Is a registered company required?

[Morrison]

I have just heard that apart from the sole proprietorship and the company ltd. there is a third form called "company".
The annual registration fee has dropped from over HK 2,000 to HK$ 450.
Does anyone have a link to this, trying to understand the difference in setting this up and in liability.
Thanks

[PDLM]

There are actually 3 types of company that you could register. From the Companies Ordinance:

(1) Any one or more persons may, for any lawful purpose, by signing his or their name or names on a memorandum of association (which must be printed in the English or Chinese language) and otherwise complying with the requirements of this Ordinance in respect of registration, form an incorporated company, with or without limited liability.

(2) Such a company may be either-

(a) a company having, or deemed by virtue of subsection (3) to have, the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Ordinance termed a company limited by shares); or (Amended 6 of 1984 s. 4)
(b) a company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up (in this Ordinance termed a company limited by guarantee); or
(c) a company not having any limit on the liability of its members (in this Ordinance termed an unlimited company).

Or you could register a Sole Proprietorship, a Partnership or an Unincorporated Body of Persons (private club, society, etc).

[Morrison]

Wonderful. Thanks PDLM

Let's say I go for point b)
which means a company limited by guarantee

I assume the minimum guarantee is a few HK$ ?
(Of course I would need more money if I was to stem big projects and want to win the trust of my suppliers )

Can one single person run a company limited or is the minimum req, two persons ?

If it's just one then it would be just like a sole proprietorship but with different liability.
personally unlt vs limited to the amount guaranteed.
Who would opt for a sole proprietorship then and why ?

[PDLM]

If you're just going to guarantee a few dollars then why not have a more normal limited company with just a few dollars worth of shares?

You only need one director (I believe) but a separate company secretary (law firms provide this service for a small annual fee).

I opted for sole proprietorship because I can't foresee any possible liability issues, the accounting is much more straightforward, there is almost no paperwork required to set it up (no MoA, etc) and far less to run it, and the tax position is better for small consulting type businesses (which have very few costs to write off against profits) since you get the personal tax allowances. This could well change if my business stopped being "small" for tax purposes, which is defined as gross revenues of <HK$2M, at which point more accounting/auditing is needed even for a sole proprietorship.

[Morrison]

If you're just going to guarantee a few dollars then why not have a more normal limited company with just a few dollars worth of shares?

I have heard it's a lot of paperwork to set up a Limited Company.
Whereas - I was told - it is not so for a "Company".

You only need one director (I believe) but a separate company secretary (law firms provide this service for a small annual fee).

I assume you refer here to the previously mentioned
option b) company limited by guarantee ?

So I would need one person plus a company secretary for this.
The fee I was quoted was HK$ 2,500 is that in line with your experience ?

Thanks !

[PDLM]

I'm at the limit of my knowledge here, so all I am doing is reading the Companies Ordinance (which I assume you can do also). I see no distinction in most places between companies limited by guarantee and those limited by shares and those with unlimited liability. They all need only one director, but there must be a separate Company Secretary (which can be a body corporate). I see little difference in the paperwork - they all require a Memorandum of Association and essentially the same filings. Those limited by guarantee seem to require more in that they require the guarantees of the members. "Company" is a generic term. Each company must be of one of the three types I listed previously: limited by shares, limited by guarantee, or unlimited.

For company setup (which generally means taking an off the shelf company and changing its name and the particulars of the director(s) etc) then a one-time fee of $2500 is in line with my expectation (but I have no experience of doing this in Hong Kong, only in the UK). For acting as company secretary, and dealing with all the regular filings and so on (but not necessarily including the the accounts) I have seen people quote figures in the range HK$5-10,000 per year. That might include the accounts if they are very straightforward.

Again, I haven't done this. I am simply reading the Companies Ordinance and relaying what I have heard other people report.

[Morrison]

Alright. Thanks a lot, really appreciate all your effort.
I just thought somebody might have some actual in depth knowledge and we can quickly tap from his experience.

I will familiarize with the Companies Ordinance

[Morrison]

This gives a good overview and comparison of company types

Hong Kong Business Structures - Types of Legal Entities - 2010 Guide

Hong Kong Limited Liability Company vs Limited Partnership vs Sole Proprietorship - 2010 Guide

Now I wonder whether a sole proprietorship is "enough of a company" to promote imported FMCGs to wholesale companies such as Watson. Will they take a sole serious ?
Any actual experience ?