Complete Guide to Business Registration in Hong Kong
Hong Kong is the investors’ paradise: a powerhouse tested and proven to act as firing canon for businesses that want to snowball in Asia and globally. It is a global financial hub run by a pro-business administration that is willing to do anything to see every business succeed. In the last World Bank’s ease of doing business Index, Hong Kong shot to the third position.
Now, you can also use Hong Kong as a launching pad. To use this potent hub for your enterprise, you need to first incorporate your business in Hong Kong. This article is your comprehensive guide to business registration in Hong Kong.
Benefits of Business Registration in Hong Kong
Before we can tell you the steps needed for business registration in Hong Kong, it is vital to start by understanding the core benefits. Here are some of them:
- Hong Kong, together with Singapore, has made a name for being the most liberal jurisdiction in the globe. With this fact, business registration in Hong Kong is simple, fast, cheap, and convenient.
- You can run your company incorporated in Hong Kong from anywhere in the globe. Using an agency, your business will be able to operate professionally on a daily basis and grow progressively. Well, if you get experts to run the company, it will grow even faster to become the multinational you always dream of.
- One of the core targets of any business is having a ready market for its products. So how do you like a market of 1.3 billion people for your product? That is what Hong Kong has to offer. It acts as the best gateway to Mainland China that opens a market of 1.3 billion people. And that is not all. Once you are through with business registration in Hong Kong, your enterprise will also enjoy preferential treatment from more than 30 states that have signed bilateral trade agreements with Hong Kong.
- Although Hong Kong is a province of the Democratic Republic of China, it enjoys huge autonomy that includes running an independent administration. Since the island lacks land for agriculture or mineral exploration, it has adopted a unique business-based model. The administration does everything possible, from simplifying the tax system to running business incubation programs, to ensure your enterprise succeeds after business registration in Hong Kong.
We can go on and on; these are only a few pros that you will enjoy after business registration in Hong Kong. Now, we will tell you how to incorporate a private limited liability company.
Useful Facts about Business Registration in Hong Kong
In Hong Kong, company incorporation is guided by the Companies Ordinance of Hong Kong. This article provides full details about registering a company in the Special Administration Region (SAR) of China. These details include the requirements for business registration in Hong Kong, post-incorporation requirements, and other details. With that said, here are some crucial facts that you need to know about company incorporation in Hong Kong.
Any Hong Kong private limited liability company is required to have at least one shareholder to a maximum of 50. No residency requirement is imposed on shareholders.
When registering a company in Hong Kong, the minimum number of directors needed is one. However, you can have as many as you want. The company needs to have at least one individual shareholder (no restrictions/requirements on nationality or residency).
Every limited liability company must have a company secretary who resides in Hong Kong. The secretary is required to maintain the company’s statutory books and records. He is also charged with the responsibility of ensuring the company is compliant with Hong Kong laws.
When you incorporate a company in Hong Kong, it has to meet its tax obligation. So what are these obligations? In 2017, Hong Kong introduced a two-tiered profit tax regime meant to make taxation simple and spur economic development. Under the two-tiered tax system, the profits tax rate for the first $2 million of the assessable profits is pushed down to 8.5%. Then, the profits tax for the assessable revenue above $2 million remains 16.5%. Note that Hong Kong uses the territorial basis of taxation, which implies that you will only pay the corporate tax on business done in Hong Kong.
Once you register a company in Hong Kong, you must prepare and maintain accounts properly. The company’s accounts have to be audited on an annual basis by a Certified Public Accountant in Hong Kong. Then, the audited accounts must be submitted to the Inland Revenue Department.
What Documents are required for Business Registration in Hong Kong?
When registering a business in Hong Kong, you need to prepare an assortment of documents and submit them to the registry. These documents are:
- Articles of Association for your company. These are documents that clearly specify a company’s operation regulations. For example, they show how different tasks such as handling of financial records and appointing directors in the company will be done.
- A duly filled company registration form that includes the following details.
- The name of your company.
- The company’s registered address.
- A description of the company’s activities.
- Details of the company’s directors, shareholders, and the resident company secretary.
- If your company has directors and shareholders who are non-residents, make sure to provide copies of their passports and proof of residence in their countries.
- In the case of local directors and shareholders, you need to provide copies of their identity cards.
- In the case of corporate shareholders, you need to provide a copy of the company registration for the parent company.
- Liabilities of the company directors.
- The share capital.
If the documents are provided in a different language other than English, you need to provide a translated document in English.
The Best Methods of Business Registration in Hong Kong
Now that you know the different documents that are required for business registration in Hong Kong, it is time to get the job done. The best method for company incorporation in Hong Kong is using an agency. Here is a demonstration of how it works.
Registering a Hong Kong Company Using an Agency
While Hong Kong has greatly simplified the business registration process, the list of documents to be prepared is rather long. And that is not all; some of the documents such as the articles of association can be complex. For those who are overseas, the idea of having to fly all the way to Hong Kong can make the process expensive and complex. The best alternative is using an agency for business registration in Hong Kong. It will make it possible for you to register a company without traveling to Hong Kong.
Benefits of using an agency to register a company in Hong Kong
The company registration law allows people and businesses, especially those located overseas, to use registered agencies for incorporation. So what are the benefits of using an agency for company incorporation?
Company registration agencies in Hong Kong are run by professionals with a lot of experience in business incorporation. Therefore, you are sure that all the documents will be properly done and registration completed faster.
The agency will help you to prepare even the documents that you would otherwise find complicated. For example, how do you go about preparing the Articles of Association? What about the memorandum of understanding, and description of the company's activities? With an agency, you can focus on other tasks, such as growing the capital to run the company, as the experts take care of the documents.
An agency can serve as your company secretary. This is perhaps the main advantage of working with an agency when incorporating a company in Hong Kong. Instead of running expensive ads in the local daily and later conducting interviews searching for a Company Secretary, the agency can act as your secretary. Well, why incur more costs on ads when an agency run by professionals can serve as your secretary?
Your company can use the agency’s office as its address. Again, this implies that you do not need to move from one sky scrapper to another downtown Hong Kong searching for an office. By using an agency, it implies that you can use its physical office, infrastructure, and expertise to run your business in Hong Kong. This is a great idea, especially for businesses that do not have a lot of operations, or do not want to run their own offices in the city. It is also a great option when you want to enter the Hong Kong market gradually before intensifying operations in the coming months or years.
You can use the expertise of the agency to understand the new market. Because agencies are run by experts who have been in the market for years and also assisted other companies enter the market, you can use their knowledge to make entry into the Hong Kong market smoother.
Business Registration in Hong Kong FAQ
What are the minimum statutory requirements for registering a company in Hong Kong?
Most companies registered in Hong Kong take the form of private limited companies. So, here are the main requirements for registering a limited liability company in Hong Kong.
- Any person or organization is allowed to register a company in Hong Kong.
- Further, a minimum of one shareholder is required, whether local or foreigner. Note that the shareholders must be over 18 years.
- At least one director, local or foreigner, is also required. The director must be more than 18 years.
- One person can serve as both the director and the shareholder.
- To register a company in Hong Kong, no minimum share capital is needed. However, the moist common practice is to have a share capital of about HKD 10,000. This capital is represented by 10,000 ordinary shares of HKD 1.00 each, because the minimum paid-up capital in Hong Kong for one share is HKD1.00.
- Your must have a registered address.
- You need a company secretary who must be a Hong Kong resident. If you prefer to use an incorporated entity to serve as the secretary, it needs to have an office in Hong Kong.
- The company must have a Designated Representative (DR). This is a person or a company selected to provide assistance related to Significant Controllers Register (SCR) of the company. The law on designated representative and SCR is relatively new having come into effect in 2018. Therefore, it is paramount to have this statutory role covered by professionals.
What language is allowed when selecting a name for company registration in Hong Kong?
A company can be registered using a Chinese name, English name, or both. But the name cannot have a combination of English and Chinese letters. Further, a company with an English name must have the name "Limited" at the end. If the name is in Chinese, the last name should have an equivalent of the word “Limited.”
How long does a company registration in Hong Kong take?
In most instances, it will only take five to seven working days to get the company incorporated. But if you are abroad, the process may take a little longer because of logistics related to signing and sending documents.
Do I need to be physically present in Hong Kong during the company registration process?
No, you don’t. If you hire an agency to register the company for you, there is no need to book a flight to Hong Kong. All you need is sending the required documents to your selected agency. However, you might need to be physically present when opening a bank account.
After the company incorporation, can I hire foreign employees?
Yes, you can. But you need to follow the right procedure. This involves filing an employment visa for the employee. That visa has to be approved by the Hong Kong authorities.
Can I relocate to Hong Kong to run my registered company?
As a foreign entrepreneur wishing to relocate to Hong Kong, you should apply for an Investment Visa. This visa is like an Employment Visa because it follows the General Employability Policy. Note that you are only allowed to apply for an Investment Visa after the company formation.