Setting up a Non-Profit / Charitable Organisation in Hong Kong

There are two options for registering a non-profit legal entity in Hong Kong:

(A) Register as a Company under the Companies Ordinance, or

(B) Register as a Society under the Societies Ordinance

(A) Company

To incorporate a Company, an organization must comply with Memorandum and Articles of

Association. After that it can proceed to register with Companies Registry
(http://www.info.gov.hk/cr/) .

Many charities and non-profit organisations opt for this.

The entity follows the usual steps to register a Company limited by “guarantee” instead of limited
by “shares”, because there is no capital involved. Similar to the structure of a private limited
company, a non-profit organisation has a Board of Directors, members, and a local secretary.
The members can either be individuals or corporations.

The process of incorporating a Company is around 1 month for non-profit organisations.

Subjected to Companies Registries’ approval, a non-profit organisation can be incorporated

without the word "Limited" (in its company name). However, the processing time can be very
long, e.g. one year, depending on the case.

(B) Society

To register as a Society, an organization must register with the Societies Office of the Police
Department (http://www.police.gov.hk/)

Many less formal industry associations and social/recreational groups opt for this.

Advantages

Cost - minimal. A society is free of the statutory controls which companies are subject to, and
can be inexpensive to run. There is no fee for registering under the Societies Ordinance.

Simplicity – set-up process is simple and hassle-free. A registered society can be very simple
to run. Minimal formalities are required and administrative complexity can be kept to a
minimum.

Disadvantages

Unincorporated structure - One drawback of an unincorporated body is that if the

organisation becomes inactive, great difficulties can sometimes be encountered in identifying

The Government of the Hong Kong Special Administrative Region 15F, One Pacific Place, 88 Queensway, Hong Kong
Tel: (852) 3107 1000 Fax: (852) 3107 9009 Web: www.InvestHK.gov.hk Contact: Philip Kung Email: pkung@InvestHK.gov.hk
 the persons with the authority to take decisions as to the disposal of the assets, or locating a
quorum having power to take decisions. Personal liability - Both members of the
management committee and sometimes the members of the association itself may incur
personal liability.

Business Registration with the Inland Revenue Department

Whether a non-profit organization registers as a Company or a Society, it must also complete

Business Registration with the Inland Revenue Department
(http://www.ird.gov.hk/eng/tax/bre.htm)

Non-Profit Organizations versus Charitable Organisations

What is a Charity?

A charity must be established for public benefit and for purposes which are exclusively
charitable according to law. Charitable purposes are classified into four heads:

a. relief of poverty;
b. advancement of education;
c. advancement of religion; and
d. other purposes of a charitable nature beneficial to the Hong Kong community

Tax Implications

Not all voluntary or non-profit organisations are charities, however worthy their causes may
be. Only non-profit organisations that qualify for Inland Revenue Ordinance Chapter 112
Section 88 are charitable organizations, and as such, are entitled to tax exemption status in
Hong Kong.

Please note that donations made to organizations without charitable status cannot be
tax-exempt.

How to Set Up a Charity

To incorporate a charity, one begins by following the above procedures required in setting up
a non-profit organisation. For further information on how to obtain recognition of tax
exemption status (Inland Revenue Ordinance Chapter 112 Section 88), please refer to:

Inland Revenue Department: http://www.ird.gov.hk/eng/tax/ach_tgc.htm

Inland Revenue Ordinance Chapter 112 Section 88:

http://www.legislation.gov.hk/blis_ind.nsf/e1bf50c09a33d3dc482564840019d2f4/23688a014
29858c6c825648000410048?OpenDocument

The Government of the Hong Kong Special Administrative Region 15F, One Pacific Place, 88 Queensway, Hong Kong
Tel: (852) 3107 1000 Fax: (852) 3107 9009 Web: www.InvestHK.gov.hk Contact: Philip Kung Email: pkung@InvestHK.gov.hk