Most small to medium sized companies in Hong Kong are set up as ‘private companies limited by shares’ and are commonly referred to as ‘private limited companies’. It is often chosen over other forms of business entities like sole proprietorships and partnerships owing to its many benefits.
A company limited by shares is the most common type of company for conducting business and trade. A company limited by shares has a share capital which is divided into a number of shares of certain value each. These shares are held by shareholders (investors) who are entitled to a share in the profits of the company and receive a dividend corresponding to their respective percentage of shareholding in the company.
In case of a loss, the shareholders will lose their investment in the shares of the company. For detailed information about setting up a private limited company, see Hong Kong Company Registration guide.