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Company Limited by Guarantee vs Society


Company Limited by Guarantee vs Society | Bestar
Company Limited by Guarantee vs Society | Bestar

Company Limited by Guarantee vs Society


Company Limited by Guarantee (CLG) and Society are both legal entities that can be established in Hong Kong. However, they have different characteristics and are suited for different purposes.


Company Limited by Guarantee


A company limited by guarantee is a type of company that does not have any share capital. Instead, its members agree to contribute a certain amount of money in the event that the company is wound up. This means that the liability of the members is limited to the amount they have guaranteed to contribute.


CLGs are typically used for non-profit organizations, such as charities, clubs, and associations. This is because they are not intended to make a profit, and their members do not receive dividends. Any profits that a CLG makes must be reinvested in the organization's objectives.


Society


A society is a voluntary group of people who come together for a common purpose. Societies are not legal entities, but they can be registered with the Registry of Societies in Hong Kong. This registration process is simple and inexpensive, and it provides the society with certain benefits, such as limited liability for its members.


Societies are typically used for informal groups, such as hobby clubs, sports teams, and social clubs. They are not subject to the same regulatory requirements as companies, so they can be more flexible in their operation.


Comparison Table

​Feature

​Company Limited by Guarantee

​Society

Liability of members

Limited to the amount guaranteed to contribute

​Limited

​Purpose

​Non-profit

​Can be profit or non-profit

​Profits

​Reinvested in the organization's objectives

​Can be distributed to members

​Regulation

Regulated by the Companies Ordinance

​Not regulated by the Companies Ordinance

​Registration

​More complex and expensive

​Simpler and inexpensive


Choosing the Right Structure


The best structure for your organization will depend on its specific needs and circumstances. If you are a non-profit organization that does not intend to make a profit, then a CLG is a good option. If you are an informal group that does not need the same level of regulation as a company, then a society may be a better choice.


Here are some additional factors to consider when choosing between a CLG and a society:

  • The size and complexity of your organization

  • The nature of your organization's activities

  • The level of transparency and accountability you need

  • The amount of funding you need

  • Your tax obligations


Seek Professional Advice from Bestar when Choosing the Right Structure for your Organization

Company Limited by Guarantee vs Society


Bestar is a reputable accounting firm with a team of experienced professionals who can provide you with expert advice on the best structure for your organization. We can help you understand the different legal and financial implications of each option and make a recommendation that is tailored to your specific needs.


Here are some of the benefits of using Bestar:

  • We have a deep understanding of the Hong Kong legal and financial system.

  • We can provide you with objective and unbiased advice.

  • We can help you prepare all the necessary documentation.

  • We can keep you up-to-date on any changes in the law or regulations.

If you are considering setting up a new organization or changing the structure of your existing organization, contact Bestar for a free consultation.

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