A Company Limited by Guarantee (CLG) is widely used in Hong Kong for charities, clubs, schools, and associations.
Members act as guarantors and their liability is limited to a fixed sum (often HKD 1).
At least 1 member, 2 individual directors, and 1 Hong Kong–based company secretary.
No dividends since there are no shares. Articles usually prohibit distributions, and this is mandatory for CLGs applying for charity status.
CLGs approved under section 88 IRO may enjoy profits tax exemption and can receive tax-deductible donations.
Thinking of launching a charity, NGO, or non-profit in Hong Kong—but not sure what structure to choose? The wrong setup could limit growth, funding opportunities, or even expose members to liability risks.
That’s where a Company Limited by Guarantee (CLG) comes in. It’s for organizations that don’t issue shares or distribute profits. In July 2025, only 126 CLGs were incorporated, compared with 16,268 total new companies that month (Companies Registry).
This guide explains what a CLG is, who it’s for, how it works, and what you must know to set one up properly in Hong Kong.
What Is a Company Limited by Guarantee?
A company limited by guarantee is a Hong Kong company without share capital. Instead of shareholders, it has members (guarantors) who each agree to contribute a small fixed amount (often HKD 1) if the company is wound up.
Like any company, a CLG is a separate legal person: it can own property, enter into contracts, sue, and be sued independently of its members.
Distribution of Funds
- No shares = no dividends.
- Articles of Association usually prohibit payments to members.
- For charity status under s.88 Inland Revenue Ordinance (IRO), the Articles of Association must prohibit distribution to members and typically restrict directors from receiving remuneration (with limited exceptions).
Who Should Use a Company Limited by Guarantee (CLG)?
A CLG in Hong Kong is ideal for organizations focused on mission rather than profit, including:
- Charities
- NGOs and community groups
- Schools and educational institutions
- Arts, sports, cultural, or research bodies
- Professional and trade associations
Not every CLG qualifies as a charity. Many clubs and associations use the structure without applying for s.88 Inland Revenue tax exemption.
Advantages of a Company Limited by Guarantee (CLG) in Hong Kong
Perpetual Succession
A CLG continues to exist even if members or directors change, ensuring long-term stability.
Charity Tax Exemption (s.88 IRO)
Approved charities under section 88 of the Inland Revenue Ordinance may be exempt from profits tax if:
- The CLG is established exclusively for charitable purposes.
- Profits are applied only to those purposes.
- Profits are not used substantially outside Hong Kong.
- Trading profits arise only when the trade furthers the charitable objects or is mainly carried on by beneficiaries.
Donations to approved charities may also qualify for donor tax deductions.
Mission-Driven Culture
Members support the cause, not financial gain.
Public Trust and Credibility
CLGs—especially those with charity status—enjoy stronger donor confidence, volunteer support, and public recognition.
Company Limited by Guarantee vs. Company Limited by Shares
| Feature | Company Limited by Shares | Company Limited by Guarantee |
|---|---|---|
| Main purpose | For-profit businesses | Non-profit or purpose-driven |
| Membership | Shareholders (owners) | Guarantors (members, not owners) |
| Liability | Limited to unpaid share capital | Limited to guarantee amount (e.g., HKD 1) |
| Capital raising | Equity subscriptions | Grants, donations, membership fees |
| Dividends | Possible if profits available | None (no shares); Articles usually prohibit distributions |
| Surplus on dissolution | As Articles allow | As Articles provide; charities must transfer to similar bodies |
| Directors | ≥1 natural person | ≥2 natural persons; no corporate directors |
| AGM deadline | Within 9 months of the financial year end (FYE) | Within 9 months of FYE (unless dispensed with under CO ss. 612–613) |
| Annual return | NAR1 (Annex A) | NAR1 (Annex B) with audited accounts attached |
What Laws Govern a Company Limited by Guarantee In Hong Kong?
A company limited by guarantee in Hong Kong is primarily governed by three legal frameworks:
1. Companies Ordinance (Cap. 622)
This is the main legislation covering how a company limited by guarantee is formed, registered, and managed. It sets out the rules on company structure, director duties, filing requirements, and dissolution procedures. Understanding this ordinance is key to staying compliant throughout the company's lifecycle.
2. Inland Revenue Ordinance (Cap. 112)
This ordinance deals with tax matters. It outlines how a company limited by guarantee can apply for tax exemption, particularly when seeking recognition as a charity under Section 88. Knowing the conditions and reporting obligations under this law can help maximize financial efficiency for non-profits.
3. Common Law Principles
Where statutory law is silent, common law helps guide how CLGs are interpreted and governed. These legal precedents support fair decision-making and provide an additional legal foundation in complex situations.
CLG is not limited to Hong Kong only. It is not uncommon to see CLG registered in Hong Kong but pursuing activities outside of Hong Kong.
Structure of a Company Limited by Guarantee
Members
- At least 1 member is required.
- Members can be natural persons or corporate entities, with no residency or nationality restrictions.
- CLGs must file NMEM1 if the registered number of members increases.
- Members may appoint proxies.
Directors
- At least 2 directors are required.
- All directors must be natural persons (corporate directors are not allowed).
- Directors owe the same duties as those in any Hong Kong company: act in good faith, avoid conflicts, exercise care and diligence, and disclose interests.
Company Secretary
- Required by law.
- Must be either a Hong Kong resident individual or a licensed corporate secretary.
Registered Office
- Must be maintained in Hong Kong at all times.
Constitutional Documents
- CLGs must have Articles of Association that set out the guarantee amount, company objectives, rules on application of income, and winding-up provisions.
Incorporation of a CLG
To register a CLG in Hong Kong, you need to prepare and file the following:
- Form NNC1G (company not limited by shares)
- Articles of Association
- Form IRBR1 (Business Registration notice)
- Directors’ consents (either within NNC1G or on NNC3 within 15 days of incorporation)
Government Fees (Companies Registry)
E-filing
- HKD 155 (≤25 members)
- HKD 305 (26–100 members)
- HKD 305 + HKD 18 for each additional 50 members (or fewer) beyond 100
- Maximum fee: HKD 925
Hard Copy Filing
- HKD 170 (≤25 members)
- HKD 340 (26–100 members)
- HKD 340 + HKD 20 for each additional 50 members (or fewer) beyond 100
- Maximum fee: HKD 1,025
Business Registration (2025/26)
The Business Registration Certificate fee is paid together with incorporation:
- 1-year certificate: HKD 2,200 (levy waived)
- 3-year certificate: HKD 5,720 + levy HKD 300 = total HKD 6,020
(Valid for certificates beginning 1 Apr 2025 to 31 Mar 2026)
Timeline
Unlike share companies, which can be incorporated within 1 hour online, CLGs often undergo additional vetting by the Companies Registry. As such, there is no fixed processing pledge. Incorporation time varies and may take longer than for a private limited company.
Ongoing Obligations of a CLG
Once incorporated, a CLG must comply with annual filing and record-keeping requirements:
- Annual General Meeting (AGM): must be held within 9 months after the end of the financial year (unless dispensed with under Companies Ordinance ss. 612–613).
- Annual Return (NAR1): must be filed within 42 days of the return date, together with audited financial statements, directors’ report, and auditors’ report.
- Accounts and audit: audited accounts must be prepared every year unless the company is dormant. The “reporting exemption” only reduces disclosure, not the audit requirement.
- Notices: changes to directors, secretary, registered office, and increases in member numbers must be reported to the Companies Registry.
Qualification as a Charity (s.88 IRO)
A CLG is not automatically a charity. To qualify for tax exemption under section 88 of the Inland Revenue Ordinance, the CLG must:
- Be established exclusively for charitable purposes
- Apply its income solely to those purposes
- Ensure profits are not expended substantially outside Hong Kong
- Carry on trading only if it directly furthers the charitable objects or is mainly run by beneficiaries
In addition, the Articles of Association must include IRD-preferred clauses, such as:
- No distribution of income or assets to members
- Governing body not remunerated (except in limited circumstances)
- Proper transfer of assets to another charity upon winding up
Recognition typically takes several months, and applications are reviewed by the Inland Revenue Department.
Conclusion
A Company Limited by Guarantee is the standard vehicle for non-profits and charities in Hong Kong. It provides credibility, limited liability, and a governance framework aligned with mission-driven organizations.
If you’re planning to set up a CLG or apply for s.88 charitable status, it’s crucial to get the details right from the start.
With Air Corporate, you can focus on your mission while we handle the paperwork, compliance, and filings.
FAQs
A charity where each member guarantees to contribute HKD 1 toward debts if the company is wound up.
A limited company by shares has shareholders and distributes profits. A CLG has guarantors instead of shareholders and is typically used for non-profits.
Not always. Many CLGs are non-profits, but only those meeting s.88 IRO requirements qualify as tax-exempt charities.
