In Hong Kong, the main difference between a Limited Company and a Company Limited by Guarantee lies in their ownership structure and profit distribution.

Limited Company (LC)Company Limited by Guarantee (CLG)
Ownership StructureA Limited Company has shareholders who own shares in the company and typically expect a return on their investment.A Company Limited by Guarantee does not have shareholders. It has members who provide a guarantee to contribute a specific amount in the event of the company’s winding up.
Profit DistributionThe profits generated by the business can be distributed to the shareholders in the form of dividends. This allows the shareholders to benefit financially from the company’s successA Company Limited by Guarantee is typically a non-profit organization, and any surplus or profit it generates is reinvested into furthering its objectives rather than being distributed to its members.
Purpose and ActivitiesLimited Companies are usually established for commercial or profit-making purposes. They engage in business activities to generate revenue and maximize shareholder wealth.Companies Limited by Guarantee are generally established for non-profit purposes, such as charitable, educational, or social causes. Their primary focus is on achieving specific objectives that benefit the public or a particular community.
TaxationLimited Companies in Hong Kong are subject to corporate tax on their profits. They are required to file tax returns and pay taxes on their assessable profitsCompanies Limited by Guarantee may enjoy tax-exempt status, depending on their activities and compliance with relevant regulations. However, tax exemption is not automatic and certain conditions must be met.

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