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Hong Kong Companies

GENERAL INFORMATION ON SETTING UP A HONG KONG COMPANY

 

For foreign investors wishing to set up a business in Hong Kong, they can either choose to set up a private limited company, partnership, liaison office or branch. In most cases, a Hong Kong limited company would be chosen to carry out the business.

 

Advantages in setting up a Hong Kong company

 

  • Well- established legal system.
  • No exchange control. Funds can be circulated freely without paying any taxes.
  • No restriction on business scope.
  • Simplified tax system and low taxation rate.
  • Excellent banking facilities.
  • Strict confidentiality of information exchanged.
  • Significant gateway to China.

 

There are two different methods to set up a company in Hong Kong, either incorporation of a new company or acquisition of a shelf company.

 

  1. Incorporation of a New Company

To incorporate a newly established company, the first step is to search on the availability of the proposed name. If the name is registerable, the next step is to prepare and file the incorporation documents with the Companies Registry. It normally will take about 4 working days to obtain the certificate of incorporation (“CI”) from the Companies Registry after the submission of all relevant documents. It takes about 3 days to have all corporate documents such as Articles of Association printed.

On the date of incorporation mentioned in the CI, the company comes into existence and it can commence business immediately after the setting up documents are executed. Generally speaking, provided that all the necessary information of the directors and shareholders and cost on account, it takes about 7 working days to complete the whole process.

  1. Acquisition of a Shelf Company

Alternatively, you may consider acquiring a shelf company. A shelf company is a ready-made company which has not traded or incurred any liabilities. It can be traded or carried on business immediately upon acquisition. If you urgently need a company for doing business, this is the faster and most convenient method.

Once the shelf company is chosen, documents have to be prepared for transfer of share and change of director and/or company secretary. The change will be effective immediately after submission of relevant documents to the Stamp Office (for share transfer) and the Companies Registry (for change of director and/or company secretary).

If the name of a shelf company is to be changed, this would involve some extra 4 working days after submission of relevant documents to the Companies Registry to effect the change of name.

 
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In respect of the legal requirement, we list the following points for your perusal:

  1. Company name

The name of a Hong Kong company should be ended with the word “Limited”. The company name can be registered in Chinese or English or both. The Companies Registry will not allow the use of a company name which is identical to that of an existing company. In this connection, a search of company names should be conducted at the Companies Registry before submission of the application for incorporating a new company.

 

  1. Share capital

There is no statutory upper or lower limit on the number and value of the share capital to be issued.

 

  1. Shareholder

A Hong Kong company must have at least one shareholder who can be non-Hong Kong resident or overseas corporation and must hold at least one share.

A shareholder (the “Beneficiary”) may appoint nominee to hold the one share in trust for him. To protect the Beneficiary’s interest, he may arrange for the nominee to execute a Declaration of Trust in favour of him. A blank instrument of transfer must be signed by the nominee in advance.

 

  1. Director

A Hong Kong company must have at least one individual director who may be resident anywhere. Corporate Director is permitted for companies which are not a member of a group companies of which a Hong Kong listed company is a member.

 

(Note: In case where a Hong Kong company has only one member who is also the sole director, a reserve director (who is 18 years of age or over) can be nominated in general meeting and act in the place of the sole director in the event of his death.)

 

  1. Secretary

A Hong Kong company must have one secretary who should ordinarily reside in Hong Kong (if an individual) or have been incorporated/ registered in Hong Kong under the Hong Kong Companies Ordinance (if a body corporate). The company secretary may be one of the directors. However, a Hong Kong company having only one director shall NOT appoint the sole director as the secretary of the company.

 

  1. Registered/ Business address

A Hong Kong company must maintain a Hong Kong registered address, which must be a physical address and not a post office box, but no requirement of having its office.

 

  1. Time required for incorporation

Incorporation of a Hong Kong company will take about 7 working days. For change of name, it will usually be effected in about 4 working days.

 

  1. Annual statutory requirement

Every company incorporated in HK is required to attend the following annually:-

  • An annual general meeting (“AGM”) must be held in respect of financial year of the company within:
  • 9 months after the end of its financial year end for the company limited by guarantee or a private company that is not a subsidiary of a public company;
  • 6 months after the end of its financial year end for any company other than the above;
  • Submission of an annual return within 42 days after its anniversary;
  • Renewal of the Business Registration Certificate;
  • Preparation of Director Report and Audited Financial Statements; and
  • Completion and submission Profit Tax Return and Employer’s Return of Remuneration and Pensions.