Three Steps for Starting a Company in Hong Kong
Many investors and entrepreneurs today choose to set up their businesses overseas, especially in jurisdictions like Hong Kong. Hong Kong is internationally renowned for its simple and low tax regime, making it one of the most business-friendly jurisdictions in the world.
Starting a new company in Hong Kong is easier than you may think. Here’s a three-step guide on how to set up a Hong Kong company.
Step 1 – Choose the type of company and name
Company incorporation in Hong Kong is guided by the Companies Ordinance of Hong Kong.
It is important you choose the type of company that best suits your company's purposes. Hawksford can evaluate the best option for you depending on the nature, structure and purpose of your business (read more about incorporation entity types).
These are the most useful types of companies in Hong Kong:
1. Company limited by shares
The liability of members is limited to the amount of their respective shareholding. A company limited by shares is the most common type of company for conducting business and trade in Hong Kong.
2. Company limited by guaranteeThere is no share capital and the liability of members is limited to the amount that the members respectively undertake to contribute to the assets of the company in the event of it being wound up. Non-profit organisations are usually registered as guarantee companies.
The main characteristic that differentiates a sole trader from other business types in Hong Kong is that this form of business is not considered a legal entity and it and its owner are one and the same. Thus, the sole proprietor is the one liable for all and any debts and liabilities. We will apply for your business registration within one month after the beginning of the business as applications without proof of commencing business will be rejected.
This type of business structure makes sense only for very small one-person type businesses as it does not offer its owner the protection of personal assets and limited liability. It is often difficult for sole proprietorships to raise capital and expand their businesses as investors hesitate to deal with non-incorporated entities.
After choosing the company type, choose a name for the company. You need to think of two to three options and we will verify the name availability before applying to establish the company.
The name could already be registered in the Registrar of Companies, otherwise known as ‘the Registrar’. Please note that if the name has already been registered, your application will be rejected.
One matter you need to consider is that a company name that may infringe the intellectual property rights (IPR) of a third party should not be adopted. Infringement of the IPR of others may lead to criminal or civil sanctions, either in Hong Kong or elsewhere. A search in the Trademark Register maintained by the Intellectual Property Department should also be conducted.
Step 2 – Choose the business structure
You need to have:
1. A minimum of 1 director
There must be at least one individual director (there is no need for the director to be resident in Hong Kong).
2. A minimum of 1 shareholder
They can be the same person as the director or a different person or legal entity. All Hong Kong private limited liability companies are required to have at least one shareholder up to a maximum of 50. No residency requirement is imposed on shareholders.
3. One company secretary
They must be resident in Hong Kong. The secretary is required to maintain the company’s statutory books and records. They are also charged with the responsibility of ensuring the company is compliant with Hong Kong laws. Hawksford offers this service.
4. A registered address
A local physical address in Hong Kong is required; it cannot be a PO Box and can be the address of the Company Secretary. Hawksford also provides this service to its clients.
5. Articles of association for your company
These are documents that clearly specify a company’s operation regulations and its purpose. The documents lay out how tasks are to be accomplished within the organisation, including the process for appointing directors and the handling of financial reports.
The information required is as follows:
- Company name
- Members’ liabilities and contributions of members
- Share capital and initial shareholding (the total number of shares that the company proposes to issue and the amount to be paid)
- Director’s power, responsibilities, decision making, appointment, termination and remuneration
- Appointment and removal of the company secretary
- Organisations of general meetings
- Shares and distributions
- Payment of dividends
- Capitalisation of profits
For individual directors/shareholders:
- Copy of directors and shareholders’ passports
- Copy of directors and shareholders’ proof of residential address
For corporate shareholders:
- Copy of business registration certificate
- Copy of all directors’ passports
- Copy of the registered office’s proof of address
- Memorandum and articles of association (M&A)
You also need to include the share capital and description of the company’s activities.
If the documents are provided in a language other than English, you need to provide a translated document in English.
Step 3: Submit the application
You will need to submit the following documents:
- Incorporation Form – Form NNC1 (for companies limited by shares) or Form NNC1G (for companies not limited by shares)
- A copy of the company's articles of association
- A Notice to Business Registration Office (IRBR1)
What ongoing compliance is there?
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. The audited accounts then must be submitted to the Inland Revenue Department.
There are annual filing requirements and deadlines that must be done in order to avoid penalties. Read more about General compliance and annual filing requirements for companies in Hong Kong.
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.