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Hong Kong Company Registration

Why need a Offshore Company in Hong Kong?

1. Hong Kong economy system is opened and market oriented with a little government intervention. Investors can choose what businesses they do. In fact, from global statistics records, Hong Kong is No. 1 economy freedom.

2. The capital flows of money between Hong Kong and other countries are freedom,  and without controls or restrictions. All currencies such as US$, GBP, Japanese yen, etc are remitted freely between Hong Kong and other countries.

3. Offshore business activities are 100% tax free. The Hong Kong tax law has confirmed that only local business is subject to profits tax, overseas business registered in Hong Kong is offshore business and so is not subject to Hong Kong profits tax. For example, if the international businessman engages in international trading in such as way that he buys goods from China and sells to UK or USA. If both buying activities and selling activities are not happened in Hong Kong, then the profits from that trading business are regarded as offshore profits, and are not subject to Hong Kong profits tax.

4. Low tax rate. Even the business is done in Hong Kong, the tax rate is only 16.5% of net profits. The tax rate is absolutely low, with no other tax systems such as VAT, business tax, capital gains tax, etc.

5. Formation requirement is very simple. An overseas person can be appointed as the shareholder and director of a Hong Kong company, he only finds local professional firms to provide appointment of secretary and provide registered office address.

6. No capital investment is required. The shareholder is only required to sign up the M & A to declare that he will contribute capital to the company, and he doesn’t require to pay money to the company.

7. Free use of company name. In other countries, some names are not freely used such as Holding, Group, International ...., etc. However, in Hong Kong, the name is freely used, provided that they are not registered in Hong Kong.

8. It is easy to open an offshore bank account with using Hong Kong company, the investor is required to provide his address proofs, passport copy, Hong Kong company formation documents and a general description of his business. HSBC and Standard Chartered Bank, as in international bankers, can accept the above documents and open an offshore bank account with multi-currencies and internet banking facilities included within a couple of days, or even in some cases the same day. Hong Kong company is also acceptable from other overseas bankers to open offshore bank accounts.

9. Legal system is using common law and equity that applied in UK and other Commonwealth countries.

10. The common form of Hong Kong company is private limited company. It is private in nature and limited in liability for shareholders.

11. Corporate structuring is allowable. An overseas company can be appointed as corporate shareholder and director of Hong Kong company. For example, a BVI company can be appointed as a director and shareholder of Hong Kong company.

12. Trust law is applicable in Hong Kong. If the investor, for his personal reasons, wants his status being hidden, he can do so with a trust arrangement that the trustee holds the shares for him (as a beneficiary) and he holds the trust deed which proves him a real owner of the shares. The trust law is applicable in Hong Kong. Remember trust documents or such laws are not enforceable, ineffective, invalid or void in other countries such as China.

 

THE INFO

Hong Kong Company Registration

The most common type of business entity registered in Hong Kong is a private limited liability company. Limited liability companies have a separate legal personality, limited liability for its owners, strong public perception and an enduring structure; raising capital and transfer of ownership is easier when compared to other business structures such as sole proprietorship and partnership. Foreign business professionals often refer to this type of entity as an offshore company in Hong Kong. Governed by the Companies Ordinance of Hong Kong, any person (foreign or local) above the age of 18 can setup a Hong Kong company. 

This article provides detailed information about registering a private limited liability company in Hong Kong including basic incorporation requirements, procedure and timeline, post-incorporation procedures etc. Irrespective of whether you are a local or foreign entrepreneur, you are strongly advised to engage the services of a professional firm as such firms are well versed with the local legislations governing companies and are also experienced in handling ongoing regulatory and compliance requirements.   

Basic Requirements and Facts for Hong Kong Companies 

  • Company name - The company name must be approved before you can proceed with the incorporation of a Hong Kong company.

  • Directors - A minimum of one director and unlimited maximum number of directors allowed. The director could be a person or a company. The director can be of any nationality and need not be resident in Hong Kong. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractices. There is no requirement for the directors to also be shareholders. Nominee directors can also be appointed. Directors Board meetings can be held anywhere in the world.

  • Shareholders - A Hong Kong private limited company can have a minimum of 1 and maximum of 50 shareholders. There is no residency requirement for shareholders. A director and shareholder can be the same or different person. The shareholder must be at least 18 years of age and can belong to any nationality. The shareholder can be a person or a company. 100% local or foreign shareholding is allowed. Appointment of nominee shareholders is permitted. Shareholders meetings can be held anywhere in the world.

  • Company Secretary - Appointing a company secretary is mandatory. The secretary, if an individual, must ordinarily reside in Hong Kong; or if a body corporate, must have its registered office or a place of business in Hong Kong. It has to be noted that in case of a sole director/shareholder, the same person cannot act as the company secretary. The company secretary is responsible for maintaining the statutory books and records of the company and must also ensure the company's compliance with all statutory requirements. A nominee secretary can be appointed.

  • Share Capital - There are two types of share capital for Hong Kong companies - authorized capital and issued / paid-up capital. Although there is no minimum share capital requirement, the general norm for companies incorporated in Hong Kong is to have a authorized share capital of HKD 10,000 represented by 10,000 ordinary shares of HKD 1.00 each. The authorized share capital can be increased anytime after the company has been incorporated. However, you will have to pay the Hong Kong government a capital duty of 0.1% for share capital over HKD 10,000. The capital duty is capped at HKD 30,000 in each case. The minimum issued/paid-up capital is usually 1 share of HKD 1.00. There is no limit or restriction on the maximum amount of share capital for both types. Share capital can be expressed in any major currency and is not restricted to the Hong Kong Dollar alone. Shares can be freely transferred, subject to a stamp duty fee. Bearer shares are not allowed.

  • Registered Address - In order to register a Hong Kong company, you must provide a local Hong Kong address as the registered address of the company. The registered address must be a physical address and cannot be a PO Box.

  • Public Information - Information about company officers viz. directors, shareholders and company secretary is public information as per Hong Kong Company Laws. It is mandatory to file details of the company officers with the Hong Kong Company Registrar. If you wish to maintain confidentiality you can appoint a nominee shareholder and nominee director by utilizing the services of a professional services firm.

  • Taxation - Corporate tax, (or profits tax as it is called), is set at 16.5% of assessable profits for companies setup in Hong Kong. Hong Kong follows a territorial basis of taxation i.e. only profits which arise in or derived from Hong Kong are subject to tax in Hong Kong. There is no capital gains tax, withholding tax on dividends, or GST/VAT in Hong Kong. For more details on corporate taxes, refer to Hong Kong Corporate Tax guide. 

  • Ongoing Compliance - It is mandatory for companies to prepare and maintain accounts. Accounts must be audited annually by Certified Public Accountants in Hong Kong. The audited accounts together with tax return must be filed annually with the Inland Revenue Department. Every company is required to file annual returns with the Companies Registry and pay the annual registration fee. The Business Registration Certificate should be renewed, one month before expiry on an annual basis or once every three years, as the case may be. An Annual General Meeting (AGM) should be held annually very calendar year. The AGM should be held within 18 months of the date of incorporation, after which no more than 15 months can elapse between one AGM and the next. A written resolution in lieu of Annual General Meeting is permissible. For more details, refer to Annual Compliance for Hong Kong Companies guide.

Usually, it takes about 4-7 working days to incorporate a company in Hong Kong

 

Advantages of setting up a business in Hong Kong

Today, many investors and entrepreneurs are choosing to set up their businesses overseas - especially in jurisdictions like Hong Kong. The rationale behind this trend is to primarily facilitate entry into an international market and to benefit from tax friendly jurisdictions. Hong Kong is considered one of the best cities to establish and  run a business, as it scores high on factors that matter to businesses. Strategic location, productive work-force, stable economic and political environment, attractive tax regime, pro-business environment, world-class infrastructure, an effective legal system are some of the factors that continue to contribute to its success.

 

 

 

 

 

   
 

 
 

 
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