COUNTRY

Hong Kong

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    HONG KONG (HK) COMPANY FORMATION

    Hong Kong company registration is relatively straightforward. Hong Kong is considered a powerhouse business hub in Asia due to its strategic location, business-friendly environment, and a strong economy.

    One of Hong Kong’s key advantages is its location. The city serves as a gateway to mainland China and other Asian markets, making it an ideal location for businesses looking to expand into the region. Hong Kong’s proximity to China provides easy access to the world’s largest and fastest-growing consumer market.

    This, coupled with Hong Kong’s world-class infrastructure and transportation links, makes it an attractive option for businesses looking to establish a presence in Asia.

    Another reason why Hong Kong is a strong business hub is its business-friendly environment. The city has a simple and transparent legal system, a low corporate tax rate, and a highly skilled workforce. This makes it an attractive option for businesses of all sizes, from start-ups to multinational corporations. Additionally, Hong Kong is known for its strong intellectual property rights, which protect businesses’ innovations and brands.

    Furthermore, Hong Kong has a strong economy with a high GDP per capita and a low unemployment rate. The city has a well-developed and diversified economy, with a focus on finance, trade, and professional services for company setup in Hong Kong. This economic stability and prosperity make Hong Kong an attractive place to do business, as it provides a reliable and predictable environment for businesses to grow and succeed.

    Hong Kong has a long-standing reputation as a global financial center, attracting many financial institutions and professional service providers to set up their base in Hong Kong. As a result, it has a large pool of professional services, including accounting, legal, and banking services, which are essential for businesses to operate efficiently.

    KEY REQUIREMENTS OF SETTING UP A COMPANY IN HONG KONG

    Hong Kong Company Formation

    TIMELINE OF HONG KONG COMPANY INCORPORATION

    Incorporation of a Hong Kong Company
    3 to 5 days
    Corporate Bank Account Opening
    3 to 6 weeks

    A Hong Kong limited company has certain requirements when it comes to shareholders, share capital, directors, company secretary, and registered office address of the Hong Kong incorporated company. .

    Shareholders

    Hong Kong limited company requires a minimum of one shareholder, with a maximum of 50 shareholders allowed. Shareholders can be both companies or natural persons, and do not need to reside in Hong Kong. Shareholders can be from any country and nominees are also accepted. The shares of the company can be owned locally or abroad, and a single director can also serve as a shareholder.

    Share Capital

    The Hong Kong Companies Registry must approve the chosen name before the company can be incorporated.

    Directors

    For a Hong Kong company set up, a Hong Kong limited company requires a minimum of one director, with no maximum limit on the number of directors. Directors can be both corporations or natural persons and do not need to reside in Hong Kong. Directors can be from any country, and nominee directors are also accepted.

    Company Secretary

    The company is required to appoint a company secretary for company registration in Hong Kong. The company secretary can be a corporate resident or a local person and does not require a professional degree. However, the company secretary cannot be a sole director or shareholder.

    Registered office address

    For HK company setup, the company must have a registered office address in Hong Kong, where all official communications and legal documents will be sent. This address is also publicly available on the Hong Kong Companies Registry.

    TYPES OF COMPANY STRUCTURES IN HONG KONG

    There are several types of company structures in Hong Kong, each with advantages and disadvantages. The most common types of company structures include:

    • Sole Proprietorship – This is the simplest type of business structure, where one individual owns and operates the business. This structure is relatively easy to set up and manage, but the owner is personally liable for all debts and liabilities of the business.
    • Partnership – A partnership is a business structure where two or more individuals come together to run a business. Partners share profits and losses and are personally liable for the business debts and liabilities.
    • Limited Company (LC) – A Limited company in Hong Kong, also known as a “Private company,” is a separate legal entity from its shareholders and directors, similar to an LLC or Private Limited Company in other countries. Shareholders have limited liability for the company’s debts and liabilities, and the company is considered a separate legal entity.
    • Public Limited Company – A public limited company is a business structure where the shareholders have limited liability for the company’s debts and liabilities and the shares are publicly traded on the stock exchange. Public limited companies are subject to more stringent regulations and reporting requirements than private limited companies.
    • Representative office – A representative office is a type of business structure that allows foreign companies to establish a presence in Hong Kong without engaging in commercial activities. It’s mostly used for research, marketing, and liaison purposes.
    • Branch Office – A branch office in Hong Kong refers to a business structure where a foreign company establishes a presence in Hong Kong by registering a branch office with the Companies Registry. A branch office is not considered a separate legal entity from the parent company, and it conducts business in Hong Kong on behalf of the parent company. The parent company is responsible for all liabilities and debts of the branch office.

    Branch offices in Hong Kong are subject to less stringent regulations and reporting requirements than other types of company structures in Hong Kong, such as private limited companies. However, they are required to file annual returns and audited financial statements with the Companies Registry. Additionally, a branch office cannot issue shares or enter into contracts in its name.

    Branch offices can be a good option for foreign companies looking to test the Hong Kong market before committing to a full-fledged subsidiary. 

    Choosing the appropriate company structure that suits your business needs and goals is essential. 

    PROCESS OF REGISTERING A COMPANY IN HONG KONG

    The process of registering a company in Hong Kong typically involves the following steps:

    • Choose a company name – For company formation in Hong Kong, this name must be unique and approved by the Hong Kong Companies Registry.
    • Prepare the incorporation documents – These include the Memorandum of Association and Articles of Association, which outline the company’s purpose, share capital, and governance structure.
    • Appoint directors and company secretary – The company must appoint at least one director and one company secretary, who do not need to be residents of Hong Kong.
    • Obtain a registered office address – The company must have a registered office address in Hong Kong where all official communications and legal documents will be sent.
    • Submit incorporation application – The company incorporation process at the Hong Kong Companies Registry (“CR”) is fast and easy.

    There are three ways of application available to submit your application: Via the online application via the 24-hour portal e-Registry, Via the “CR eFiling” mobile application which can be downloaded from the App Store or Google Play (free of charge), or By submitting the documents in hard copy to the CR. 

    It takes only one hour to process the application for company incorporation and business registration in HK if submitted online. Hard copy applications will usually be processed in the four-day window.

    • Obtain a Business Registration Certificate – This is required to register the company for tax purposes.
    • Register for taxes – To open a company in Hong Kong, it must register for Hong Kong profits tax and other relevant taxes, such as salaries tax and goods and services tax.
    • Obtain any necessary licenses or permits – Depending on the nature of the business, the company may need to obtain additional licenses or permits from government agencies.
    • Register for social security and employee benefits – If the company hires employees, it must register for social security and employee benefits schemes.

    DOCUMENTS ARE REQUIRED FOR HONG KONG COMPANY FORMATION

    Articles of Association of the company, a duly completed incorporation form with the necessary information:

    • business name
    • Official address 
    • Detailed explanation of the company’s operations
    • Information about the company secretary, directors, and shareholders
    • Members’ liability
    • Registered capital shares at incorporation
    • Number of shares purchased by subscribers

    For non-resident directors and shareholders:

    • Copies of passports and proof of an international address

    For local directors and shareholders:

    • A copy of the Hong Kong identity card
    • a certified copy of the residence’s address
    • For corporate directors and shareholders:
    • A copy of the parent company’s registration documents, such as the Certificate of Incorporation and Articles of Association.

    BASIC REQUIREMENTS AND FACTS FOR SETTING UP A COMPANY IN HONG KONG

    • Name of the company: Before incorporating a Hong Kong company, the name of the company needs to be approved.
    • Companies Ordinance: With the amendment, in effect from March 1, 2018, all Hong Kong-incorporated businesses—aside from those that are listed on the Hong Kong Stock Exchange (HKSE)—must establish and keep up a register of all individuals who hold a significant control of the company.
    • Public Information: Under Hong Kong company laws, information about the directors, shareholders, and company secretary is considered public information.
    • Designated Representative (DR): Additionally, on request, all businesses must designate a Designated Representative (DR) who will be in charge of reporting to the designated local authorities regarding the SCR. 

    The Hong Kong Companies Registry must receive the company officers’ information. One can use a professional services firm to designate a corporate shareholder and nominee individual director if they would like to keep things private.

    • Taxation: For businesses established in Hong Kong, the corporate tax rate is 16.5% of assessable profits. This tax is also known as profits tax. Only profits generated within or derived from Hong Kong are subject to tax in Hong Kong, as the city has a territorial basis of taxation. In Hong Kong, there is no capital gains tax, dividend withholding tax, or GST/VAT.
    • Annual General Meeting (AGM): Every calendar year, there should be an Annual General Meeting (AGM). After the date of incorporation, the AGM must be held within 18 months, and there can be a maximum of 15 months between AGMs after that. 
    • Ongoing Compliance: Businesses must keep and prepare their accounts. In Hong Kong, Certified Public Accountants are required to audit accounts on an annual basis. An annual tax return and audited accounts must be submitted to the Inland Revenue Department. All companies must pay the annual registration fee and file annual returns with the Companies Registry.
    • Business Registration Certificate: The Business Registration Certificate needs to be renewed annually, or every three years, depending on the situation, and must be renewed one month before its expiration.

    HONG KONG BUSINESS REGISTRATION: WHAT FOREIGNERS NEED TO CONSIDER?

    • A company incorporated in Hong Kong may have one or more foreign directors and shareholders. There are no requirements for local residents.
    • While being physically present is not necessary for company registration, it might be necessary to open a bank account (depending on the selected bank).
    • Foreigners can manage their Hong Kong offshore company from abroad if they do not intend to move to Hong Kong.

    PROS AND CONS OF COMPANY IN HONG KONG

    PROS

    Ease of incorporation Hong Kong Company Registration

    Ease of incorporation

    Incorporating a company in Hong Kong is relatively straightforward. Foreigners are authorized to own 100% of their Hong Kong-based firms, and the registration process can be completed online in as little as 24 hours.

    The criteria for forming a corporation are clear and easy to understand, making it an attractive option for entrepreneurs and business owners.

    Open market Hong Kong Company Registration

    Open market

    Hong Kong is known for its open market and liberal economy. The government does not impose any restrictions on the types of businesses that can be established in the city-state, making it an ideal location for businesses of all types.

    Money transfer and currency exchange are permissible, and Hong Kong corporations are not restricted from having bank accounts outside of Hong Kong.

    Business-friendly tax regime Hong Kong Company Registration

    Business-friendly tax regime

    Hong Kong’s corporate tax system is designed to be business-friendly, with competitive tax rates and a territorial principle system that exempts tax on all profits earned outside of Hong Kong. Income earned in Hong Kong is subject to a marginal tax rate of between 0% to 16.5%.

    Additionally, there are no taxes on capital gains, dividends, or sales and no withholding tax. This makes Hong Kong an attractive destination for businesses looking to reduce their tax burden.

    CONS

    Lack of company privacy and discretion

    Lack of company privacy and discretion

    One potential drawback of incorporating a company in Hong Kong is the lack of privacy and discretion. The Hong Kong Companies Ordinance requires companies to make certain information publicly available, such as the capital structure and the identities of its owners, directors, and secretaries.

    This means that the company’s information is visible to the general public and can be accessed through the Companies Registry HK. This lack of privacy can be a concern for some businesses, particularly those that value discretion.

    Higher cost of rental and living Hong Kong Company Registration

    Higher cost of rental and living

    Another potential drawback of incorporating a company in Hong Kong is the high cost of rental and living. Hong Kong is widely considered to be one of the most expensive cities in the world, with the cost of renting a conventional 500-square-foot flat averaging around HKD 15,000 per month.

    This high cost of living can be a financial burden for businesses, particularly new start-ups, that need to secure a physical office to comply with company regulations. The high cost of rental properties may also be a deterrent for some businesses looking to establish a presence in Hong Kong.

    WHY DO YOU NEED TO HIRE A PROFESSIONAL SERVICES FIRM FOR HONG KONG COMPANY FORMATION?

    The professional services firm hired by the applicant to assist in forming a Hong Kong company will often handle all the essential paperwork from start to end. This is a long-term and continuous partnership, so choosing a skilled and service-oriented company is crucial.

    The professional service firm will provide the following services:

    • Gather the identification documents and the required incorporation information.
    • Choose a company name, reserve it, and prepare the incorporation paperwork (such as the Articles of Association) that must be submitted to the Company Registrar. The applicant must put their signature on these papers.
    • Obtain a Certificate of Incorporation by submitting the necessary paperwork to the Company Registrar.
    • Obtain a business registration certificate from the Inland Revenue Authority.
    • Open a bank account on the company’s behalf.
    • Getting common seals and stamps for the business
    • Share certificates and share register
    • Assisting with annual filings, continuing statutory compliance, business license applications, and relocation visa applications.

    HONG KONG COMPANY FORMATION – WHY INCORPORATE WITH US?

    Relin Consultants has a team of professionals who are well aware of the company registration process in Hong Kong. Our team will take care of all the paperwork and regulatory requirements as stated above, providing you with time to focus on the main operations of your newly incorporated business.

    Reach out to us at Relin Consultants – Leading Global Business Set Up Partners for further assistance with our company formation services in Hong Kong.

    FAQs

    Is it possible for a foreigner to set up a business or company in Hong Kong?

    Yes, a foreigner may register a company in Hong Kong because the law permits 100% foreign ownership of businesses there. A foreigner has full authority to serve as a company’s individual director and shareholder in Hong Kong. A resident director or shareholder is not required to be appointed for the company.

    What is the corporate tax rate for resident companies?

    The corporate tax rate for resident companies is 16.5%

    Is Hong Kong a crypto-friendly country?

    Currently, Hong Kong’s regulatory uncertainties and tight quarantine regulations have prompted several cryptocurrency businesses to relocate their operations to other regions where regulators are working more quickly to implement laws supporting the embryonic industry.

    Do I need a business license to operate and carry out business activities for my Hong Kong company?

    Certain business activities are obligated to acquire a business license before carrying out professional and controlled business activities. The license or permission must be registered within one month after the company is formed to start a business.

    • It can be obtained in 2-8 weeks from the date of company formation in Hong Kong.
    • A list of the most common business sectors and their respective registration departments can be seen below: 
    No. Business Type The Registration Department
    1. Employment agencies Labour Department
    2. Travel/tour agencies Commerce and Economic Development Bureau
    3. Restaurant Food and Environment Hygiene Department
    4. Education business Education Bureau of Hong Kong
    5. Financial and Insurance services

    Investment

    • Foreign exchange trading
    • Corporate finance
    • Assist management
    Securities and Futures Commission
    6. Event-related business

    • To organize prize-giving games for enjoyment.
    • To show promotional materials or film
    • To hold a public screening of a movie
    • Selling of liquor
    • Handling of food stalls
     

    Television and Entertainment Licensing Authority

     

    Liquor Licensing Board

    Food and Environmental Hygiene Department

    7. Retail

    • Pets and accessories retail shop
    • Herbs and medicinal stores
    Agriculture, Fisheries, and Conservation Department

    Department of Health

    Is there any difference between Hong Kong company formation, company registration, and company incorporation?

    The steps for forming, registering, and incorporating a company in Hong Kong are essentially the same; they all involve obtaining a permit to legally conduct business in Hong Kong.

    What are the minimum statutory requirements for registering a company in Hong Kong?

    The minimum statutory requirements for the formation of company in Hong Kong are:

    • Whether local or foreign, there must be a minimum of one stakeholder. At least one director is also necessary. A director and shareholder need to be older than 18 years old.
    • The roles of shareholders and directors can both be held by the same person.
    • In Hong Kong, there is no minimum share capital requirement for incorporating a  company in Hong Kong. However, it is currently customary to have a share capital of approximately 10,000 Hong Kong dollars. Due to the minimum paid-up capital requirement of HKD1.00 per share in Hong Kong, this capital is represented by 10,000 ordinary shares of HKD1.00 each.
    • A registered address is required.
    • The company will require a company secretary who must reside in Hong Kong. It must have a Hong Kong office if the applicant decides to have an incorporated entity act as the secretary.
    • There must be a Designated Representative for the company (DR). This is the person or company chosen to offer support with the company’s Significant Controllers Register (SCR). Given that it only went into force in 2018, the law governing designated representatives and SCR is very new. Therefore, it is important that professionals complete this statutory function.

    What language is allowed when selecting a name for company registration in Hong Kong?

    A corporation may be registered under its English, Chinese, or both names. However, a name cannot have both English and Chinese characters. Additionally, a business with an English name needs to conclude with “Limited.” If the last name is in Chinese, it should have a word that means “Limited” in it.

    How long does a company registration in Hong Kong take?

    Most of the time, incorporation of company will take five to seven working days. However, the procedure can take a little longer if the applicant is outside of the country because of the difficulties involved in signing and sending documents.

    Do I need to be physically present in Hong Kong during the HK company formation process?

    No, there is no need to purchase a flight to Hong Kong if you employ an agency to set up a company in Hong Kong on your behalf. Sending the necessary paperwork to the agency is all that is necessary. However, it’s possible that you must be present in person to open a bank account.

    After the company incorporation in Hong Kong, can I hire foreign employees?

    You can, indeed. However, you must follow the correct procedure. This requires applying for the employee’s employment visa after the company is set up in Hong Kong. The Hong Kong government must approve that visa.

    Can I relocate to Hong Kong to run my registered company?

    You should apply for an Investment Visa if you’re an international business owner who wants to move to Hong Kong after registering a business in Hong Kong.

    Because it follows the general employability policy, this visa is comparable to an employment visa. Remember that you may only apply for an Investment Visa after the firm has been formed.

    What is an HK business registration certificate?

    A document containing the company’s information is known as a business registration certificate and is produced by the Hong Kong Business Registration Office.

    The applicant must apply for a business certificate in Hong Kong within 30 days of setting up a Hong Kong company. The applicant must notify the Business Registration Hong Kong Office of any changes to the type or specifics of the firm within 30 days.

    The following is expressed on the business registration certificate:

    • Business name
    • Nature of the business
    • Registered Business address
    • The type of business
    • The date the business started
    • The Expiry date
    • A Certificate number

    What is a Hong Kong certificate of incorporation?

    The HK Companies Registry SAR is the organization that issues a certification of incorporation Hong Kong. This document, which is written in both Traditional Chinese and English, attests to the incorporation of any Hong Kong-based limited liability company.

    Do I still need to complete the accounting and auditing report if my company conducts all of its business outside of Hong Kong?

    Annual returns must be submitted to the Inland Revenue Department and the Companies Registry by all Hong Kong businesses. Regardless of the location of the business activities, the annual compliance obligations include the accounting and auditing reports.

    Do we need to be in Hong Kong to incorporate a company?

    It is possible to form a company in Hong Kong remotely with the help of Relin Consultants, a reputable service provider. After registering, you can obtain the digital corporate documents.

    Can a foreigner be a director in a Hong Kong company?

    Yes. The Companies Ordinance does not state that a director has to be a resident of Hong Kong.

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