Hong Kong is known for its excellent infrastructure, free economy, and low taxes. Its location in Asia, close to Mainland China, makes it an ideal location for businesses operating in the Asian market and worldwide.
Key facts about subsidiaries in Hong Kong
is the most popular business form chosen by foreign companies in Hong Kong
. The subsidiary is a private limited liability company registered in Hong Kong
treated as a separate legal entity from its parent company, thus the liabilities of the subsidiary do not extend to the parent company, as they would in the case of a branch in Hong Kong.
The four main traits of the subsidiary in Hong Kong can be summarized as follows:
• Independence: this is possibly the most important trait of the subsidiary, as the company in Hong Kong is completely independent of the parent company abroad.
• Limited Liability: the subsidiary is a Hong Kong limited liability company meaning that both the founders and the parent company only have limited liability in terms of debts and obligations incurred by the subsidiary.
• Distinct Management: the management of the subsidiary is separate from that of the parent company; the subsidiary handles its own accounts and accounting.
• Flexibility: the subsidiary is independent of the parent company and this also extends to the business activities; it can perform the same business activities and others if needed.
The subsidiary can have the same name or choose a different one and it can have the same listed activities or these can differ. However, it is important that the name of the company is approved by the Companies Registry
. Our tool allows you to perform a preliminary name check
for the subsidiary. There is no minimum or maximum share capital for a subsidiary in Hong Kong
and subsidiaries are subject to the same tax regime and tax rates applicable to private limited companies.
The basic requirements for a subsidiary include:
The current company registration requirements in Hong Kong do not make it mandatory to deposit a minimum or maximum share capital for a subsidiary. However, in practice is it common to have ordinary shares with a value of 1.00 HKD each and to have an issued or paid-up capital of at least one share with this value. Companies can choose to have an authorized capital of 10,000 HKD represented by 10,000 ordinary shares, as described above.
Our company formation specialists in Hong Kong
can tell you more about the accounting requirements for subsidiaries and other types of companies
Register a subsidiary in Hong Kong
· - the application form, signed and completed;
· - the incorporation documents for the subsidiary;
· - The parent company’s Memorandum and Articles of Association and Certificate of Incorporation;
· - Documents for the appointed company officers: identification documents, proof of residence and a bank letter.
A registration fee and a capital fee apply. The procedure usually lasts between four and seven days. After the company is registered, a Certificate of Incorporation will be issued. After registration, any company must register at the Inland Revenue Department and obtain a Business Registration Certificate. Companies will also need to open a bank account and apply for any necessary business licenses, according to the type of activity they perform.
Requirements for Hong Kong subsidiaries after registration
After the company is registered with the Trade Register in Hong Kong
, it must also register with the Inland Revenue, which is the tax authority in this country. The Inland Revenue will issue the Business Registration Certificate which will enable the subsidiary to operate in Hong Kong
. This application must be submitted within one month of registering the company with the Companies Registry and it is performed whether or not the subsidiary has started the business activities or not. The process is a simple one and the Business Registration Certificate is collected in person, usually within one business day. The subsidiary needs to display this certificate on the office premises, in a visible spot, at all times.
The next requirement is for the subsidiary directors or representative of the company to open a corporate bank account with a Hong Kong Bank. The subsidiary can have an account with any bank, regardless of the bank of the parent company abroad. Different banks have different requirements for opening a bank account and the fees for opening and maintaining one will vary. The documents usually needed to open this account include the following:
- - certified copy of the Articles of Association, the Certificate of Incorporation and the Business Registration Certificate;
- - Board resolution for opening the corporate bank account;
- - identification documents for the company directors and specimen signatures for the authorized signatories (either the directors or other appointed individuals);
- - a certificate showing the percentage of shareholdings owned by the foreign company in the Hong Kong subsidiary;
- - the business plan or the audited financial statements.
This list is not an exhaustive one and it can differ from one bank to the other. We recommend selecting a bank to work with and then reaching out to them to find out the exact document list. Alternatively, one of our specialists can handle this step.
Our Hong Kong company formation agents
can assist with the opening of the bank account and can help advise foreign investors on their options when they cannot be present in Hong Kong during all of the company incorporation formalities. With the help of our agents, you can handle part of the procedures through a power of attorney, allowing one of our specialists to handle particular company incorporation phases. An important advantage is that you do not have to travel to Hong Kong at different stages in the process of opening a subsidiary.
Once these requirements are complied with, the Hong Kong subsidiary may apply for the business license which will be issued by the competent authority. It must be taken into account that certain special licenses could be required, depending on the activity of the subsidiary. Examples of regulated businesses include travel agencies, restaurants, employment agencies, education business, financial services companies, event management companies, retail shops or trading companies. These are just some example, however, investors interested in company registration in Hong Kong for the purpose of starting a subsidiary may need to obtain different types of permits according to the types of activities undertaken by the said subsidiary.
One example of a regulated business includes financial services companies. Hong Kong is a popular business and financial hub and many of these types of companies choose to expand their services here. For a subsidiary in this business field, the following will be required, apart from the Business Registration Certificate and the others already mentioned. For these types of companies, the following licenses are generally required, depending on the exact type of activity or activities:
- - A corporate license issued by the Securities and Futures Commission, a representative license and an authorized institution registration.
- - Money lenders license which is issued by the Companies Registry.
- - Insurance agent’s registration that is issued by the Office of the Commissioner of Insurance and it is needed in order to perform activities as an insurance agent.
- - Insurance Business Authorization also issued by the Office of the Commissioner of Insurance.
- - Authorization of Insurance Brokers, also issued by the Office of the Commissioner of Insurance.
- - Pawnbrokers License, which is a license issued by the Hong Kong Police Force.
- - Deposit-Taking Company Registration, offered by the Hong Kong Monetary Authority.
- - Registration of Remittance Agents and Money Changers, also issued by the Hong Kong Police Force.
One of our agents who specialize in company formation in Hong Kong can give you more information about the financial services licenses. The examples above include just some of the categories of businesses in this field for which a special license is needed. Depending on the types of services they provide, financial companies in Hong Kong will need to obtain one or more of these licenses. The same applies to restaurants, where business owners will need to obtain several licenses, from those needed to store and produce foodstuffs to selling alcoholic beverages.
Taxation of subsidiaries in Hong Kong
As mentioned above subsidiaries in Hong Kong
will be treated the same as local companies in terms of taxation. The corporate tax for a Hong Kong subsidiary
is 16,5%, which is one of the lowest in Southeast Asia. Apart from that, the parent company may also file for certain tax exemptions or credits depending on the double taxation agreement its home country has signed with Hong Kong.
Subsidiaries must also comply with the same accounting regulations as Hong Kong companies. They must file their tax returns within one month of their issuing by the Inland Revenue Authority. The tax year in Hong Kong starts on April 1st and ends on March 31st the next year.
Our company formation consultants in Hong Kong
are ready to assist you and answer any questions. Please contact us
for additional information.