Register your company in Hong Kong with our Special Anniversary discount!

Get Started!

Comparing Limited and Unlimited Companies in Hong Kong

Limited company vs unlimited company


Register your company with Air Corporate

Pay less, get more

Enjoy a 10% OFF

100% online and hassle-free

The key difference between limited and unlimited companies in Hong Kong lies in liability. In a limited company, shareholders' liability is restricted to their share capital, protecting personal assets.

In an unlimited company, shareholders face unlimited liability, meaning personal assets can be used to settle business debts.

Key Takeaways

The main business structures in Hong Kong are limited companies and unlimited companies.

When choosing a business structure, consider liability protection needs, business size and growth potential, funding requirements, and compliance burden.

Unlimited companies suit low-risk, small businesses.

Limited companies are better for startups seeking investment and significant growth.

Hong Kong is a key financial center known for its strong economy, strategic location, and business-friendly policies.

Entrepreneurs looking to start a business in Asia often choose Hong Kong because of its supportive regulations and low taxes.

In this market, two main business structures are common: Limited companies and Unlimited companies. 

Limited companies include private limited companies (used by most businesses) and public limited companies (i.e. companies listed on a stock exchange). Unlimited companies refer to sole proprietorships and partnerships.

Here, we will compare these two structures to help entrepreneurs choose the right one for their business. 

But if you want to go further, just scroll down to the end of this article for the complete video recorded by our colleague Nicole on this topic. She actually helps you decide which is the right structure for your business.

Limited Company: Hong Kong

In Hong Kong, a popular business structure is a private company limited by shares.

This structure creates a separate legal entity, limiting shareholders' liability to their investment.

Also, this limited liability protection (along with the flexibility to transfer shares and raise capital) makes it ideal for businesses seeking growth while protecting owners from personal financial risks.

Limited companies account for roughly 90% of companies registered in Hong Kong.

Types of Limited Companies

There are two main types of local limited companies in Hong Kong:

  • Private Limited Company (Ltd.): This is the most popular choice for small and medium-sized businesses. It allows for a maximum of 50 shareholders (excluding employees) and cannot offer shares to the public.
  • Public Limited Company (Plc.): These companies can raise capital by selling shares on a stock exchange. They are subject to stricter regulations and higher compliance costs compared to private limited companies.

Key Characteristics

In the context of a limited liability company, the shareholders' personal assets are protected, and they are only liable for the amount they invested in the company.

Usually, a limited company needs at least one shareholder.

Shares can be easily transferred, making it easier for investment and ownership changes.

Setting up and maintaining a public limited company is more complex and costly (than a private limited company). It requires strict compliance, as outlined by the Companies Ordinance, including regular audits and financial reports. 


Shareholders' personal assets are safe from the company’s debts, lowering financial risk.

Limited companies can more easily attract investment by issuing shares, which is important for business growth.

This structure suits businesses with big growth plans and risks, providing a strong base for expanding operations.

Registration Process

Registering a private limited company in Hong Kong involves several steps:

  1. Company Name: Choose a company name and be sure that the name is unique and complies with Hong Kong's naming regulations.
  2. Governance: You need at least one director (individual or company) and a company secretary to oversee operations and maintain company records. 
  3. Registered Address: You will also need to provide a registered business address in Hong Kong. It cannot be a PO Box but can be the address of your company secretary
  4. Submission of Documents: Submit the necessary documents, including the Articles of Association and Memorandum of Association, to the Hong Kong Companies Registry.
  5. Business Registration: Once your application is approved, you will receive a business registration certificate, allowing you to start operations. You will need to pay the business registration fee associated with this process.

Management Structure

Limited companies must have at least one director who manages the company's affairs.

Shareholders can also be directors.

The company secretary ensures compliance with regulations and maintains statutory records.


Limited companies in Hong Kong pay a profits tax rate of 16.5% on the net profits of their local business. No tax is applicable on any offshore revenues. Qualifying startups can benefit from a reduced tax rate under the "Startup Tax Concession" scheme.

Limited companies are required to file profits tax returns with the Inland Revenue Department (IRD) annually.

Unlimited Company: Hong Kong

While limited companies are more common in Hong Kong, especially private companies limited by shares, unlimited companies, particularly those structured as a partnership business, serve as a niche option for entrepreneurs with specific needs.

An unlimited company does not limit the liability of its owners, meaning they are personally responsible for all business debts.

This structure is typically chosen by businesses with lower risks and simpler needs and also comes with advantages in terms of simplicity and cost. This setup is sometimes imposed for some regulated professions, such as lawyers or doctors.

These companies offer advantages in simplicity and cost but come with significant risks.

Types of Unlimited Companies

Technically, there is only one type of unlimited company in Hong Kong, but based on ownership, they can be categorized as:

  • Sole Proprietorship: Owned and operated by a single individual who is entirely responsible for the company's debts and obligations.
  • Partnership: Two or more individuals come together to manage and operate the business. Partners share profits and losses according to a pre-determined agreement and are jointly liable for the company's debts.

Key Characteristics

Owners are personally liable for the company’s debts, which can put their personal assets at risk.

Unlimited companies are easier and cheaper to set up, with fewer regulatory requirements and no mandatory audits.

These companies often have higher tax rates compared to limited companies.

It is important to note that a sole proprietorship or partnership cannot be reorganized as a limited company. It is therefore essential to choose the right structure for your business early on.


Lower setup and operational costs make this structure appealing for small businesses and professional partnerships.

The straightforward nature of unlimited companies suits businesses that do not need complex administrative setups.

Registration Process

Registering an unlimited company in Hong Kong is simpler than registering a limited company:

  1. Choose a business name that is unique and complies with Hong Kong's naming regulations.
  2. Register your business with the Business Registration Office of IRD by submitting basic information, including your business address, and obtaining a Business Registration Certificate.
  3. Depending on your business activities, you may need additional licenses and permits from relevant government departments.

Management Structure

The management structure of an unlimited company in Hong Kong varies based on the ownership type:

  • Sole Proprietorship: The owner makes all business decisions and has complete control over the company's operations.
  • Partnership: Partners jointly manage the company based on their partnership agreement. This agreement should outline profit-sharing, decision-making processes, and how liabilities will be handled in case of debts.


Unlimited companies, particularly sole proprietorships, are transparent from a tax point of view. This means that their profits are taxed as the owner's personal income.

The exact tax implications for unlimited companies will be determined by the Inland Revenue Department based on the business structure, income level, and other factors.

Choosing the Right Structure

Choosing the right business structure is a crucial decision that affects various aspects of your business, from daily operations and taxes to the extent of your personal liability.

Factors to Consider

Here are some key factors to consider when selecting the best structure for your business.

Liability Protection Needs

  • Sole Proprietorship and General Partnership: These structures offer no liability protection. If your business faces legal issues, your personal assets, like your car or house, are at risk. Depending on your business nature, you may have to select one of these vehicles.
  • Limited Liability Company (LLC) and Corporation: These structures separate personal assets from business assets. This means that if your business faces legal issues, your personal belongings are generally protected.

Business Size and Growth Potential

  • Sole Proprietorship and General Partnership: Best for small, local businesses with limited growth expectations.
  • LLC and Corporation: Suitable for larger businesses and provide more flexibility for future growth.

Funding Requirements

  • Sole Proprietorship and General Partnership: Limited funding options, relying mostly on personal funds or bank loans based on your personal credit.
  • Corporation: Easier to attract investment by issuing stocks.

Compliance and Administrative Burden

  • Sole Proprietorship: Simplest structure with minimal filing requirements.
  • Corporation: Most complex structure with extensive regulations and paperwork.


For small family businesses or professional partnerships with low risk, an unlimited company might be a good choice because of its simplicity and lower costs.

On the other hand, startups looking for investment and significant growth should consider a limited company for its liability protection and easier capital raising.


Knowing the differences between limited and unlimited is key to choosing the right business structure in Hong Kong.

Limited companies offer strong liability protection and better ways to raise capital, making them ideal for businesses aiming to grow.

Unlimited companies, with their lower costs and simpler setup, are best for small, low-risk businesses.

Here at Air Corporate, our experienced professionals can guide you through the process and ensure you select the best structure for your business goals.

Contact us today for a free consultation!


Vivian Au

For many years, I worked at big accounting and company secretary firms in Hong Kong. I started Air Corporate to make the life of entrepreneurs and SMEs easy.

Vivian Au


Your Hong Kong company and business account. Online and Simple.