There are many advantages to starting a company in Hong Kong. Thus, many people from all over the world intend to do so. Those who do should know about the laws, requirements, criteria, and facts about company incorporation there before they proceed with starting the company.
According to the Companies Ordinance of Hong Kong, there are two methods by which a company in Hong Kong can be defined. The first of these definitions is that of a business entity formed and registered under the provisions of the Companies Ordinance. The second definition is that of a company which already exists in Hong Kong.Generally, for the purpose of conducting small business, a private company is set up in Hong Kong. The Companies Ordinance of Hong Kong defines a private company as a company which bounds the rights of transferring of shares.The total number of members of a private company mustbe 50 people or fewer.
Thinking of incorporating in Hong Kong? Let’s get started.
E A S I E R • F A S T E R • B E T T E R
The Companies Ordinance is the piece of legislation which defines the legal status of a company in Hong Kong. The current version of the Companies Ordinance came into effect on March 3, 2014. Its purposes were to modernize and reform Hong Kong’s company laws, clarify enactments which were relevant to Hong Kong companies, make certain provisions involving companies, and provide understanding regarding any incidental or related issues. The Companies Ordinance also specifies who may interpret or translate any information found in it. It contains 921 sections, 21 parts, and 11 schedules in its entirety; all of these work together to form the most comprehensive legislation on companies based in Hong Kong.
According to the new requirements of the Companies Ordinance,the number of types of companies that can be formed in Hong Kong has been reduced from eight to five. Furthermore, some of the types of companies that had previously been allowed to have been formed have since been abolished.
The following are the five types of companies that can be formed under the new requirements of the Companies Ordinance:
Private companies limited by shares
Public companies limited by shares
Companies limited by guarantee without any share capital
Private unlimited companies with share capital
Public unlimited companies with share capital
It was also decided that after the effective March 1, 2018 amendment, every corporation incorporated within Hong Kong except the HKSE (Hong Kong Stock Exchange) is to manage a register of the personnel who have considerable control of the company. All companies in Hong Kong will be responsible for the appointment of a Designated Representative who will report to the Significant Controllers Registrar (SCR).
Prerequisites for Registering a Company in Hong Kong
The following are some important facts and prerequisites for registering companies in Hong Kong:
The very first step for one to establish a company in Hong Kong is the verification and approval of the company name.The Companies Ordinance states that the following names are not allowed to be used: those which are the same as a company name already in the Index of Company Names, those which would violate the law through their use as a company name, those which would share a name with an incorporated or established body corporate, and those deemed to either be offensive or violate the public good.
There must be a minimum of one individual as a director. The director or directors may appoint an unlimited number of directors, depending upon the needs of the company. The minimum age of directors is 18 years old; directors must never have been convicted of any misconduct.
A private limited company in Hong Kong can have anywhere between one and 50 shareholders. The age limit for shareholders is the same as that of directors. Shareholders may belong to any nationality.
In Hong Kong, it is mandatory to appoint a secretary. This secretary must ordinarily live in Hong Kong. A sole shareholder or director cannot also serve as the secretary of the company.
How to Register a Company in Hong Kong
The following documents are required for the registration of the company:
A copy of theArticles of Association (AA) of the company
Name of the company
A registered address
Description of business activities
Personal details of shareholders, directors, and company secretary
Non-resident shareholders and directors are required to submit a copy of passport and overseas residential address
Resident shareholders and directors are required to submit copy of Hong Kong ID (identity card) and copy of residential address
Corporate Shareholders and directors are required to submit a copy of parent company registration credentials including certificate of incorporation and AA (Articles of Association)
Authoritative credentials as well as translated versions for any non-English credentials must be provided
Procedure After the Registration of the Company
The following proceduresmust be carried out after the registration of a company in Hong Kong:
Opening a Bank Account
After the registration of a company in Hong Kong, the first step is to open a bank account. The duration of the opening of account varies from bank to bank. The following documents are required for opening a bank account in Hong Kong:
Authorized copy of the Articles of Association of the Company
Authorized true copy of the business registration of the Company
Submission of the authorized copy of the Certificate of the Incorporation of the Company which is issued by the Companies Registry
A copy of Hong Kong ID (Identity Card) and passport
Residential proof including utility bills, bank statements, and driving license
Directors, Company Secretary, and Shareholders
After the registration of the company, the company appoint directors and acompany secretary. Shareholders are also to be selected.
Online Application for Business Registration
Ever since 2011, those who have intended to set up a business in Hong Kong have been able to do so via the Internet. By using an eTAX Password or a MyGovHK Password, anyone who is eligible may opt to register their business online. For further information related to the registration of any kind of business or valid business registration certificate in Hong Kong,there are online services which can be used.
Foreigners and Company Registrationin Hong Kong
Just like locals, foreigners are also eligible for registration of companies in Hong Kong. In fact, the government of Hong Kong encourages foreigners to set up business in their country.
The following key points must be taken into consideration by a foreigner who wishes to register an offshore limited liability company in Hong Kong:
Foreignershave complete rights to be the individual director and shareholder of a company in Hong Kong. There is no requirement of a local resident.
For the registration of the company in Hong Kong, there is no need forphysical presence of the owner. The owner can register the company through online sources but will have to be physically present when opening a bank account in Hong Kong.
Those who do not intendto move to Hong Kong have the right to operate their Hong Kong offshore company from abroad. They are under no obligation to move to Hong Kong to do so.
The documents required for the registration of a company in Hong Kong are the same for foreigners as those requiredof locals. These include company name, residential address proof, parent company registration documents, liability of members, and registered address. Foreigners will also need to supply a copy of their passport and its details.
Cost of Registering a Company in Hong Kong
There are reasonable fees for the incorporation of a company limited by shares in Hong Kong. They are as follows:
HK$1,720 for the registration of acompany; if the process is unsuccessful, an application with a refund of HK$1,425 will be acceptable
HK$2,000 for the registration of abusiness with a certificate valid for one year and HK$5,200 for the one with a certificate valid for three years
Tax for the security of earnings in a bankruptcy fund (HK$250 for a one-year certificate and HK$750 for a three-year certificate)
Main Advantages ofRegistering a Company in Hong Kong
The following are the primary benefits of incorporating company in Hong Kong:
Low cost of incorporation. It costs far less to incorporate a company in Hong Kong than it does in most other countries.
Lack ofcapital gains tax
No minimum requirements for share capital
Hong Kong is a chief trading location in the world today.Therefore, the incorporation of a Hong Kong company is likely to be seen as legitimate and therefore less likely to be thought of as a tax avoidance vehicle.
Widespread use of English. It is an official language and used as a main business language. All the information related to reporting and documentation can be found in English.
Trouble-free, easy-to-understand tax system which does not impose burdensome taxes. Tax rates in Hong Kong are some of the lowest in the world, thus attracting many people from all over the world to live and work there.
The formation of a limited liability company requires only one director and shareholder
Hong Kong is home to an excellent banking system and world-classcommunications infrastructure. In both of these areas, Hong Kong has become the envy of many nations all over the world.