by shares.
What Is a Hong Kong Company Limited by Guarantee?
A Hong Kong company limited by guarantee is a legal entity without share capital. It has members, not shareholders. Each member’s liability is capped at the amount they agree to guarantee, HK$1 each. The Companies Ordinance (Cap. 622) governs this structure, which exists for organisations that do not aim to generate profit for distribution to members.
No shares means no ownership in the conventional sense. The company is owned by its members, but no one holds equity that can be sold or transferred for value. The articles of association must prohibit the distribution of profits to members. Any surplus must be applied to the company’s objects, charitable, educational, cultural, or trade-related.
The Companies Registry issues the Certificate of Incorporation and the Inland Revenue Department issues the Business Registration Certificate, just as for a company limited by shares. The incorporation form differs: use Form NNC1G, not Form NNC1.
Hong Kong Guarantee Company Requirements
Incorporating a guarantee company means meeting the same basic structural requirements as any Hong Kong company under Cap. 622, with several important differences.
Members and guarantee. There must be at least one member. Each member signs a guarantee in the articles of association, agreeing to contribute a stated amount if the company is wound up while they are a member or within one year after they cease to be a member.
Directors. At least one director who is a natural person is required. There is no maximum. A director may also be a member.
Company secretary. A company secretary is mandatory. The secretary must be either a natural person ordinarily resident in Hong Kong or a body corporate with a registered office or place of business in Hong Kong. If the company has only one director, that same person cannot also be the sole company secretary.
Registered office. The company must maintain a registered office in Hong Kong. A post office box is not acceptable.
Articles of association. A guarantee company must file its own articles. Unlike a company limited by shares, it cannot adopt the model articles under Cap. 622. The articles must state the company’s objects, the amount of the guarantee, and a clause prohibiting the distribution of profits to members. The Registrar will reject articles that do not comply.
Form NNC1G. File the incorporation application on Form NNC1G, together with Form IRBR1 (the notice to the Business Registration Office) and the articles of association. The Registrar issues the Certificate of Incorporation upon approval.
Hong Kong Non-Profit Company Structure
The guarantee company is the standard Hong Kong non-profit company structure. Charities, clubs, trade associations, professional bodies, community organisations, and other non-profit entities use it.
Because the company has no share capital, it cannot distribute dividends. Any income or surplus must be used to further the company’s objects. Donors, members and the public can see that funds will not be diverted to private profit.
Many guarantee companies apply for tax exemption under section 88 of the Inland Revenue Ordinance (Cap. 112). If the Inland Revenue Department recognises the company as a charitable institution or trust of a public character, its income is exempt from profits tax. This is a separate application from incorporation. It is not automatic.
Draft the articles of association carefully to meet both the Companies Registry requirements and the Inland Revenue Department’s criteria for charitable status. A guarantee company that does not obtain section 88 status is still subject to profits tax on any surplus from trading activities.
Hong Kong Company Limited by Guarantee vs Limited by Shares
| Feature | Company limited by guarantee | Company limited by shares |
|---|---|---|
| Capital structure | No share capital | Shares issued with no par value |
| Members | Members, not shareholders | Shareholders |
| Liability | Limited to the guarantee amount (HK$1) | Limited to unpaid amount on shares |
| Profit distribution | Prohibited by articles | Dividends may be paid to shareholders |
| Incorporation form | Form NNC1G | Form NNC1 |
| Model articles | Not available; bespoke articles required | Model articles may be adopted |
| Typical use | Non-profit, charitable, clubs, trade bodies | Trading, investment, holding companies |
A company limited by shares is the standard trading vehicle. It is used for businesses that intend to generate profit and distribute it to owners. A guarantee company cannot do that. If an organisation expects to have owners who want to sell their interest or receive dividends, the guarantee structure is the wrong choice.
Hong Kong Guarantee Company Incorporation
The incorporation process follows the same general steps as for any Hong Kong company, but with specific documentation.
Step 1: Choose a company name. The name must not be the same as one already on the Companies Registry index, must not constitute a criminal offence, and must not be offensive. Names suggesting a connection with government require consent. The Registrar may direct a change if the name is too similar to an existing one.
Step 2: Prepare the articles of association. This is the most important document. It must set out the company’s objects, the amount of each member’s guarantee, and the prohibition on profit distribution. It must also cover internal management: appointment and removal of directors, holding of meetings, and keeping of records.
Step 3: Complete Form NNC1G. This is the incorporation form for a company not limited by shares. It requires details of the proposed company name, the registered office address, the directors, the company secretary, and the members.
Step 4: Complete Form IRBR1. The application for a Business Registration Certificate. File it together with Form NNC1G.
Step 5: Pay the fees. The government fee for incorporation is payable to the Companies Registry. The business registration fee is payable to the Inland Revenue Department. The Business Registration Certificate is available as a 1-year or 3-year certificate.
Step 6: Receive the certificates. The Companies Registry issues the Certificate of Incorporation and the Inland Revenue Department issues the Business Registration Certificate. The company is then a legal entity.
Ongoing Compliance Obligations
A guarantee company has the same ongoing obligations as any Hong Kong company under Cap. 622.
Annual return. File an annual return with the Companies Registry on Form NAR1. The filing is due within 42 days of the return date. Late filing attracts a higher fee.
Audit. Appoint an auditor and prepare audited financial statements each year. The audit requirement applies regardless of whether the company is non-profit or charitable.
Company secretary. The company secretary must be in place at all times. If the secretary resigns, appoint a replacement promptly.
Registered office. Maintain the registered office address and notify the Companies Registry. File any change on Form NR1.
Significant Controllers Register. A guarantee company must keep a register of persons with significant control, unless it is exempt. Appoint a designated representative to provide the register to law enforcement on request.
Business Registration renewal. Renew the Business Registration Certificate annually, or every three years if the 3-year option was chosen. The Inland Revenue Department sends the renewal notice.
Tax filing. Even if the company is exempt from profits tax under section 88 of the Inland Revenue Ordinance, it must still file tax returns if required by the Inland Revenue Department. A guarantee company that trades or earns income must report it.
Practical Considerations
A guarantee company is not a vehicle for a commercial business. If you intend to operate a trading company, hold investments, or distribute profits to owners, use a private company limited by shares. The guarantee structure is only appropriate for organisations that are genuinely non-profit and whose articles prohibit distribution to members.
The drafting of the articles of association is critical. Poorly drafted articles may be rejected by the Companies Registry or may fail to meet the Inland Revenue Department’s requirements for tax exemption. Engage a professional familiar with Cap. 622 and the specific requirements for guarantee companies.
The liability protection is real: members are not personally liable for the company’s debts beyond their guarantee amount. Directors, however, owe fiduciary duties to the company and may be personally liable for breach of those duties, regardless of the company’s structure.
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