Introduction to NPO
Non-profit organisations, abbreviated as NPO, refer to the organisations that are organised to operate for collective, public, or social benefits, not for the interest of the organisations’ owners or investors. Non-profit organisations do not distribute their profits to their owners or investors, but they always re-invest the funds back into their programs, services, or research beneficial to their social cause.
Note that NPO is not equivalent to a charity in Hong Kong, and charities (Section 88) are a subset of NPOs.
Constraints of an NPO
- Non-distribution constraintAny revenues incurred that exceed expenses must be used in line with the collective, public, or social interest, or to the development of the organisation, but not to any private parties.
Responsibilities of an NPO
- AccountabilityAn NPO should shoulder their responsibility for society as promised and be accountable for the social impacts they are creating and their donors and volunteers.
- TrustworthinessAn NPO should be trustworthy and honest about its missions and schemes.
- OpennessThe financial statements should be disclosed on a regular basis to inform your donors what social benefits their money has created.
Advantages of an NPO
- Tax exemption, if eligible – learn more here from our guide to Charities and Tax Exemption (S88) in Hong Kong.
- Limited liabilityIf you establish your charitable cause as an NPO in the form of either a company or a society, it becomes a legal entity, which is separated from you and has limited liability.
- Legal entrySince your cause is legally recognised, it has legal entry to settle any disputes.
- Public and private grantsAs an NPO, you may be eligible to apply for public and private grants by external funders to finance your operational or project-based expenses.
Establish an NPO as a company
It is common practice for an NPO in Hong Kong to incorporate into a local limited company as a vehicle of the organisation to better function and fulfil their missions. There are two types of companies to incorporate – limited by shares, or limited by guarantee. NPO operators usually opt for the latter, for it has no requirements of shareholders and the operating profits are retained within the organisation
💡 Cap.622 Companies Ordinance Company limited by guarantee (1) For the purposes of this Ordinance, a company is a company limited by guarantee if—
(a) it does not have a share capital; and
(b) the liability of its members is limited by the company’s articles to the amount that the members undertake, by those articles, to contribute to the assets of the company in the event of its being wound up.For further steps of company registration, please refer to Step 2 – 4 in the corporation guide.
Establish a Society
You can consider establishing a Society instead of a Company, with the Societies Office of the Societies Office of Hong Kong Police Force. Usually, the less-formal associations or social groups choose to register as a Society as it involves less administrative procedures and can be less expensive. However, note that the members of the management committee of the Society, or sometimes the members of the Society themselves may incur personal liability.
Required Documents
- Application form – downloadable here
- Copies of HKID Cards or other valid identity documents;
- Document to prove the place of business of the Society;
- Consent letter with clear copy of HKID card or other valid identity document from the lawful occupier of the premises (if applicable);
- Constitution, articles of association or minutes of a meeting, to establish the society and show the objects and purposes of the society;
- Relevant qualification of the office bearers (e.g. certificates, if any);
- Consent letter for the name of the society (if applicable).
Submission of Documents
Submission of the application should be sent to the Police Licensing Office within one month after the society’s establishment.
Collecting certificates
- Given sufficient information received for the registration, the society concerned will receive an acknowledgement together with a “Certification of Registration of a Society” or “Certificate of Exemption from Registration of a Society” within 12 working days after the submission.
- An official sample is provided here.
Apply for the tax exemption status
- Certain types of non-profit organisations are eligible to obtain a tax exemption status. Follow our guide on the application.
Additional Readings:
- https://startupregistry.hk/services/limited-by-guarantee/
- https://sleek.com/hk/resources/setting-up-a-nonprofit-company-in-hong-kong/
- [Official] Registration of a Society by Hong Kong Police ForceAbout Registration of a Society
- Non-Profit Organisation in Hong Kong: The Complete Guide by startupr.hkhttps://blog.startupr.hk/non-profit-organization-hong-kong-complete-guide/
- Companies Ordinance (Cap.622)Hong Kong e-Legislation
- Societies Ordinance (Cap. 151)Hong Kong e-Legislation
