Incorporated Hong Kong Company Types

Hong Kong incorporated companies are separate legal persons. They may be incorporated under the Companies Ordinance or the Securities and Futures Ordinance. Hong Kong incorporated companies under the Companies Ordinance may take the form a company limited by shares, a company limited by guarantee and an unlimited liability company. Hong Kong incorporated companies under the Securities and Futures Ordinance are open-ended fund companies (“OFCs”).

Company Limited by Shares

A company limited by shares is a company in which the liability of each shareholder is limited to the subscription price for the shares to which the shareholder has agreed to subscribe. Once a shareholder has paid the company the subscription price for the shares for which he has agreed to subscribe, he has no further liability. A company limited by shares is by far the most common type of Hong Kong incorporated company.

Company Limited by Guarantee

A company limited by guarantee is a company in which each member agrees to contribute a pre-agreed amount to the company in the event that the company is wound-up. A company limited by guarantee does not have any share capital. A company limited by guarantee is often used for charitable or non-profit endeavours.

Open-Ended Fund Company

OFCs are special types of companies designed to serve as fund vehicles. They are companies with share capital and the liability of shareholders is limited. Unlike a company limited by shares under the Companies Ordinance, OFCs may segregate assets and liabilities into different sub-funds. This means that the assets of one sub-fund cannot be used to satisfy the liabilities of another sub-fund.

Moreover, OFCs allow for redemption of shares without capital maintenance restrictions which apply to companies limited by shares. As a result, it possible for an investor to liquidate his investment at any time.

OFCs are well suited for hedge funds and enjoy broad exemption from Hong Kong profits tax.

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