Economic Project

Contents

Introduction

Business Registration

~Meaning

~Registration Procedure for Sole Proprietorship and Partnership

~Registration Procedure for Limited Company

~Registration Procedure for Overseas Company

~Registration Fee and Levy

~Payment Methods

~Cancellation

Sole Proprietorship

~Definition

~Popularity

~Set-up process

~Advantages

~Disadvantages

~Reason of suitable for Small Business

~Examples

Partnership

~Definition

~Features

~Forms/Establish

~Liability

~General partnership

~Limited partnership

~Advantages

~Disadvantages

~Tax rate

~Dissolution and Termination

Limited Company

~Meaning

~Advantages

~Disadvantages

~Private limited companies

~Public limited companies

~Shares

~Procedures of Formation

~Taxes

Comparison

Conclusion

Working Table

Private Limited Companies

Meaning

  This type of organization is incorporated by the Companies Act 1948-85. The number of members can range from two to fifty and they provide the financial resources for the undertaking. Membership of the company is restricted to private individuals. The profits are distributed to the members is dividends on their shareholding. Losses are borne by the company. Private limited companies are often local family business and are common in the building, retailing and clothing industries.

Private Limited Company is the most common business unit in Hong Kong. Under this business unit, there are between 2 to 50 owners or shareholders and the company should employ 2 directors (min requirement) and 1 company secretary to manage the company. The shareholders can be same as directors of the company.1

Advantages

1.  Limited Liability

Under common law, no person is responsible for anyone else’s debts without agreement to be so bound. It means that people can invest in a business without worrying about losing personal possessions because their liability to the business is limited to the amount they have invested in it.

2.  Legal Entity

Private Limited Companies have a legal position in their own rights and they are not a group of partners. So, all the assets are owned by the corporation itself. They are not the property of the members.  

3.  Perpetual succession

The corporation exists in its own right. Changes in membership have no effect on the status of the company. It means that it has continuity.

4. Finance is easier to obtain than in sole proprietorship or partnership

Disadvantages

1. Complex to set-up

  Under the Company Ordinance, Limited Companies should have two constitutional documents - the Memorandum of Association and Articles of Association.

  The Memorandum of Association – it includes the name, registered office and objectives of the company, the amount of registered share capital and the description of the work.

  The Article of Association – it is the internal regulation of the company. It describes the organization and management of the company.   

2. Shares cannot be freely transferred or sold without getting consent from other shareholders.2

1 Teach Yourself Business Studies - Peter Fearns

   Hodder & Stoughton Ltd (1998) P.13

2 http://www.sgasc.com/Types%20of%20company%20in%20HK%20%28English%29htm

P.30