HONG KONG SAR, CHINA Law and Practice Contributed by: Alfred Ip, Hugill & Ip
for its members and directors, a familiar governance structure with a board of directors and annual general meetings, and the ability to employ staff, hold prop - erty, and enter into contracts in its own name. Com - panies limited by guarantee are required to file annual returns and financial statements with the Companies Registry, providing a degree of public accountability. They are well suited to operational charities with sig - nificant assets, employees, or public-facing activities. A charitable trust is a private law arrangement in which a trustee holds assets for charitable purposes. It does not require incorporation or registration (other than the Section 88 application to the IRD), and its financial affairs are not publicly disclosed in the same man - ner as a company. This makes it particularly attractive to high net worth families who wish to conduct their philanthropy privately. A charitable trust can be estab - lished during the settlor’s lifetime or by will, and can be structured to provide for distributions to specific causes or to a broad range of charitable purposes at the trustee’s discretion.
Both structures must apply to the Inland Revenue Department for Section 88 tax-exempt status in order to offer tax-deductible receipts to donors. The appli - cation process requires the submission of the govern - ing documents, a description of the charitable activi - ties, and evidence that the organisation is established and operated exclusively for charitable purposes. For a discussion of Hong Kong’s philanthropic culture and the role of corporate social responsibility in the private wealth context, see The Positive Impact of Corporate Social Responsibility.
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