Why Form a Hong Kong Company ?

These are some of the advantages of trading with a Hong Kong limited company :

A limited company is a corporation ,i.e. a separate legal person distinct from the members, whereas a partnership is merely the aggregate of the partners and a sole proprietor is the same legal person in business and personal life

The result is :-

  1. the debts and contracts of a limited company are those of the company itself and not those of the members, whereas in the case of a partnership every partner is jointly and severally liable with the other partners for all the firm debts and obligations incurred while he is a partner.

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  2. A limited company exists until it is wound up. It is not affected by dealth, bankruptcy, mental disorder or retirement of any of its members.

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  3. The property of a limited company belongs to and is vested in the company. It is not affected by change of ownership of shares in the company. In a partnership the property belongs to the partners and is vested in them. This means that there are changes of ownership of, and in the formal title to, the firm¡¦s property from time to time on the death or retirement of a partner or trustee. In a company, transfer of shares does not affect the title of the company¡¦s assets.

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  4. Subject to any restrictions in the articles, shares in the company may be transferred easily or mortgaged without the consent of the other shareholders.

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  5. Limited liability for the shareholders. Liability in the case of a company limited by shares is limited to the amount unpaid on the shares held.

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  6. Management of the company can be separate from ownership and therefore provides continuity after shareholder changes.

    7.
  7. The taxation of companies is often more ¡¥flexible¡¦ than other types of organisations. The scope of deduction for expenses is wider than that for a sole proprietor or partnership.

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  8. A limited company is comparatively easier than a proprietor or partnership to raise capital to finance its operations.

    9.

And the disadvantages¡K¡K

  1. More formalities to be observed and therefore more publicity, e.g. filing of articles of association, keeping company registrar up to date with changes, filing of annual return.

    2.
  2. A limited company must keep accounting records and must appoint an auditor who must be a member of the Hong Kong Society of Accountants and hold a practising certificate. The tax authorities require audited accounts to be filed with the tax return.