How to Set up a Non-Profit Organization in Hong Kong

Have you ever wondered how people have turned their charitable goals into non-profit organizations in Hong Kong? Well, the process may not be as hard as you think. Company registration in Hong Kong is an easy and quick process, and it also applies to non-profit organizations and foundations.

Why More And More People Opt For Non-profit Organizations?

The goal of any nonprofit organization is to offer knowledge, services or research to benefit the broader community or general public using the majority of the organization’s funds. These organizations do not keep their profits, but rather re-invest the funds into services, programs or research. Business owners operating nonprofit organizations experience various advantages due to running their business in this manner.

These advantages include:

• Tax benefits
• Legal Entity
• Limited Liability
• The satisfaction of helping people.
• The eligibility of public and private grants.

Before we dive deeper into the details, first you should know the difference between a charity and a non-profit making business.

Non-profit Or Charitable Organizations In Hong Kong

While all charities are nonprofits, not all nonprofits are charities. A non- profit organization is based on the simple premise that none of the corporation’s net profit from donations, membership fees, or any business activities will benefit any individual. There are many different types of nonprofit organizations. Many homeownership associations, clubs, and other various organizations are nonprofits; often, though, these types of organizations are formed as mutual benefit nonprofit organizations, as they do not benefit the general public. Those non-profits that do help the general public are typically the best-known type of nonprofit—we call them charities.

What is a charity?

A charity is a nonprofit whose purpose is to, in some way, benefit the general public. A charity’s goals are philanthropic and aim to improve the quality of life for the community and beyond. Below, you’ll find examples of organizations that generally fall under a charitable definition:

• Churches or associations of churches.
• Educational organizations.
• Hospitals and medical research organizations.
• Organizations that provide support for state colleges or universities.
• Governmental units of Hong Kong.

Charity is not equivalent to the non-profit organization including non-governmental organization (NGO) and voluntary organizations and trusts. Hence, not all Non-profit organizations are charity. However, a charity must be non-profit making.

Regardless the objective of “non-profit making,” a qualified “charity” organization is a specific form of organization which must be enrolled and registered under the Welfare Department of Hong Kong and list in charitable donations and tax-exempt charities of The Inland Revenue Department.

The Inland Revenue Department grants tax exemption to only eligible Charity organization but no authority to exempt a voluntary or non-profit organization.

A charity is supposed to be fixed for public benefit and for purposes which are completely charitable as per the law.

Charitable Purposes Categories

The charitable purposes for an organization are generally classified into four different categories. They are as:

• Relief of poverty
• Advancement of education
• Advancement of religion, and
• Other charitable acts beneficial to the Hong Kong community

Each organization is analyzed by merit on a case by case basis, as it is not possible to lay down any precise definition of what kind of charity will be offered to the general public.

However, investors who want to open a Hong Kong company and register it as a non-profit making organization should be aware of the acts and activities that qualify as charitable under the directives of the Inland Revenue Department of Hong Kong. Not to mention, it is only regarded as such as long as the organization performs these acts, keeping in mind the benefit of the Hong Kong community.

What are Your Legal Options To Incorporate?

It’s simple! Just set up a company in Hong Kong.

Most of the charities and non-profit organizations opt for this. Moreover, entities follow the usual steps to register a company limited by guarantee instead of limited by shares, since there are no funds involved.

Similar to a private company, a non-profit making organization has a board of directors, members (individuals or corporations) and a local or a social secretary. The process takes around one month. When applying you will be required to write up the company’s mission, vision and target audience.

Please Note: Subjected to Companies Registries’ approval, a non-profit organization 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.

Set Up A Non-Profit Organization in Hong Kong

Non-profit organizations or charitable institutions can be used to provide assistance and aid in some sectors like education or health care. These voluntary or non-profit organizations must qualify as a charity to benefit from a tax exemption from the Hong Kong Inland Revenue Department.

The non-profit organizations can be easily set-up in the form of a trust in Hong Kong. At the same time, investors can open a company.

The legal status of a charity of Hong Kong will be that of a limited liability company, and the investor should choose to set-up a company for charitable purposes instead of a fund.

The company registration process includes a few basic steps, which are mentioned below:

First of all, you need to pay the agency’s fee and choose a name for your new company. Your Hong Kong agency will then check the name availability that you have selected, or if it is already taken.

After that, you will have to send the following documents;

• A photocopy of your passport
• A copy of an official certificate as a proof of your residency
• A questionnaire with standard questions such as your address
• Your passport no. and the name of the shareholders and directors

If you are planning to open the company alone, then you can be the director and sole shareholder as well in Hong Kong.

Once all the documents have been received and reviewed, the process will start to incorporate your company. After it is incorporated, you will receive the official documents stating your company as officially incorporated.

That’s all! The whole process should take around five working days to get the company registered.

Are you seeking a reliable agency that can help you to set up your Hong Kong company?

If you are still not convinced with this information and looking for more detailed information on the set-up and the taxation system of non-profit organization in Hong Kong, then simply contact our company registration team in Hong Kong.

We assure to provide you with the very best and are dedicated to offering world-class services that will not only make you stand out but will take you and your business to new heights.