How to Incorporate a Company in Hong Kong
Hong Kong economy is one of the most highly developed and 2nd freest in the world. The GDP Has been growing steadily over the last half a decade and has increasingly become integrated with the mainland financial links, tourism, and trade. The conducive business environment attracts hundreds of entrepreneurs to set up companies here.
Today, we will discuss the process of incorporating a company in Hong Kong.
The first thing that you need to note is that the Companies Ordinance of Hong Kong allows both foreign and local persons who are at least 18 years old to set up a company in Hong Kong. Private limited liability company is the most common business entity in the country.
As the name suggests, a limited liability company is considered to have a separate legal personality and a limited liability to its owners. Compared to other business entities such as partnerships and a sole proprietorship, it is easier to transfer ownership and raise capital with a limited liability company in Hong Kong. Usually, the process of incorporating a company in Hong takes between 5-7 working days.
Let us shift gears and look at the basic requirements for incorporating a company in Hong Kong.
Basic Company Incorporation Requirements in Hong Kong
Company name: This is the name that the government, business associates, and clients will use when relating to your company. It must be approved before you can incorporate the company.
Company Ordinance: Following an amendment of the rules governing company incorporation that took effect in 1st March 2018, all companies incorporated in the country are required to set up and maintain a register of all people who have a significant influence of the company. Only companies that are listed in Hong Kong Stock Exchange (HKSE) is exempt from this requirement.
In addition, the company is required to have a designated representative (DR) whose primary role is to report to SCR whenever the local authorities request.
Directors: The company is required to have at least one individual director. There is no limit on the number of directors can be a local or foreigner. It’s not a must that the director is a Hong Kong resident but he or she must be at least 18 years old, not convicted of any malpractices in the past, and not bankrupt.
It is also important to note that there is no requirement for any of the directors to be shareholders of the company. You can also decide to appoint nominee corporate directors and directors board meeting can be held in any part of the world.
Shareholders: Any Hong Kong private limited company must have a minimum of one and a maximum of 50 shareholders. Just like the directors, the shareholders don’t have to be residents of Hong Kong. A shareholder and director can also be the same or different person, that is, a director can also be a shareholder.
The shareholder must be at least 18 years old and can be of any nationality. One of the highlights of incorporating a company in Hong Kong is that 100% foreign or local shareholding is permitted. You can also appoint nominee shareholders and shareholders meetings can be held in any country.
Company Secretary: It is mandatory to appoint a company secretary. The secretary must be a resident of Hong Kong. If you decide to hire a body corporate to play this role, it must have its offices registered in Hong Kong. A solo director or shareholder cannot be appointed as the company secretary.
Share Capital: The beauty of incorporating a company in Hong Kong is that there is no minimum share capital required. The norm is that at least one shareholder with an ordinary share in the company issued during formation of the company.
The share capital can be in any major currency in the world. This means that you are not restricted to the Hong Kong dollar. The shares can be freely transferred but bearer shares are not allowed. A stamp duty fee has to be paid during the transfer of shares.
Registered Address: A local Hong Kong address is required to act as the official registered address of the company. This address must be a physical address and not a PO BOX.
Public Information: According to Hong Kong Company Laws, information about the company officials such as directors, shareholders, and company secretary is considered public. This information should be presented to the Hong Kong Registrar of companies during incorporation. However, if you want to maintain your confidentiality, you can appoint a corporate shareholder and a nominee individual director by leverage the services offered by a professional company registration firm.
Taxation: Corporate tax is currently capped at 16.5% of all assessable profit accrued by the company. The government has put in places a territorial basis form of taxation which means that only profits earned in or derived from Hong Kong are taxable. There is no withholding tax on dividends, capital gains tax, or GST/VAT in Hong Kong.
Ongoing Compliance: All companies incorporated in Hong Kong are required to prepare and maintain financial accounts. These accounts are subject to an annual audit that is done by Certified Public Accountants in Hong Kong. The tax returns and audited accounts are then filed with the Inland Revenue Department annually. You should also note that every company is required by law to file annual returns with the Companies Registry as well as pay the annual registration fee stipulated.
The Business Registration Certificate issued after successfully incorporating the company should be renewed one month before the expiry date every three years or annually, as the case may be.
Annual General Meeting (AGM): The first Annual General Meeting should be held within 18 months after the date of incorporation. Thereafter, no more than 15 months can elapse between one AGM and the next one. Ideally, this meeting should be held once every calendar year.
A written and signed resolution in lieu of an Annual General Meeting is allowed.
Documents Required to Register a Company in Hong Kong
The following documents are required to successfully set up a Hong Kong limited liability company.
- A copy of the Articles of Association of the company you intend to register. Professional services firm that helps with company registration and incorporation using provide a standard document for this purpose.
- Complete Incorporation form with the following details:
- Approved company name
- Official registered address
- Brief description of the activities the company will be involved in
- Details of the directors, company secretary, and shareholders
- Liability of the members
- Share capital registered on incorporation
- A specific number of shares owned by the company subscribers
- The non-resident directors and shareholder need to provide a copy of their passport and proof of residential address overseas
- Hong Kong resident directors and shareholders should provide a copy of the Hong Kong identity card and a copy of proof of residential address
- Corporate directors and shareholders need to submit a copy of parent company registration documents such as Articles of Association and Certificate of Incorporation
Important Facts that Foreigners Need to Consider
Foreign entrepreneurs who want to register a company in Singapore need to put into consideration the following factors.
- Foreigners are allowed to be shareholders and solo directors of any Hong Kong company. No local resident requirements.
- Even though one does not have to be physically present during the process of company registration and incorporation, physical presence may be required for tasks such as opening the company bank account. However, this depends on the bank you choose.
- Foreigners who don’t plan to relocate to Hong Kong are legally allowed to operate the company from overseas.
As you can see, the process of incorporating a company in Hong Kong is quite straightforward and entrepreneur oriented. It is recommended to hire one of the professional service company that offer company registration and incorporation services to complete the process successfully and faster. The firm will use its expertise to help you circumvent any hurdles that may arise on the way. Good luck as you register and incorporate your company in Hong Kong. The future has never looked brighter.