Hong Kong

3 Chapter Establishment

    • DIFFERENT KINDS OF ORGANIZATION

        The most common types of business vehicle for foreign companies wishing to carry on business in Hong Kong are:

      • A company incorporated in Hong Kong

      • A branch office of that foreign company, or

      • The establishment of a representative office in Hong Kong

      •Also possible, but less common, are sole proprietorships, partnerships and limited partnerships. 

    • a. Special Types of Business

       Certain businesses may not be carried on in Hong Kong without a specific licence or other consent of the relevant regulatory authority, in addition to the other requirements set out in this guide. These businesses include various financial institutions, telecommunication and broadcasting companies, restaurants, travel agencies and employment agencies. 

    • b. Business Registration

       Every business in Hong Kong is required by the Business Registration Ordinance to obtain a Business Registration Certificate within one month of commencing business for its principal office address and also for any other business address in Hong Kong. If a company carries on a business using one or more business or trade names, a Business Registration Certificate is required for each such name. Business registration serves to notify the Inland Revenue Department of the establishment of a business in Hong Kong which may be subject to the payment of profits tax. The One-stop Company and Business Registration Service was jointly launched by the Companies Registry and the Inland Revenue Department in February 2011. Any person who applies for incorporation of a Hong Kong company or for registration of a non-Hong Kong company at the Companies Registry is deemed to have made an application for business registration simultaneously. Accordingly, companies are only required to lodge one single application for both company incorporation/registration and business registration.

    • REGULATORY BODY FOR BUSINESS ENTERPRISES

       The Companies Registry of Hong Kong is tasked with the following:

       

      1. To provide services to allow the promoters of companies, limited partnerships, trust companies and registered trustees to incorporate their enterprises easily and to register all documentation required by the various ordinances governing those enterprises.

                    

      2. To provide the public with services to search for the information held by the Registry.

                    

      3. To ensure compliance by enterprises and their officers with their obligations under relevant Ordinances.

                    

      4. To advise the Government on policy and legislative issues regarding company law and related legislation.

                    

      5. To achieve all the aims described above in an efficient and effective manner and to provide services within time frames and at prices which are acceptable to our customers.

    • MINIMUM REQUIREMENTS AND PROCEDURE

       

       

      TYPE OF BUSINESS

       

      REQUIREMENTS

       

      PROCEDURE

       

      1.     Private Limited Corporation

       

       

      1. Registration and Incorporation

       

      2. Name

      - A company name is not permitted if it is identical to that of an existing company. There are also restrictions on the use of certain words.

       

      A free company name search may be conducted on the Companies Registry’s website or at its Public Search Centre to check whether or not a name is already being used. It is not possible to reserve a name in advance.

       

       A company may be incorporated with either an English name, a Chinese name or both. Where a company is incorporated with an English and Chinese name, both names together constitute the full name of the company and should be used together.

       

      3. Share Capital

       

      There is no prescribed minimum or maximum share capital for any type of company. Share capital may be divided into different types or classes of shares such as ordinary, preference or deferred shares with special rights attached to them as prescribed by the company’s Articles of Association.

       

      4.  Shareholders

       

      Every company must have at least one (1) registered shareholder whose name, address and shareholding are filed on public record at the Companies Registry. Shareholders can be individuals or corporations of any nationality, domicile or residence.

       

       

       

      5. Directors

       

      A private company is required to have at least one (1) natural person as director and there is no legal maximum for the number of directors.

       

       Directors can be individuals (over 18 years old) or corporations of any nationality, domicile and residence, except that no corporate director is allowed in the case of a private company which is a member of a group of companies of which a listed company is a member.

       

       The director’s name, the number of his or her identity card (if any) or the number and issuing country of any passport held, and his or her residential address must be filed on public record at the Companies Registry.

       

      There are no restrictions as to the place at which board meetings can be held. Most modern Articles of Association provide for written resolutions by the directors as well as meetings to be held by telephone or through video conference facilities.

       

      6. Company Secretary

      - A company must have a company secretary which is

       

      a.)   either another company with its registered office or place of business in Hong Kong or

      b.)   an individual ordinarily resident in Hong Kong.

       

      The sole director of a company or a body corporate, of which the sole director is the sole director of the company, cannot be the secretary of the company.

       

      The company secretary’s particulars must be filed on public record at the Companies Registry.

       

      The company secretary’s function is to maintain the company’s statutory books including registers of directors and shareholders, the minute book of directors’ and shareholders’ meetings and the share certificate book and to prepare the documents which have to be filed on public record.

       

      7. Registered Office

       

      A company must have a registered office address in Hong Kong which serves as the company’s legal address for the service of notices and proceedings. This can be the same as or different from the company’s business address.

       

      8. Auditors and Accounts

      A company must keep proper books of accounts and the financial statements must give a true and fair view of the financial position and financial performance of the company unless the company is entitled to reporting exemption.

       

      Its accounts must be audited every year and submitted to the Hong Kong Inland Revenue Department. The accounts of a private company are not published or filed on any public record in Hong Kong. The accounts of a public company must, however, be filed at the Companies Registry.

       

      9. Annual Filing Requirements

      Apart from the obligation to update the Companies Registry within a prescribed period after certain changes are made such as alteration of Articles of Association or change of company name, a company is required to file an Annual Return which shows updated particulars of the company’s share capital, shareholders, directors and registered encumbrances (e.g., charges over its assets).

       

      9. Business Registration

      A company is required to obtain a Business Registration Certificate under the Business Registration Ordinance.

       

       

       

      1. Submit to the Companies Registry in Hong Kong the following:

       

      a. Copy of its Articles of Association (which contain its internal regulations constituting a contract between the shareholders and the company)

       

      b. Completed incorporation form (containing information on particulars of first directors, first secretary, founder members, share capital on formation, as well as the address of the registered office of the company)

       

      c. Completed Notice to Business Registration Office, and

       

      d. The prescribed fees and levy

       

      The Notice to Business Registration Office must be submitted together with the incorporation documents.

       

      An applicant may make an electronic application for incorporation of a Hong Kong company via the e-Registry which is a 24-hour portal developed by the Companies Registry to facilitate electronic submission of application for company incorporation.

       

       

      2. Upon approval of an application for company incorporation, the Companies Registry issues the Certificate of Incorporation certifying the name and date of incorporation of the company and the Business Registration Certificate in one go. The legal existence of the company commences from the date of incorporation.

       

      2. Branch Operations

      - Foreign corporations are permitted to establish branch offices in Hong Kong and, in general, such offices are subject to the same legal and tax consequences as companies incorporated in Hong Kong. As a matter of Hong Kong law, there is no distinction between the foreign corporation itself and its branch, and the branch is only an address at which the corporation itself carries on business.

       

       

      1. Registration

       

      A foreign corporation wishing to establish a Hong Kong branch office must register with the Companies Registry as a non-Hong Kong company which has established a place of business in Hong Kong under Part 16 of the Companies Ordinance. This must be done within one (1) month of establishment of the place of business in Hong Kong.

       

      2.  Accounts

       

      A foreign corporation needs to file a copy of its annual accounts on public record at the Companies Registry. (Exceptions to this requirement are those foreign corporations that do not need to publish their accounts or make them available for inspection on public record

       

      a)           under the laws of the place   

      where they are incorporated, or

      b) under the laws or rules of any stock exchange or similar regulatory bodies in any other jurisdictions where the foreign corporations are registered as companies.)

       

      Once registered, the corporation is required to file a certified copy of its latest published accounts with the Companies Registry on an annual basis together with an annual return, unless the condition for not having to file its accounts is fulfilled.

       

      2. Annual Filing Requirements

      Apart from the regular filing requirements to update the particulars of a foreign corporation on public record at the Companies Registry, a foreign corporation is required to file an Annual Return showing updated particulars of the corporation’s share capital, directors and registered charges over its assets in Hong Kong, etc.

       

       

      1. Registration is effected by submitting to the Companies Registry:

      a. completed application form

      b. certified copy of the instrument defining the company’s constitution

      c. certified copy of the Certificate of Incorporation (or its equivalent)

      d. certified copy of the latest published accounts

      e. completed Notice to Business Registration Office and the prescribed fees and levy.

       

      2. Obtain a Business Registration Certificate under the Business Registration Ordinance.

       

      Since February 2011, any person who applies for registration of a non-Hong Kong company under the Companies Ordinance is deemed to have made a simultaneous application for business registration. The Notice to Business Registration Office must be submitted together with the registration documents.

       

      3. Upon approval of an application for company registration, the Companies Registry issues the Certificate of Registration of Non-Hong Kong Company and the Business Registration Certificate in one go.

       

       

      3. Representative Office

      Hong Kong law recognises the status of a foreign corporation whose activities in Hong Kong do not require it to be registered as a Hong Kong branch. In such a case, the appropriate status is that of a local representative office of the foreign corporation. A representative office must not transact any business in Hong Kong which creates any legal obligations. However, there are some well-established exceptions, such as entering into usual arrangements with utility companies; with landlords (in respect of the lease of its office premises); and with its employees. Since a representative office cannot conduct business in Hong Kong creating legal obligations, its activities should be limited to acting in a liaison capacity between the corporation and the corporation’s offices elsewhere and introducing Hong Kong customers to those offices.

       

       

      1.  Obtain a Business Registration Certificate under the Business Registration Ordinance

      A foreign corporation which establishes a representative office in Hong Kong is not required to register under Part 16 of the Companies Ordinance (which a branch office needs to do) but must obtain a Business Registration Certificate under the Business Registration Ordinance. On the basis that it will not conduct any business in Hong Kong, a representative office should not generate any profits within the scope of Hong Kong taxation.

       

      The representative office may apply to the Inland Revenue Department for an exemption from filing profit tax returns on the basis that it does not carry on business in Hong Kong; otherwise, it may file annual profit tax returns on a “NIL” basis.

       

       

       

      4. Sole Proprietorship

       

      A sole proprietorship is not a separate legal entity so all its debts and liabilities are the personal responsibility of the sole proprietor.

       

      Obtain a Business Registration Certificate

       

       

      5. General Partnership

       

      A partnership is not a separate legal entity nor does it have continual existence. The partners are personally liable for all of its debts, and all of its property rights are vested in all of the partners. A partnership agreement usually governs a partnership. There is also a Partnership Ordinance which codifies the law relating to partnerships. This contains provisions regulating the rights and obligations of partners, and is deemed to apply when there is no partnership agreement.

       

       

      Obtain a Business Registration Certificate

       

       

      6.Limited Partnerships

      A limited partnership consists of one or more general partners, who are responsible for the management of the partnership, and who are liable for all of its debts and obligations. A limited partnership also consists of one or more limited partners, who are liable for the debts or obligations of the partnership only up to the amount that they contribute to the capital of the partnership. In order for a limited partner to have the benefit of limited liability, the limited partner must not take part in the management or control of the business of the limited partnership and must have no power to bind the limited partnership as its agent.

       

       

      1. Registration

      - with the Companies Registry, otherwise it is deemed to be a general partnership

       

      2. Obtain a Business Registration Certificate

      - for each place at which it conducts business in Hong Kong

       

       

    • Share Capital Requirement

       There are two types of share capital for Hong Kong companies – authorized capital and issued / paid-up capital.

    • a. Authorized capital

       There is no minimum share capital requirement. However, the general norm for companies incorporated in Hong Kong is to have a 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, a capital duty of 0.1% for share capital over HKD 10,000 will have to be paid to the HK government. The capital duty is capped at HKD 30,000 in each case.

    • b. Issued/ Paid-up capital

       The minimum issued/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 a stamp duty fee. Hong Kong company formation law does not permit bearer shares.