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Glossary of Terms
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Agent
- A person authorized by another to act on their behalf. An agent can enter into contracts and other legal binding functions on behalf of another. For example, directors act as corporate agents of the company.
Annual General Meeting (AGM) of Shareholders
- An AGM must be held once in every calendar year and not more than 15 months after the last preceding AGM. However, a company need not hold its first AGM until 18 months of its incorporation. A company can dispense with the holding of AGM if everything that is required or intended to be done at the meeting is done by resolutions.
Articles of Association
- The articles are one of the primary legal document of a company. It is a set of internal regulations that governs the day to day operations of the company. It has to be filed to Companies Registry at the time of incorporation or if there is any changes thereafter.
Asset
- Anything owned that has monetary value. It can be tangible or intangile.
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Business Registration Certificate (BR)
- It is issued by the inland revenue department. Every business is required to apply for a BR. A sole proprietor or partnership is required to apply a BR after commencement of its business within 1 month. A company is required to apply a BR within 1 month after issuance of its certificate of incorporation.
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Certificate of Incorporation (CI)
- It is issued by the registrar of companies. It is the conclusive evidence that all requirements for incorporation of a company have been complied with.
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Directors
- Directors are elected by shareholders at AGM. They are acting on behalf of the company to enter into contracts, etc. The minimum number of directors of a company is 2 at any time. # From 14 February 2004, a private company can have only one director.
Dividend
- A company may only make a dividend to its shareholders out of profits. Dividend is usually paid to shareholders in proportion to their shareholdings, usually expressed as a percentage of paid-up capital of the company.
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Extraordinary General Meeting (EGM) of Shareholders
- All meetings of shareholders other than an AGM is an EGM.
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Limited Company
- A limited company is formed under the Companies Ordinance such that the liability of its shareholders are limited either by shares or guarantee.
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Member
- A member is a person who is an owner of some of all of a company. Member has the same meaning of shareholder. The minimum number of member of a company is 2 at any time. # From 14 February 2004, a private company can have only one member.
Minutes
- A written record of a meeting. They are required to file in the register of minutes of the company.
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Ordinary Resolution
- A resolution that requires at least 50% of votes. Some affairs of the company are required to pass by a ordinary resolution at an AGM or EGM, either as a requirement set by its articles of association or by Companies Ordinance.
Oversea Company
- An oversea company is a company incorporated outside Hong Kong which establishes a place of business in Hong Kong. It must, within one month of establishing the place of business, register the company with the registrar of companies. An oversea company registers by lodging certain documents with the companies registry and obtaining a certificate of registration. Oversea companies must also apply to the inland revenue department for a BR.
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Partnership
- A partnership is a business where two or more individuals associate together to conduct a business with a view to profit. Usually a partnership cannot have more than 20 members, and all partners are jointly and severally liable to contracts and debts of business. It is not required to be registered with the registrar of companies.
Private Limited Company
- A private limited company is a type of limited company but has the following restrictions in its articles of association : restricts the rights to transfer its shares; limits the number of its members to 50; prohibits any invitation to the public to subscribe for any shares or debentures of the company. A private limited company does not need to file its annual accounts with the companies registry or open its account for public inspection. The minimum number of directors/shareholders of a company is 2 at any time. # From 14 February 2004, a private company can have only one director and one shareholder.
Proxy
- If a shareholder cannot attend an AGM or EGM, the shareholder is entitled to vote by proxy. A proxy grants another person to vote on their behalf.
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Quorum
- The minimum attendance required to conduct business at a meeting set by its articles of association. However, the Companies Ordinance requires a quorum of at least 2. # From 14 February 2004, a private company can have a quorum of 1.
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Registered Office
- The registered office of a company must be situated in Hong Kong.
Resolution
- A resolution is a formal decision of the company which has been adopted either by the shareholders or the board of directors. For shareholders meeting, there are two kinds of resolution - ordinary resolution and special resolution.
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Share
- An interest in a company. The ownership of a company is divided into shares of stock.
Sole Proprietorship
- A business carried on by the owner as an individual. The owner of a sole proprietorship is personally and fully liable for all business debts. It is not required to be registered with the registrar of companies.
Special Resolution
A resolution that requires at least 75% of votes. Some affairs of the company are required to pass by a special resolution at an EGM, either as a requirement set by its articles of association or by Companies Ordinance.
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Ultra Vires
- Traditionally, the purpose of a company must be stated in its memorandum of association as object clauses. If the company acted beyond its described purposes these actions were unenforceable against the company or by the company. However, it is not required to state its object clauses in its memorandum of association pursuant to an amended Ordinance at 1997.
Unanimous Written Resolution
- Anything which can be done by a company by resolution in general meeting may be done, without a meeting and without any previous notice, by a written resolution signed by or on behalf of all the members who at the date of resolution would be entitled to attend and vote at the meeting.
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