By Vlad Cuc, specialist in company formation matters
Any new company in Hong Kong
needs to be registered with the Companies Registry
and obtain the necessary permits for functioning. Afterward, the legal entity needs to be registered with the tax authorities in Hong Kong.
Our company formation agents are able to give you complete information about the full process of opening a business, from choosing the right type of company to hiring employees. Below, we answer some of the most commonly asked questions on company formation in Hong Kong. This set of questions can be regarded as a general guide for company formation, however, foreign investors who need more information or have more specific questions can always reach out to one of our agents.
What are the main steps for registering a company in Hong Kong?
Choosing a suitable type of company
is the first step when deciding to incorporate a business in Hong Kong. Several options are available and the choice is made according to the size of the future company and the available capital. Below, we highlight some of the most commonly used business forms:
- - Private limited liability company: one of the most-used business forms, especially by small and medium-sized businesses, it has a legal identity and the shareholder’s liability is limited to the amount of their investment in the company; it needs to comply with the on-going statutory compliance and disclosure requirements.
- - Public limited liability company: suitable for large businesses, this is a type of company that can offer its shares publicly and the shareholders, however, when this takes place the company is subject to more complex requirements for public disclosure and general regulations.
- - General partnership: formed by two or more individuals who are jointly and unlimitedly liable for the debts of the business; it is easy to set up and manage and the partners can benefit from their combined experience.
- - Limited partnership: there are two types of partners and only the general ones bear full liability while the limited ones are only liable to the extent of the invested capital; it is also subject to less demanding compliance requirements.
- - Sole trader: the simplest business form and also the one with the highest degree of liability; it is the simplest to register and manage.
- - Branch: foreign companies can enter the market by opening a branch: an extension of the parent company and not a separate legal entity from the foreign one, making the company abroad liable for the branch’s debts in Hong Kong; it is registered with the Companies Registry although the process is less demanding than in the case of a subsidiary.
All of the business forms briefly described above have their advantages and disadvantages and our team of company registration agents in Hong Kong can help investors with more details. Choosing the proper business form is the first step for company incorporation and also one that will determine the future compliance requirements for the business.
After choosing the suitable business form, the general steps for registration include the following:
- - having the company name approved: the investor will need to choose an available company name and a preliminary name availability search can be performed online through the Companies Registry; the final name choice is made by filing an application with the Registry.
- - prepare the company documents: the founders need to fill in the Incorporation application form, draw up the Articles of Association and also provide a set of copies of their identification documents.
- - make the registration submission: the company registration documents are submitted to the Companies Registry; the normal processing time is approximately four days when all the documents are in order; the maximum wait time is approximately one week.
- - post-registration steps: once the company received the Business Registration Certificate, it must open a bank account, register with the Inland Revenue Department and apply for the additional business licenses as needed.
What are the company's constitutive documents?
Investors need to draw up these types of documents for company incorporation in Hong Kong:
- the incorporation form, filled in as required by the Companies Registry;
- the company’s articles of association (copy), which can be drawn up with the help of our agents;
- the Notice to Business Registration Office, a mandatory process in Hong Kong.
Fees apply for registration. The application can be rejected if the company name does not comply with the ongoing requirements. We recommend performing the company name check
with the help of our agents and, in all eventuality, prepare more than one company name.
What are the requirements for the minimum share capital?
Many investors decide to open a private limited liability company is Hong-Kong
because this business form has no burdensome requirements for a minimum share capital. This also extends to other business forms, most notably partnerships, sole proprietorships and others.
What are the requirements for opening a private limited liability company?
In order to incorporate a private limited liability company in Hong-Kong, its founders will need to draw up the Memorandum of Association and the Articles of Incorporation. At least one shareholder, one director and a secretary (either an individual or corporation, having Hong-Kong residence) are needed to establish this legal form. When the company only has one shareholder/or director, he cannot act as the company secretary. The number of members cannot exceed 50, however, there are no restrictions on nationality. The shares of a private limited liability company cannot be transferred freely and cannot be made available to the public. The members are only liable to the extent of the invested capital.
A Hong Kong registered company is required to have a registered address, that is a physical address and not a PO box.
Are special permits and licenses needed in Hong Kong?
Companies activating in business sectors like import and export, food production, restaurants and catering, those that offer insurance and banking services, those that perform activities related to offering nursing home care services and those engaged in activities that have an impact on the environment are required to obtain more than the regular business registration permit. These special permits or licenses
are issued by the relevant Hong Kong authorities and one of our agents can help you apply for these.
Is VAT registration mandatory in Hong Kong?
The Value Added Tax is one of the taxes that do not apply in Hong Kong.
What are the applicable taxes in Hong Kong?
Hong Kong has a low tax regime
and one indication is precisely the fact that there is no applicable value-added tax. However, the corporate income tax
rate is also considered a low one, at 16.5% and 15% for unincorporated businesses. Other taxes for companies in Hong Kong are the social security contributions, the real estate tax, stamp duty. There is no payroll tax, no gift or capital taxes and no withholding tax on dividends and interest. Duties are charged for a number of products, among which most importantly alcohol and tobacco. One of our agents who specialize in company formation in Hong Kong can give you complete details on the taxation regime as well as the double taxation relief.
What are the requirements for opening a bank account in Hong Kong?
Applicants must submit a set of documents when they open a corporate bank account. These will include the following:
- the application for opening a corporate bank account, filled in and signed by the authorized persons,
- the decision to open the bank account,
- the certified copy of the Certificate of Incorporation as well as a certified copy of the Business Registration Certificate, the certified copy of the Memorandum of Association of the company,
- a statement given by the company manager and from the main shareholder,
- copies of the identification details for the company shareholders as well as proof of residence when needed; specimen signatures will also be required.
The actual documents will differ according to the selected bank. The company's lawyer or a certified public accountant can perform the document certification.
What are the conditions for hiring employees in Hong Kong?
Companies can use different methods to recrit the adequate candidates and then commence the process for hiring personnel in Hong Kong
. Working with a recruitment agency is a methid commonly employed by large companies, but other options are available such as online portals for different types of jobs, announcements in printed media or job fairs.
An employer in Hong Kong needs to observe the requirements for occupational safety and health as well as the minimum wage and other benefits. Enrollment with the Mandatory Provident Fund is needed for part-time and full-time employees and it is performed by the employer.
Why is Hong Kong a good location for doing business?
That fact that the city is a Special Administrative Region of China has not affected its political and economic stability. Hong Kong is the main gateway to Mainland China and this is one important location advantage.
Hong Kong is not a tax haven in the traditional sense, like Belize or Seychelles, but it is a jurisdiction that has low taxes for companies, and this has been very important in its ability to establish itself as a financial and business center. A large number of double tax treaties that also include a clause for the exchange of information grant commercial transparency as well as protect investors from double taxation.
Our company registration agents in Hong Kong invite you to watch a comprehensive video about the company incorporation process in the city: