Many people have heard of ‘Limited by Shares’, which is a Private Limited Company, for which there would be director and shareholder in the structure. But here you may ask: “What is a ‘Limited by Guarantee’?” Actually, you might be more familiar with Non-Profit Organisation (NPO), which is the more common name of ‘Limited by Guarantee’, having no shareholder in the structure - only director and member instead. Get a better understanding with a clear comparison chart below :
 

Contribution Type

For Limited by Guarantee: Every guarantor has to contribute the same and fixed amount of guarantee if the company is going to be dissolved. Just like when you are joining some sort of clubs and you have to hand in certain amount of membership fees.

For Limited by Shares: Every shareholder has to invest a certain amount of share capital. The capital amount depends on how much he/she is willing to invest or how much the number of shares the board allows him/her to buy. The share capital has to be invested during the initial formation and it can be increased in time if the board decides to do so.

 

Popular FAQs of the TWO Entities

>> Can We Transform from Limited by Shares to Limited by Guarantee?

No, you CANNOT switch from one entity to another since they serve completely different purposes. In that case, you will need to set up a new Limited by Guarantee entity.

 

>> What Should I Do If I Want to Set up a Charity?

You will need to set up a Limited by Guarantee (NPO) first. While setting up the Limited by Guarantee, you will have to provide a proposal on the objective and a 1 year upcoming plan of this Charity, and submit to us for further review. After the Limited by Guarantee has been formed, you can file your tax exemption application, for which we will assist in applying for such tax exemption under Section 88 of the Inland Revenue Ordinance via the IRD. After the Charity status is approved, you may or may not wish to remove your company suffix ‘Limited’ - if you prefer to do so, our experienced team can handle such application to the IRD for you by taking care of all paperwork.

 

>> Do I Have to Prepare Any Annual Filing for Limited by Guarantee?

Yes, you must submit Annual Return to update the Government if there are any changes on director and member information, just like any other Limited by Shares. Profit Tax Return would also be needed to file along with the audited financial statement.

 

>> Please Give Me Some Examples of Limited by Guarantee & Limited by Shares?

  • Limited by Guarantee: Sports Association, Recreational Club, Student Union, etc.
       
  • Limited by Shares: Trading Company, IT Consulting Agency, Property Sales Agency, etc.

 

If you have any further questions on these 2 types of incorporation, please feel free to email our Start-up Advisor Team at info@bridges.hk to know more of our advice. 

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Speaking of setting up a Non-Profit Organisation, the word ‘Charity’ usually pops up in the conversation. Many of our clients get confused between these two terms. Read on this blog to understand more. 
 

A NPO can serve different purposes, like sharing interests, arranging social gatherings, or even targeting to serve the local community.

 

What Exactly Is NPO?

Non-Profit Organisation (NPO) is generally an organisation that is created not to attain monetary achievement, which means their ultimate purpose is NOT to generate additional revenue. NPO can serve many different purposes, some for recreational interests, some for networking and some for community purpose.
 
In HK, there are 2 mainstreams of NPO.
 
A) Limited by Guarantee: It needs to be registered through HK Companies Registry & Inland Revenue Department (IRD). This type of entity is mainly for recreational purpose or socialising purpose. 
 
B) Charitable Organisation: It is also needed to be registered through HK Companies Registry & Inland Revenue Department, with the aim that is exclusively charitable. In general, our team would help the client set up the Limited by Guarantee first, and then apply for the Charity status through the Inland Revenue Department. The purposes must be served under the following 4 categories -
 
1) Relief of poverty
2) Advancement of education
3) Advancement of religion
4) Other purposes of charitable nature that serve and are beneficial to the HK Community
 

Why Would You Want to Set up a NPO?

Having a NPO is more like treating a hobby seriously, something you always wish to do but have no idea where to start with. Think of having a profitable organisation is like the need for reputation and achievement, while having a non-profit is to fulfill the needs for affiliation and networking. One way or another, you would want one of them or maybe both.
 
Now you see a NPO includes all sorts of organisation that does not look for monetary outcome but it could be as simple as practicing something that you are really interested in with a group of like-minded people and taking it into the next stage, to spread it out; or just doing good for the community without any profits in return (of course you can still collect fees from your members just that all revenues will be used for the organisation’s expenses). 
 

FAQs on Establishing a NPO

>> Can Every Company Secretary Service Provider Help to Set up a NPO?
Yes, a normal company secretary service provider can help in forming a NPO, yet they might lack such experience in dealing with different kinds of NPO. Therefore, it's safer to seek assistance from a service provider which specialises in NPO set up like the BRIDGES team.   
 
>> Can Every NPO Be Tax Exempted?
Not really, as setting up the Charitable Organisation needs to go through an application process of tax exemption, and after getting the approval from the IRD, the charitable status can then be granted and you can start to receive donations. 
 
>> Can Every NPO Accept Donations?
Not every NPO can accept donations, only Charitable Organisation can accept donations from the public.
 
>> What Happen If I Still Have a Bunch of Questions?
BRIDGES can provide you with a FREE professional consultation session on NPO setup, thus your queries can be addressed and cleared with our preceding case studies and experience sharing. Email info@bridges.hk to arrange an appointment.
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Trademark is important. Even the Romans used a ™ for their swords thousands of years ago.

Getting a trademark for your business is definitely a smart move because the business name or appearance of your product is a valuable asset. Let us explain what a trademark can do for your company and the tips of the trademark application in HK. Ready to safeguard your names / products that could be the swords of your company?
 

 

What Can Trademark Do for You?

Trademark, the mark “™” is usually used for distinguishing products and services of a particular company / an individual owner from those of others in the market.

Yet, bear in mind that the HK Companies Registry and HK Trade Marks Registry are 2 different authorities. Some of our clients get confused with these two departments, but having the company registered does not mean it would automatically register for your trademark or you will be entitled to any trademark rights.

In other words, if you would like to enjoy the exclusive right to use your company’s name or logo, it is inevitable to get a trademark, by which you can use it in relation to the products / services / inventions of yours and it will save you a lot of hassles when your products or services provision get more popular in time. In fact, some clients might come late (they just ignored this part from the start and suddenly remembered after a couple of years of the incorporation), then found out their business / product name has already been taken by others in their preferred category (i.e. a class of trademark, like machine tools; cooking; telecommunications; etc.) and so they couldn’t register in that category now. Because some businesses may have ignored the importance of trademark and eventually suffered from the plagiarising behaviour at the end, realising they should have taken this step earlier. 

Talking about the exclusive trademark right, many people mix up “™” and  “®”. Generally, the “™” symbol can be used whether the trademark is registered or not.  But the “®” symbol means this trademark is a registered one, and you are entitled to the exclusive trademark right provided by the Trade Marks Registry. In other words, by obtaining this right, your company can then apply the “®” symbol next to your company’s name or logo as an identification. You can take legal actions against any parties that violate the trademark law, such as using your trademark without your consent / agreement, to prevent anyone to take your trademark’s benefits (could be company name, products, inventions, ideas, etc).

 

Be the First-Mover in Your Market

Moreover, having a trademark can also be a first-mover advantage for your company, you can easily dominate the market if you have a newly-invented product or service. Any newcomers would then be hard to get an identical trademark anytime soon. In essence, it gives you a chance to become the market leader if you act quickly with the trademark registration.

According to our 18 years of experience, if a HK company owns a registered trademark, it will be a lot easier to cooperate with her mainland China partners because those Chinese companies tend to believe you are a reputable company and they are willing to pay extra for your products / services, which makes the whole trademark registration very worthwhile as it just costs you less than HK$100 per month for owning the 10-year trademark right.

 

Easy-to-Prepare Materials for Registration

Before kicking off the registration, you just have to provide :

  • The trademark you would like to register graphically
     
  • What products / services will be covered by this trademark? (i.e. baby foods, hygienic and beauty care, etc.)
     
  • Would you like an official search / non-official search first? (to ensure your trademark is available for registration)
     
  • Information of the trademark’s owner

 

5 Steps for HK Trademark Registration

Trademark registration sounds complicated yet it is not as hard as you thought. Our experienced advisor will guide you step by step throughout the whole process, whether you are a local or overseas firm. Here we’ll give you some ideas :

1. File the Application

Gather all necessary information of your product / creations / services and we will assist you in submitting the application. In general, the application procedure can take as little as 6 months.

2. Deficiencies Checking

The Trade Marks Registry will conduct a thorough check on the application and provided documents. The authority will get in touch with us if further information is required.

3. Search and Examination

The Trade Marks Registry will then perform a proper search to see if any identical or similar trademark has already been registered. The authority will also review and see if the submitted trademark is proper and fits the Trademark Ordinance’s requirements.

4. Objections (possible to occur)

If the requirements are not met, the Trade Marks Registry has the authority to object to the application. Yet, applicants are granted 6 months for amendments in order to meet the requirements.

5. Registration

Once your trademark has been accepted for registration, it will be published in the Hong Kong Intellectual Property Journal. If no opposition by a 3rd party is made, the Trade Marks Registry will enter your trademark into the trademarks register and you will be issued with a certificate of registration, meanwhile, the notice of the registration will be published in the Journal too. As the owner of a registered trademark, your rights take effect from the filing date of the application, which allows you to use it for 10 years.

 

How to Make Your Trademark Stand Out?

- Be creative, emphasise the uniqueness of your trademark, for instance, in the food industry, using “MEAT FOOD” instead of “MEET FOOD” might be objected by the Trade Marks Registry since the chance of getting a similar trademark is massive.

- No description of the products in terms of quantity or quality like “100 Chicken Wings” or “Quality Chicken Wings”.

- No geographical name like “Milano Fashion”.

- Use your invented product name would be the best since as it would most likely be innovative.

 

If you are not sure whether you are having a trademark idea similar to others, shoot us an email at info@bridges.hk or call +852 2159 9666. Our on-site Trademark Team will help ease the application process and smoothen your journey.

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