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Main characteristics for registration in Hong Kong
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Time to complete the registration2 weeks
Company Registration in Hong Kong
Hong Kong is the special administrative region of the People’s Republic of China, an autonomous territory and a perfect location for foreign investors to enter the Chinese market. Foreign investment is welcomed by the Hong Kong Government. This jurisdiction offers low and attractive tax regime for foreign investors along with beneficial immigration policies for professionals. Hong Kong is a free port and generally imposes no customs duties on imported goods, with a few limited exceptions. Besides, it is a great location to enter the Chinese market which is the second largest economy in the world and the fastest-growing major economy.
Hong Kong has the status of an important offshore and international finance center.
This article gives you an overview on how to set up a company in Hong Kong and key points on how your business can benefit from it.
What types of legal entities is it possible to incorporate in Hong Kong?
Foreign companies and citizens usually consider the following types for company formation in Hong Kong:
- A private or public company limited by shares: there is no minimum share capital required by the Companies Ordinance of a company.
- Company limited by guarantee
- Branch or representative of foreign company
- Sole proprietorship
Company registration documents to be submitted depend on the type of legal entity you choose from.
How long does it take to form a legal entity in Hong Kong?
It usually takes 1-2 weeks depending on the form of business you choose to set up.
Tips: If you file an application online, then the certificate of incorporation is generated electronically and becomes available once the application is fully completed.
What are company incorporation documents in Hong Kong?
The documents and information necessary for preparing application documents are as follows:
Once the above documents are ready, it is necessary to prepare the following documents for filing to the Companies Registry:
- incorporation form (Form NNC1 or Form NNC1G depending on the type of the company);
- a copy of the company’s articles of association; and
- a notice to business registration office.
There are standard official templates of Model Articles for public companies limited by shares, private companies limited by shares and companies limited by guarantee. It is possible to adopt the Model Articles for your company. However, if you wish to make any amendments, then you are advisable to seek advice with lawyers, as there are mandatory provisions that should be included in the articles of association, such as the company name, capital and initial shareholdings, etc.
How to register a company name in Hong Kong?
The company name in Hong Kong must be approved by the Registrar of Companies before the company is registered. A company name will not be registered if:
- it is the same as a name appearing in the Index of Companies Names of Hong Kong;
- it implies a connection in any way with the Central People’s Government or the Government of the Hong Kong Special Administrative Region or any department or agency of either government;
- it is the same as that of a body corporate incorporated or established under the Companies Ordinance;
- its use would constitute a criminal offence;
- it is offensive or otherwise contrary to the public interest;
- the words “Bank”, “Stock Exchange”, “Unified Exchange”, “chamber of commerce”, “kaifong”, “levy”, “savings”, “tourist board”, “tourist association”, “trust”, “trustee” or any variations are subject to prior approval.
Company name can be in English or Chinese or both English and Chinese. However, it is not permitted to combine English words and letters with Chinese characters.
It is not possible to use such additions as HK or Far East for wholly owned subsidiary of a foreign corporation. It is advisable to make a company name search at the Companies Registrar to check whether the proposed name is not similar to any existing company name.
Tips: your company name is the cornerstone of your brand and this is how you make your first impression. So, you should think how it works on your logo, website, and advertisements. It is essential to check whether there is no registered trademark that has identical name. You should try to avoid such similarities; otherwise you will fail to protect your IP rights.
What is the company registration fee in Hong Kong?
The official fee for incorporation a Hong Kong company having a share capital is HK$1,720. It is possible to apply for a refund of HK$1,425, if the incorporation is unsuccessful. The registration fee for incorporation of a company limited by guarantee is calculated according to the number of members of the company. The registration fee is HK$170 for up to 25 members, and HK$170 for 26-100 members, and HK$20 for every additional 50 members.
Business registration fee is HK$2,000 for one-year certificate and HK$5,200 for a three-year certificate.
The company should also have annual maintenance costs.
What is the company registration process in Hong Kong?
In order to register a company in Hong Kong, it is required to follow these steps:
- preparing articles of association;
- identifying a number of founder members;
- renting an office or using nominal services of registered office address in Hong Kong;
- appointing director(s) and secretary, alternatively using nominal services of director(s) and nominal shareholder(s);
- receiving director(s) Consent to Act as Director in the incorporation form;
- paying registration fees;
- submitting documents to the Registrar of Companies;
- receiving company incorporation certificate and business certificate;
- receiving tax identification number (TIN);
- opening a bank account.
What is Registrar of Companies Hong Kong?
The Registrar of Companies Hong Kong is the official government body of the Government of the Hong Kong Special Administrative Region. It is responsible for incorporation of local and foreign companies. The Registrar of Companies provides the services for obtaining company information contained in the Companies Register. It also receives statutory returns from Hong Kong companies. Besides, the Registrar of Companies is responsible for granting licenses to trust and company service providers. Certain services of this governmental body can be accessed online.
What are the requirements for shareholders in a Hong Kong company?
A Hong Kong companies have at least one shareholder whose name is contained in the official record. Shareholders are not required to be residents or citizens of Hong Kong. It can be an individual or a corporation either registered in Hong Kong or overseas.
What are the requirements for directors in a Hong Kong company?
A company must have minimum one director. If the company has only one director, that director must be an individual and not a corporate director. It is required to appoint as the company’s secretary a Hong Kong resident individual or a company having its registered office or a place of business in Hong Kong. A private company having only one director cannot have its sole director to act as the secretary.
Tips: Nominee services are allowed, in which case the beneficial owners are not revealed.
What are the accounting requirements in a Hong Kong company?
All companies in Hong Kong are required to keep proper accounting records which must be open for inspection. Financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and are in compliance with IFRS. Financial statements are presented by company’s director before annual general shareholders meeting once per year. The Companies Ordinance also sets forth the disclosure requirements relating to the balance sheet and the profit and loss account (income statement) set out in the financial statements for a company.
What are the audit requirements in a Hong Kong company?
All companies incorporated in Hong Kong must appoint one or more independent auditors. An auditor must be a member of the HKICPA and hold a practicing certificate. The requirement of auditor does not apply to a branch of a foreign corporation. In the meantime, the branch is required to file a profits tax return annually and the official authorities may require audited accounts of the foreign corporation to be presented.
Tips: A company may hold the account records at a place outside of Hong Kong. As per request, it must send accounts to Hong Kong for inspection.
What is the cost of company formation in Hong Kong?
The cost of company incorporation in Hong Kong is Euro.
Taxes in Hong Kong
Hong Kong tax system is rather simple compared to other countries. Thanks to its low tax rates Hong Kong is favoured by foreign investors. Besides, there are no significant tax incentives for foreign investment. Hong Kong is a free port and generally imposes no customs duties on imported goods (with a few exceptions).
What companies are qualified as tax residents in Hong Kong?
A company is a tax resident in Hong Kong if it is incorporated in Hong Kong or its management and control is exercised in Hong Kong. Tax resident companies are taxed on a territorial basis and are taxed only on income generated or accrued from Hong Kong. Foreign income is exempt from taxation in Hong Kong. If a company is Hong Kong non-tax resident, then it is taxed on income generated or accrued from Hong Kong.
What is a taxable period in Hong Kong?
Taxable period in Hong Kong equals to accounting year from 1 April to 31 March.
When tax returns are filed in Hong Kong?
Each company submits annual tax returns with the Inland Revenue Department. Generally, tax returns are issued on 1 April and need to be filed within 1 month.
What is corporation tax rate in Hong Kong?
Corporation tax rate in Hong Kong is 16.5% and is levied on taxable income. Corporation tax applies only if the company both carries on business in Hong Kong and earns profits from that business which are sourced in Hong Kong.
How dividends are taxed in Hong Kong?
No tax in Hong Kong applies to dividend income from foreign investments. Hong Kong does not impose withholding taxes on dividends or interest.
What is interest tax rate in Hong Kong?
Interest income is taxable under income tax.
What is royalties tax rate in Hong Kong?
Royalty income is taxable under income tax.
Are capital gains taxed in Hong Kong?
There is no capital gains tax in Hong Kong. Capital losses are not deductible for profits tax purposes.
Is there VAT in Hong Kong?
There is no VAT on goods and services in Hong Kong.
Voluntary and involuntary liquidation of companies incorporated in Hong Kong is regulated by the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) and the Companies (Winding Up) Rules.
What are the grounds for involuntary liquidation in Hong Kong?
A company incorporated in Hong Kong can be liquidated compulsory based on a court order. There are the following reasons for a compulsory winding up of a company in Hong Kong:
- Failure of the company to pay its debts;
- Non-compliance with statutory requirements;
- The court is of the opinion that it is just and equitable that the company should be liquidated.
What is the procedure of involuntary liquidation in Hong Kong?
The petition is filed to the court by a creditor, shareholder or the company itself and must be published in the Gazette. The liquidator of the company takes control of the company, its assets and accounting records. Once the companies are disposed and the dividends are paid to the creditors, it can be finally liquidated.
What are the grounds for voluntary liquidation in Hong Kong?
Voluntary Liquidation is initiated by company’s members or creditors.
What is the procedure of voluntary liquidation in Hong Kong?
The members pass a special resolution which shall be published in the Hong Kong Gazette within 14 days. Usually it takes 12 months to complete the company liquidation in Hong Kong. Directors of the company appoints a liquidator who is responsible for controlling the company, its assets, debts and accounting records. In case the liquidation process is more than a year, a general meeting is kept annually for informing the members about the liquidation process. Once the liquidator settles all company’s debts and assets, it prepares a final account with indication of the distribution of the company’s property. The account is present at a final general meeting. Finally, the company is written off the Company Registrar.
Note: the company liquidation in Hong Kong is an expensive procedure. It is strongly advised to seek advice before you decide to liquidate your company in Hong Kong. Our experts will provide you with appropriate guidance and assistance.
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