What are the advantages of using limited companies to engage in commercial activities in Hong Kong?

What are the advantages of using limited companies to engage in commercial activities in Hong Kong?

Limited companies are companies with limited liabilities. From a legal perspective, a limited company is a separate legal entity and thus has the capacity to institute proceedings against others or vice versa. Since the liability of shareholders is limited to the nominal value of their shareholdings, the maximum possible loss of the shareholders could only be the total sum of their investments. Generally speaking, the directors and shareholders of the companies are not personally liable for the debts of the company.

Where the investors prefer to adopt other forms, such as sole proprietor or partnership, to run their businesses, the liabilities of the investors are unlimited. The creditors can hence institute legal proceedings directly against the investors. Where the investors cannot repay the debts, the investors are forced into personal bankruptcy. Nevertheless, incorporating and running a limited company is comparatively more costly. 

What are the conditions of establishing a limited company?
A limited company must have at least 1 shareholder, 1 director, a company secretary and a registered office situated in Hong Kong. Any person (natural or legal person) can at the same time be a shareholder, a director and also a secretary. If the secretary is an individual person, there are no restrictions on his nationality but he must reside in Hong Kong. There are no restrictions on the nationality and domicile of the shareholder and director. The executive body of a company is its board of directors, responsible for the daily running of the company and implementing the decisions in the annual general meeting (AGM). The AGM is the highest body of a company. It must be held at least once a year and must not be held more than 18 months since the last AGM.

There is no upper limit of the capital of limited companies, but it must not less than 1 Hong Kong dollars.

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