Our article series of '10 things to learn about...' starts, naturally, with questions about forming a company in Hong Kong to start a business.
1. What companies can be incorporated in Hong Kong?
A: The most common form of business entities that are incorporated in Hong Kong is a company limited by shares, or simply, a Limited Company. Limited companies are further distinguished into private and public companies, depending on their size. Public companies are subject to stricter compliance regulations than private companies. The majority of registered companies in Hong Kong are considered private companies limited by shares.
A limited company means that the liability of the shareholders do not extend to them personally, unlike a sole proprietorship or a general partnership, and is wholly contained within the company. The incorporation of a limited company establishes a separate legal personality for that company with the same rights and obligations of a natural person.
Other than a limited company by shares, you can incorporate a limited company by guarantee. Limited companies by guarantee are always public companies. They do not have a share capital and instead the members undertake or guarantee that, subject to the guaranteed amount specified, they will bear the liabilities and cost of winding down the company. Limited companies by guarantee are typically used for not-for-profit causes.
2. Which entity is the best?
A: In most cases, a limited company will be the most appropriate.
3. How long does it take to incorporate a company?
A: The incorporation of a company typically takes 5-7 working days. The signed incorporation form is required to be submitted to the Companies Registry. Thus, you should add a few days for the courier to deliver the documents.
Alternatively, submissions can be made in electronic form and are usually processed within the same day, however, the e-incorporation service is available to registered users only.
4. What are the requirements for company incorporation? If local representative required?
- To register a company, the shareholder(s), whether they are individuals or other corporations, must appoint at least one director, who is a natural person.
- The director(s) may be the same person(s) as the shareholder(s).
- Private companies may even appoint corporate directors, provided that there is at least one natural person director.
- Following the principle of separation of ownership and management, the shareholder(s) may appoint unrelated director(s).
- Other office bearers appointed to the company are the Company Secretary and Designated Representative, who are required to be ordinarily residing in Hong Kong.
- It is highly recommended to appoint a professional service provider to this office, such as Encore, to ensure statutory compliance and good governance.
- The company name must not be the same or of confusible similarity as a name appearing in the index of company names kept by the Registrar of Companies.
5. Do I need a service provider to incorporate a company for me?
A: No, but it is generally recommended. The Companies Registry accepts submissions from founder members and directors directly and the incorporation forms and model articles are available from the Registry’s website. However, if you are not resident in Hong Kong or are the sole director, you will need a Hong Kong resident company secretary and designated representative to be appointed as officers. In addition, if you are not familiar with the corporate governance requirements and records, a professional service provider can assist you.
6. Is it required to have an office?
A: It is not required to rent an office. The company must provide a Hong Kong address as its registered address which cannot be a PO box.
7. Is it is acceptable to use a residential address as business registration address?
A: The Companies Registry will accept a residential address to be submitted as the registered address of a company. Having said that, apart from the use of a residential address at a reputational disadvantage, there may be building or lease conditions that restrict the use of premises. Compass Offices offers virtual offices services at a variety of well reputed commercial building where your new company can feel at home.
8. Can I do business in China with a Hong Kong company?
No. Hong Kong and China are two separate jurisdictions under the One Country – Two Systems principle. A Hong Kong company can enter into business with Chinese companies. In order to do business domestically in the Mainland, a Wholly Foreign Owned Entity (WFOE) in Mainland China can be established.
9. What are the statutory governance and compliance requirements for a company in Hong Kong?
A: Every Hong Kong company is required to maintain and keep its statutory records, file all government returns in time and have its accounts audited annually.
10. Can I open a bank account with my company?
A: Yes, a Hong Kong company can apply to have a bank account opened at any Hong Kong or overseas bank.
For information specific to your circumstances, contact us.