English | Fran├žais

Hong Kong

Advantages

  • Having your business incorporated in Hong Kong means that all incorporations are legal bodies. The advantage is that you can sell or buy shares at any time. The buying or selling of the shares does not hamper the operations of the corporations.
  • Another main advantage of incorporations is that they all belong to a class known as limited liability. This means that in case of a loss that is being suffered to the corporation, the only loss that the shareholders will have to suffer is the amount that they have invested. The reason for this is because the creditors cannot claim losses more than the assets of the corporation.
  • All profits made internationally will not be taxed as long as it is booked and structured in a non resident Hong Kong company.
  • Free to Choose the Name of the Company: no matter how much is the register capital, the Hongkong government allows the names of the company to include the words such as international, group, holding, industry, investment, enterprise, association, chamber of commerce, united group, foundation, association for promotion, center and etc..
  • Great Development in Low Taxation Environment: The taxation in Hongkong is very low, and that is why a lot of organizations avoid taxation reasonably by the benefit of Hongkong taxation. When setting up companies in Hongkong, you only need to pay two kinds of taxation: one is the stamp tax of the registered capital, which is decided by the actual registered capital and its rate is 0.001. the other is the income tax, which is decided by the actual profit, and its rate is 16.5%. No tax on off-shore income, capital gains, dividends, estate or sales, no goods and services tax.
  • Modicum Registered Capital and No need of Inspection: The registered capital often directly influences the shareholders’ decision of setting up enterprises. In Hongkong, no matter how much is the registered capital; the enterprise needn’t send the fund to Hongkong banks.
  • Easy to Get the International Credit: It is known to all that Hongkong is the economic and financial center in Asia, every street of which has banks. Credit is the basis to develop international businesses, and you can do finance by this financial center after getting the credit, or you can directly open the L/C to foreign enterprises and do big businesses with less fund.
  • In-and-out Freedom of People, Materials and Funds: Hongkong is the freest and most flourish harbor in the world, whose infrastructure is excellent. The in-and-out of people, materials and funds are free. Hongkong has signed treaties with more than 100 countries for people coming to and leaving Hongkong without signing visa. When goods are imported and exported, they can be free of tax and the logistics fr om sea, land and air will be managed very quickly.
  • Taking the advantage of Hongkong’s popularity and establishing Hongkong brand: Because of the notability of Hongkong’s international status, the following-up enterprises often like to package their own enterprises by taking the advantage of Hongkong popularity, i.e. the Hongkong’s clothes, toys, culture, publishes and so on have some competitive advantage in the world.
  • Within five hours of half the world’s population.
  • Asia’s leading aviation and shipping hub.
  • Proven gateway to China’s high-growth markets.
  • The world's freest economy and free flow of information.

Main Forms of Incorporation

  • Limited Liability Company (both public and private)
  • Branch Office
  • Representative Office
  • Partnership
  • Sole Proprietorship

Most foreign investors form limited liability companies, but in some cases they opt to form branches. All of these entities are subject to profits tax. A private limited-liability company is one that restricts that right to transfer its shares, limits and number of shareholders to 50 and prohibits any offers to the public of its shares or debentures. Companies that do not have these restrictions are public companies.

All businesses must register with the Inland Revenue Department (IRD) and obtain a Business Registration Certificate fr om the Registrar of Companies. Tax implications vary according to the structure and professional advice is essential before commencing business.

Limited Liability Company (both Private and Public)

  • Company can be incorporated with limited or unlimited liability. In a "limited" company, the shareholders are liable only for the amount unpaid on their shares or, alternatively, for the amount that they have pledged to contribute. Companies in which the shareholders have unlimited liability are rare. Most foreign investors choose to establish private limited companies or branch operations.
  • Limited companies can be divided into public companies and private companies. Companies must have a minimum number of one subscribers and may be either private or public companies.
  • Private companies may not have more than 50 shareholders nor offer its shares or debentures to the public, and the right to transfer shares in a private company may require board approval or be subject to a right of pre-emption by the other shareholders.
  • Public companies are subject to minimum capitalization requirements and to regulation in the issuance of prospectuses and stock offerings, and must file annual statements with the Companies Registry.
  • Anyone can be a shareholder and director of a Hong Kong company. There is no restriction on foreigners acquiring shares in Hong Kong companies. Shares can be registered in name of persons residing outside Hong Kong.
  • A corporation may act as director of a Hong Kong company provided that the company is a private company, and it is not a member of a group of companies which includes a listed company.
  • A company secretary must be appointed. It must have an address in the terrirory and the statutory secretary has to be a Hong Kong resident if it is an individual or a corporation having its registered office or place of business in Hong Kong.
  • There is no special qualifications on a company secretary, however, the Stock Exchange Listing Rules require secretaries of listed companies to be an individual possessing certain qualifications.
  • An annual general meeting (AGM) must be held each calendar year with the exception of the first AGM which must be held within 18 months of incorporation.
  • At least one Board of Directors’ Meeting must be held every year and need not be held in Hong Kong.
  • An annual return must be filed with Companies Registry wh ere is open for public inspection. All documents filed must be in English or Chinese, or accompanied by a certified translation into English or Chinese.
  • Hong Kong Company has to keep proper books of accounts. In general, the audited accounts are prepared annually in accordance with Hong Kong Financial Reporting Standards issued by Hong Kong Institute of Certified Public Accountants (HKICPA).
  • The annual audited accounts have to be submitted to the Hong Kong Inland Revenue Department (IRD) together with the annual Corporation Profits Tax Return for assessment.
  • Audited accounts of a private company having a share capital are not filed with the Companies Registry, although they are lodged with the Hong Kong IRD in support of the tax computation.

Branch Office (Non – Hong Kong Company, Overseas Company)

An overseas corporation that intends to set up a business in Hong Kong may register a branch office with lim ited liability. A branch is the same legal entity as its head office. The overseas company must register its branch office within one month of commencing business. The procedure is quite simple and involves the preparation and submission of a list of required documents to the Hong Kong Companies Registry:

  • A certified copy of the Memorandum and Articles of Association of the corporation head office or other instruments defining its constitution.
  • A list of the names, nationalities and residential address of the directors and shareholders of the company.
  • The name and address of at least one person resident in Hong Kong who is authorized to accept legal notice served on the company.
  • Name and address of the company’s statutory secretary.
  • The address of the principal place of business of the Hong Kong branch.
  • The address of the principal place of business and registered office of the foreign company in its place of incorporation.
  • A memorandum of appointment or power of attorney authorizing a person to accept legal notice for the company in Hong Kong.
  • A certified copy of the company’s certificate of incorporation and a certified translation of the certificate if it is written in a language other than Chinese and English.

Representative Office

Like a branch, this is a means by which a company incorporated outside Hong Kong establishes a place of business in Hong Kong. Representative Offices (RO) are particularly useful for foreign companies that wish to analyse the Hong Kong market before making a bigger investment in the city. After obtain a business registration certificate from the Business Registration Office, the representative office is required to register under the Companies Ordinacne unless:

  • The RO does not conclude contracts in Hong Kong other than contracts for employing domestic staff, purchasing furniture and fixture, etc.;
  • RO does not maintain accounts in Hong Kong; and
  • RO receives no income in Hong Kong.

Partnership

Similar to the sole proprietorship business, the only formality for establishment of a partnership is to obtain a business registration certificate. There must be an office address in Hong Kong and at least one of the partners must reside in territory. If all partners are stationed overseas, there must be a manager who residents in Hong Kong to represent the partnership.

Sole Proprietorship

The establishment and operation of a business in the form of a sole proprietorship are relatively simple. Sole proprietorships are required to be registered under the provisions of the Business Registration Ordinance.