Hong Kong Subsidiary Registration
More and more foreign investors and entrepreneurs choose Hong Kong as their base for business operations and expansion due to the island’s business friendly policies that include 100% foreign ownership, low taxes, preferential access to Mainland China markets, etc. Among the various business structures available to foreign companies, setting up a wholly-owned subsidiary company is the most popular and preferred option.
This article provides detailed information on requirements and procedure of registering a Hong Kong subsidiary.
A Hong Kong subsidiary company is a private limited company incorporated in Hong Kong with the shareholder being another local or foreign corporate entity. It’s treated as a separate legal entity thus the parent company’s liability is limited to the amount of share capital it has contributed to the subsidiary. It enjoys all the tax benefits available to locally incorporated companies.
Hong Kong Subsidiary: Basic Requirements and Facts
- Company Name: The company name must be approved by the Companies Registry and should conform to the Company Name Guidelines.
- Shareholding. 100% shareholding by a foreign company is allowed.
- Directors: A Hong Kong subsidiary must have at least one director (person or body corporate; local or foreigner; above 18 years of age and must not be bankrupt or convicted for any malpractices)
- Shareholders: A Hong Kong subsidiary must have a minimum of one shareholder and a maximum of 50 (person or body corporate; local or foreigner; above 18 years of age)
- Company Secretary: It is mandatory to have a local resident company secretary (individual or body corporate)
- Local Registered Address: The registered address must be a physical address and cannot be a PO Box. Commercial offices as well as home offices are allowed.
- Auditor: A Hong Kong subsidiary must appoint an auditor who must be a member of the Hong Kong Society of Accountants and holds a practicing certificate.
- Share Capital: There is no minimum or maximum requirement for share capital. The general norm is to have a authorized share capital of HKD 10,000 represented by 10,000 ordinary shares of HKD 1.00 each and the issued/paid-up capital is usually 1 share of HKD 1.00.
- Taxes: Subsidiaries are subject to the same tax regime and tax rates as other private limited companies in Hong Kong. For more details, refer to Hong Kong Corporate Tax Guide.
- Compliance: The audited accounts together with Tax Return must be filed annually with the Inland Revenue Department. Annual Return must be filed with the Companies Registry. An Annual General Meeting (AGM) should be held annually very calendar year. For further details, refer to Annual Compliance and Filing Requirements.
Foreign entities must engage the services of a professional services firm to register a subsidiary in Hong Kong. The following documents/information are usually required for the registration of a Hong Kong subsidiary:
- A duly signed and completed incorporation form
- Articles of Association for the subsidiary
- Documents for parent company: copy of registration documents such as Certificate of Incorporation and Articles of Association.
- Documents for company officers:
- For non-residents: Copy of passport and latest overseas residential address proof
- For Hong Kong residents: Copy of Hong Kong identity card
Note: Officially certified translated versions for any non-English documents must be provided.
Registration Procedure and Timeline
The incorporation procedure entails two steps:
- Approval of company name
- Registration of the company
The prevailing registration fee and the capital fee of HKD1 for every or part of HKD 1,000 of the nominal share capital (this capital fee is subject to a maximum of HKD 30,000 per case), is payable to the Companies Registry.
A successful application is usually processed within 4-7 working days and the Companies Registry will issue a Certificate of Incorporation.
Post Registration Formalities
Apply for Business Registration Certificate
It is mandatory for all Hong Kong companies to register with the Inland Revenue Department’s Business Registration Office and obtain a Business Registration Certificate. Business Registration with the Inland Revenue Department must be done within one month after incorporation with the Companies Registry, irrespective of whether the company is actually in business or not. Upon application, the Business Registration Certificate will be issued on the next working day and must be collected in person. The Business Registration Certificate must be conspicuously displayed on the office premises at all times.
Open Bank Account
Once you have registered your company with the Companies Registry and Inland Revenue Department, you can proceed to open a corporate bank account with any of the major banks in Hong Kong. Different banks have different account opening procedures and requirements. Some banks may require you to be personally come down, while others may not have such a requirement. The firm you have choosen to assist you with registration of the subsidiary should be able to advice you on the policies of various banks.
Apply for Business Licences
If the intended business activities of the subsidiary require a business licence from a relevant authority, you must do so before commencing those activities. For more on business licences, refer to Guide to Business Licences in Hong Kong.