Establishing a Charity in Hong Kong

Establishing a Charity in Hong Kong | Bestar

Establishing a Charity in Hong Kong

Establishing a charity in Hong Kong involves a few key steps and decisions. Here's a breakdown to get you started:

1. Defining Your Charity's Purpose:

• Charitable Objectives:  Hong Kong law recognizes four main charitable purposes: poverty relief, education advancement, religion advancement, and other purposes benefiting society.  Ensure your charity falls under one of these categories. https://www.hkreform.gov.hk/en/docs/charities_se.doc

• Public Beneficiary: Your charity must benefit the general public or a significant portion of it. Restricted beneficiaries based on unreasonable geographical limitations or other factors can hinder your charity's legal status.

2. Choosing a Structure:

• Society: A less formal option with simpler registration and lower costs through the Societies Office. However, management committee members might incur personal liability.

• Company Limited by Guarantee:  A more formal structure with limited liability for its members. Requires registration with the Companies Registry.

3. Registration Process:

• Documents:  Prepare the necessary documents based on your chosen structure, such as application forms, identification documents, a constitution outlining your purpose and governance, and proof of your operating address.

• Fees:  Registration fees apply depending on the chosen structure.

Detailed Breakdown of Establishing a Charity in Hong Kong

Here's a deeper dive into the requirements and processes for setting up a charity in Hong Kong.  

1. Defining Your Charity:

• Charitable Purpose: Ensure your charity's primary objective falls under one of the recognised charitable purposes:

• Relief of poverty

• Advancement of education

• Advancement of religion

• Other purposes for the benefit of the community (e.g., environmental protection, animal welfare)

• Public Benefit:  Your charity's activities must benefit the public or a substantial portion of it. Avoid overly restrictive beneficiary criteria based on location, religion, or other factors that limit public benefit.

2. Choosing a Structure:

There are two main options for structuring your charity:

• Society:

• Pros: Simpler and faster registration process with the Societies Office. Lower registration fees.

• Cons: Management committee members might hold personal liability for the society's debts. Limited fundraising capability compared to a company limited by guarantee.

• Company Limited by Guarantee (CLG):

• Pros: More formal structure offering limited liability for its members.  Greater flexibility in fundraising and attracting donations.

• Cons: More complex registration process with the Companies Registry. Higher registration fees compared to a society.  Requires compliance with stricter governance and reporting regulations.

3. Registration Process:

The specific documents and steps involved in registration will depend on your chosen structure. Here's a general outline:

For a Society:

• Documents:

• Application form (NC1)

• Constitution outlining your society's objectives, management structure, and dissolution procedures.

• Proof of identity and residence for at least two office-bearers (committee members).

• Proof of a registered office address in Hong Kong.

• Process:

• Submit the completed documents to the Societies Office.

• Pay the registration fee (currently HK$60).

• Await approval, which can take several weeks.

For a Company Limited by Guarantee (CLG):

• Documents:

• Application form (Incorporation Form) for a company limited by guarantee.

• Articles of Association outlining your CLG's objectives, governance structure, and distribution of profits (which must be reinvested in charitable activities).

• Notice to Business Registration Office.

• Proof of identity and residence for at least one director and the company secretary (can be the same person).

• Proof of a registered office address in Hong Kong.

• Process:

• Submit the completed documents to the Companies Registry.

• Pay the registration fee (varies depending on the number of members).

• Await approval, which can take several weeks.

4. Additional Considerations:

• Tax Exemption:  Once registered, you can apply for tax exemption from the Inland Revenue Department (IRD) to further benefit your charity.

• Ongoing Requirements:   Both societies and CLGs have ongoing filing and reporting requirements.  Societies need to file annual reports with the Societies Office, while CLGs need to file annual returns with the Companies Registry and the IRD. Depending on your income level, you might also need to have your accounts audited annually.

Additional Resources:

• For a detailed breakdown of the requirements and processes, consider consulting these resources:

  • https://www.bestar-asia.com/post/establishing-a-charity-in-hong-kong
    

• The Inland Revenue Department's website on tax concessions for charitable institutions: https://www.ird.gov.hk/eng/tax/ach.htm

• A guide to registering a non-profit company in Hong Kong: https://bestar-asia.com/

How Bestar can Help

Bestar can be a valuable asset throughout the process of establishing and running your charity in Hong Kong. Here's how we can provide specific guidance and support:

• Choosing the Right Structure:  We can advise you on the most suitable structure for your charity (society or CLG) based on your goals, operational complexity, and fundraising needs.

• Drafting Legal Documents:  We can ensure your constitution or Articles of Association are compliant with legal requirements and clearly define your charity's purpose, governance structure, and management responsibilities.

• Registration Process:  We can navigate the registration process with the Societies Office or Companies Registry, ensuring all necessary documents are prepared accurately and submitted efficiently.

• Tax Exemption:  We can guide you through the application process for tax-exempt status with the Inland Revenue Department (IRD), maximizing the financial benefits for your charity.

• Ongoing Compliance:  We can advise you on your ongoing filing and reporting obligations with the relevant government departments, ensuring your charity remains compliant.

• Risk Management: We can help identify and mitigate potential legal risks associated with your charity's operations and activities.

• Governance Best Practices: We can advise on best practices for corporate governance,  ensuring your charity is managed transparently and ethically.

In addition to these specific advantages, Bestar can also:

• Stay Updated on Legal Changes:  We keep you informed about any changes in laws and regulations that may affect your charity.

• Connect You with Resources:  We can assist with accounting, fundraising, or other needs your charity may have.

• Provide Objective Advice:  We can offer impartial professional advice based on our experience and knowledge of the non-profit sector in Hong Kong.

Overall, Bestar can significantly streamline the process of establishing your charity, ensure legal compliance, and protect your organization from potential risks. This allows you to focus your time and energy on fulfilling your charitable mission.

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