Hong Kong Company Registration Information
The most common type of business entity registered in Hong Kong is a private limited liability company. Limited liability companies have a separate legal personality, limited liability for its owners, strong public perception and an enduring structure; raising capital and transfer of ownership is easier when compared to other business structures such as sole proprietorship and partnership. Foreign business professionals often refer to this type of entity as an offshore company in Hong Kong. Governed by the Companies Ordinance of Hong Kong, any person (foreign or local) above the age of 18 can setup a Hong Kong company.
This article provides detailed information about registering a private limited liability company in Hong Kong including basic incorporation requirements, procedure and timeline, post-incorporation procedures etc. Irrespective of whether you are a local or foreign entrepreneur, you are strongly advised to engage the services of a professional firm as such firms are well versed with the local legislations governing companies and are also experienced in handling ongoing regulatory and compliance requirements.
Basic Requirements and Facts for Hong Kong Companies
· Company name – The company name must be approved before you can proceed with the incorporation of a Hong Kong company.
· Directors - A minimum of one director and unlimited maximum number of directors allowed. The director could be a person or a company. The director can be of any nationality and need not be resident in Hong Kong. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractices. There is no requirement for the directors to also be shareholders. Directors Board meetings can be held anywhere in the world.
· Shareholders – A Hong Kong private limited company can have a minimum of 1 and maximum of 50 shareholders. There is no residency requirement for shareholders. A director and shareholder can be the same or different person. The shareholder must be at least 18 years of age and can belong to any nationality. The shareholder can be a person or a company. 100% local or foreign shareholding is allowed. Appointment of nominee shareholders is permitted. Shareholders meetings can be held anywhere in the world.
· Company Secretary – Appointing a company secretary is mandatory. The secretary, if an individual, must ordinarily reside in Hong Kong; or if a body corporate, must have its registered office or a place of business in Hong Kong. It has to be noted that in case of a sole director/shareholder, the same person cannot act as the company secretary. The company secretary is responsible for maintaining the statutory books and records of the company and must also ensure the company's compliance with all statutory requirements.
· Share Capital – There are two types of share capital for Hong Kong companies – authorized capital and issued (or paid-up) capital. Although there is no minimum share capital requirement, the general norm for companies incorporated in Hong Kong is to have an authorized share capital of HKD 10,000 represented by 10,000 ordinary shares of HKD 1.00 each. The authorized share capital can be increased anytime after the company has been incorporated. However, you will have to pay the Hong Kong government a capital duty of 0.1% for share capital over HKD 10,000. The capital duty is capped at HKD 30,000 in each case. The minimum issued (or paid-up) capital is usually 1 share of HKD 1.00. There is no limit or restriction on the maximum amount of share capital for both types. Share capital can be expressed in any major currency and is not restricted to the Hong Kong Dollar alone. Shares can be freely transferred, subject to payment of stamp duty. Bearer shares are not allowed.
· Registered Address – In order to register a Hong Kong company, you must provide a local Hong Kong address as the registered address of the company. The registered address must be a physical address and cannot be a PO Box.
· Public Information – Information about company officers - directors, shareholders and company secretary is public information. It is mandatory to file details of the company officers with the Hong Kong Company Registrar. If you wish to maintain confidentiality you can appoint a nominee shareholder by utilizing the services of a professional services firm.
· Taxation – Corporate tax, (or profits tax as it is called) is set at 16.5% of assessable profits for companies setup in Hong Kong. Hong Kong follows a territorial basis of taxation i.e. only profits which arise in or derived from Hong Kong are subject to tax in Hong Kong. There is no capital gains tax, withholding tax on dividends, or GST/VAT in Hong Kong.
· Ongoing Compliance – It is mandatory for companies to prepare and maintain accounts. Accounts must be audited annually by Certified Public Accountants in Hong Kong. The audited accounts together with tax return must be filed annually with the Inland Revenue Department. Every company is required to file annual returns with the Companies Registry and pay the annual registration fee. The Business Registration Certificate should be renewed, one month before expiry on annual basis or once every three years, as the case may be. An Annual General Meeting (AGM) should be held annually every calendar year. The AGM should be held within 18 months of the date of incorporation, after which no more than 15 months can elapse between one AGM and the next. A written resolution in lieu of Annual General Meeting is permissible.
Usually, it takes about 4-7 working days to incorporate a company in Hong Kong.
Considerations for Foreigners
Foreigners who wish to register an offshore limited liability company in Hong Kong, must take into consideration the following points:
· Foreigners are free to be the sole directors and shareholders of a Hong Kong company. There are no local resident requirements.
· Although there is no requirement to be physically present at the time of company registration, physical presence may be required for the purpose of opening a bank account, depending on the bank chosen.
· Foreigners who do not plan to relocate to Hong Kong are free to operate their Hong Kong offshore company from overseas. They can travel to Hong Kong on a visitor visa as and when required.
· Foreigners who plan to relocate to Hong Kong to operate their offshore Hong Kong companies are required to obtain an appropriate relocation visa type.
Documents Required for Company Registration
To setup a Hong Kong limited liability company, normally the following documents will be required:
· A copy of the Memorandum and Articles of Association (MAA) for the company. A standard MAA document is normally provided by the professional services firm who is assisting with incorporation of the company.
· A duly completed incorporation form that includes the following:
o Company name
o Registered address
o Brief description of business activities
o Particulars of shareholders, directors and company secretary
o Liability of members
o Share capital registered on incorporation
o Number of shares taken up by subscribers
· For non-resident shareholders and directors:
o Copy of passport, overseas residential address proof, bank reference letter
· For resident shareholders and directors:
o Copy of Hong Kong identity card
· For corporate shareholders and directors:
o Copy of parent company registration documents such as Certificate of Incorporation and Memorandum & Articles of Association
Note: Officially certified translated versions for any non-English documents must be provided.
Company Registration Procedure
The incorporation procedure entails two steps: Approval of Company Name and Application for Company Registration with the Companies Registrar.
Approval of Company Name
The first step in the registration procedure involves approval of the proposed name of the company by submitting an application to the Companies Registry.
Company Name guidelines:
· A company may be registered with an English name, a Chinese name, or an English and a Chinese name.
· A company name with a combination of English "words" and "letters" and Chinese characters is not allowed.
· An English company name must end with the word Limited and its equivalent in Chinese characters in the case of a Chinese company name.
· A Chinese company name should use traditional Chinese characters, in "New Sai Ming" font, that can be found in the Kang Xi Dictionary or Ci Hai Dictionary and also in the ISO 10646 international coding standard.
The proposed name will likely be rejected if the name:
· Is the same as or similar to a name appearing in the Companies Registry's 'Index of Company Names'
· Infringes on trademarks
· Is considered offensive or otherwise contrary to public interest
Company names containing words or expressions such as 'Trust', 'Chamber of Commerce', 'Bureau', 'Cooperative', 'Government' etc. will require prior approval from the Chief Executive. In some cases, the use of certain words and expressions in company names is covered by other legislation. For example, use of expressions like 'Bank', 'Stock Exchange' etc. should not contravene the related legislation and approval from the relevant body/authority is required prior to usage.
Company Registration with Companies Registry
Once the name has been approved, the incorporation request can be filed with the Companies Registry by submitting the above mentioned incorporation documents that have been duly completed and signed. A registration fee of HKD 1,720.00 and the capital fee of HKD 1.00 for every (or part of) HKD 1,000.00 of the nominal share capital (this capital fee is subject to a maximum of HKD 30,000.00 per case), is payable to the Companies Registry for incorporating a private limited company.
A successful application is usually processed within four to seven working days and the Companies Registry will issue a Certificate of Incorporation. The presenter of the incorporation documents (person stated in the Incorporation Form) will be intimated of the application outcome as the Companies Registry will send a fax notification, with the details. The Certificate of Incorporation must be collected at the Companies Registry, only in person by the presenter. Note: the presenter must furnish his identity card or the company chop (in the case of a corporation or firm) to collect the Certificate of Incorporation. A written authorization will be required if the presenter sends a representative to collect the certificate.
Post Registration Formalities
Once the company has been registered, there are a number of other formalities that need to be taken care of. These include:
i) File post registration documents with Company Registrar
Within 14 days of the incorporation, the following documents / notifications must be filed with the Companies Registry:
1. Notification of Appointment of First Directors and Secretary
2. Notice of Consent to Act as Director
3. Notification of Situation of Registered Address
4. Other documents as required by the Companies Registry
ii) Open a Bank Account
Once you have registered your company with the Companies Registry, you can proceed to open a corporate bank account with any of the major banks in Hong Kong. Some of the banks in Hong Kong require the physical presence of the company principals as part of their due diligence procedure in opening a bank account. However, there are certain banks which do not require you to personally be present at the time of opening an account. Therefore before you choose a bank, it is important to consider if you will able to visit Hong Kong for the bank account opening procedure. Generally, the Professional firm that you have chosen will guide you on choosing an appropriate bank depending on your requirements and provide you with the necessary information.
iii) Register with Inland Revenue Department
It is mandatory for all Hong Kong limited liability companies to register their business with the Business Registration Office in the Inland Revenue Department by obtaining a Business Registration Certificate. Business Registration with the Inland Revenue Department must be done within one month after incorporation with the Companies Registry, irrespective of whether the company is active in business or not. The business registration number that appears on the Business Registration Certificate is also the respective company's profits tax (corporate tax) file number.
On receiving the application, Business Registration Certificate will be issued on the next working day and must be collected in person. The Business Registration Certificate must be displayed on the office premises at all times.
iv) Apply for a Business Licence
Once you have registered your company with the Companies Registry and the Inland Revenue Department and, depending on the nature of your proposed business activities, you may require a business licence before you can actually start your business activities. Fortunately, most of the business activities do not require any special license. Examples of businesses that require a business licence include restaurants, educational institutes, travel agencies, financial services etc.
Hiring a Professional Firm
The professional firm you have engaged for your company formation will normally take care of all the necessary formalities from the beginning to the end. Hiring a competent and service oriented firm is very important as the relationship is a long-term and ongoing one. The firm you hire will:
1. Collect the necessary incorporation details and identifications documents from you.
2. Reserve the company name of your choice and prepare the necessary incorporation documents (including Memorandum and Articles of Association) that will need to be filed with Company Registrar. You will need to sign these documents.
3. File the incorporation documents with the Company Registrar and obtain Certificate of Incorporation.
4. Obtain Business Registration Certificate from Inland Revenue Authority.
5. Assist the client with opening of bank account.
6. Prepare the following for the new company:
o Common seal and stamps
o Share certificate and share register
o Statutory books
7. Assist with filing for relocation visa, business licenses, ongoing statutory compliance, and annual filings as appropriate