Business Organizations in Hong Kong

Owned by partners.
Created by partnership agreement.
Partners share profits and losses.
Dissolved upon a partner's departure or death, requiring a new partnership to continue.

Section 3(1) of the Partnership Ordinance defines a partnership as the relationship between persons carrying on a business in common with a view of profit.
Charities and sports clubs are not partnerships; they are unincorporated associations.

Can be partnership property (belonging to all partners) or separate property.
Partnership property is jointly owned, giving each partner an equitable proprietary interest.

Section 26: Partners share equally in capital and profits, contribute equally to losses (joint and several liability), and are entitled to indemnity for liabilities incurred in the ordinary conduct of business.
Partners are entitled to 8% interest on payments beyond agreed capital contributions.
Partnership books must be accessible to all partners.

Partners owe fiduciary duties to each other.
Examples include accountability for private profits (s.31) and the duty not to compete with the partnership (s.32).

Partners are jointly liable for contractual obligations (Cap 38 s.11).
The partnership is liable for loss or injury from a partner's wrongful act or omission (s.12) - jointly and severally.

Grounds for dissolution are in Partnership Ordinance ss.34–37.
Involves winding-up, asset realization, and settling accounts as per Section 46.

Required by the Business Registration Ordinance (Cap 310) for entities making profit in Hong Kong.
Requires a BR certificate displayed prominently.
Details on the BR cert include business name, address, and nature of business.

Two key features: limited liability and separate legal entity.
Funded by issuing share capital.
Members' liabilities are limited to the amount of issued share capital. If shares are fully paid, they bear no further liability even if the company winds up.

Requires at least one member, a director, and a company secretary.
Must submit Articles of Association and Declaration of Compliance to the Companies Registry.
A Certification of Incorporation (CI) is issued upon compliance.

Confirmed in Salomon v. A Salomon & Co Ltd [1897] AC 22.
The company is a separate entity from its shareholders.
Supporting legislation: Cap 622 s.115 grants a company the capacity, rights, powers, and privileges of a natural person.

Can enter contracts, possess assets, pay taxes (8.25% for first $2$ million, 16.5% above), take legal action, and commit crimes/torts.
Has perpetual succession, continuing despite changes in ownership.

Significant role in company administration.
A private company may have one director minimum.
No residency requirement.
Directors are fiduciaries of the company with duties to act in its best interest.

To act bonafide for the benefit of the company.
To exercise powers for their proper purpose.
Not to allow any conflict between their duties as directors and their personal interests.
The test to determine liability for breach of duty of care is now a hybrid of objective and subjective test.
- What is expected of directors with the same skill and experience?
- What skill and experience are expected of the director in question according to his level of qualification and knowledge?

Court may order winding-up under s.178(1) – “debt” ground or “just and equitable” ground.
Company may be wound-up voluntarily under s.228(1) by members or creditors.