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Should I Incorporated vehicles or Unincorporated vehicles ?

Home > Hong Kong Company Formation > Should I Incorporated vehicles or Unincorporated vehicles ?

Should I Incorporated vehicles or Unincorporated vehicles ?

  • Unincorporated vehicles
  • Unincorporated vehicles (sole proprietors and partnerships) are usually easier and cheaper to form. They are not required to disclose most of the information for public inspection but the owner will be personally liable for all debts and obligations of the business.
  • Unincorporated vehicles are not a popular form of business in Hong Kong mainly because of the risks involved and the problem of transfer of ownership and raising fund during the course of business.
  • Incorporated vehicles (limited companies)
  • Incorporated vehicles (limited companies) are relatively more expensive to form and operate, but the liability of owner will be limited and it is easier to expand or transfer ownership.
  • Incorporated vehicles (limited companies) is the most popular form of business in Hong Kong. There are also a lot of legal advantages of using a limited companies to carry on a business.

Here is a summary and comparison of Unincorporated vehicles and Incorporated vehicles (limited companies) :

  • No. of partners
  • Unincorporated vehicles : 1 for sole proprietor / 2-20 for partnerships
  • Incorporated vehicles (limited companies) : At least 1
  • Registered with Company Registration
  • Unincorporated vehicles : Not required
  • Incorporated vehicles (limited companies) : Required
  • Accounting record
  • Unincorporated vehicles : Required
  • Incorporated vehicles (limited companies) : Required
  • Audit requirement
  • Unincorporated vehicles : Not required
  • Incorporated vehicles (limited companies) : At least once per year by certified public accountant
  • Disclosure of company information
  • Unincorporated vehicles : Not required
  • Incorporated vehicles (limited companies) : Financial statements (not for private companies), company directors, secretary, shareholding structure, charges, etc are required to file with the Company Registration for public inspection
  • Startup costs
  • Unincorporated vehicles : Lower
  • Incorporated vehicles (limited companies) : Higher
  • Running costs
  • Unincorporated vehicles : Lower
  • Incorporated vehicles (limited companies) : Higher
  • Separate legal entity
  • Unincorporated vehicles : No - owner personally liable for obligations and debts of business
  • Incorporated vehicles (limited companies) : Yes - liability of owners is limited
  • Fund raising methods
  • Unincorporated vehicles : Usually owner personal injection or personal bank loan
  • Incorporated vehicles (limited companies) : By issuing new shares, exchanging shares, placing of shares, bank loan, etc
  • Registration procedure
  • Unincorporated vehicles : Apply to business registration office within 1 month from start of business
  • Incorporated vehicles (limited companies) : Appoint a professional company secretarial firm or lawyer to incorporate, usually requires one to two weeks to incorporate

If you would like further information concerning Should I Incorporated vehicles or Unincorporated vehicles ? please contact QIDA professionals and we will provide you with free advisory.

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