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Hong Kong Private Limited Company Registration

Complete Overview of Hong Kong Private Limited Company Registration

Table of Contents

Hong Kong is one of the best countries to do business. The World Bank ranked Hong Kong at 3rd place on the ease to do business index. Similarly famous magazine Forbes also place Hong Kong on 3rd place of Best countries for doing business.

In this era of globalization, many entrepreneurs and investors are looking for opportunities to expand and start their businesses in the world’s business hub. These opportunities and ease of doing business open new gates to making a fortune.

Hong Kong’s business-friendly environment competitive tax regimes make it more attractive to do business. Similarly, due to its easy and simplified process, applicants can get their documents ready and run their business within 24 hours.

Following the step-by-step procedure, one can select a suitable company type, choose the company name, draft company structure and submit their application to the Hong Kong companies registrar (CR). A license or permit is mandatory if your business nature is required from the Hong Kong company’s registrar.

Private Limited liability Company:

According to the company’s ordinance of Hong Kong, any person (local or foreign) above the age of 18 is eligible to set up a Hong Kong company. Limited liability companies have their own separate legal entity traits. They can raise capital; Transfer for ownership is much easier than other business structures such as sole proprietorship and partnership. From a foreign person’s perspective, it is often referred to as an offshore company in Hong Kong.

It is advisable to get professional assistance when registering a company in Hong Kong. Whether you are a local or foreign entrepreneur, try to engage a well-known company, know all the official legislation, and have experience in handling regulatory and compliance requirements for Hong Kong company formation.

Basic Requirements, facts, and registration process:

Like other legal entity formations, Hong Kong company formation also has some basic requirements and procedures that need to be addressed. As we emphasized earlier, it is advisable to seek professional help from a firm dealing with the registration process and other legal requirements to make it smooth and easy. Following are mandatory requirements for setting up a private company limited liability in Hong Kong.

Company Name:

Before starting the registration process, select a proper company name. The Hong Kong company formation compliance must approve a company name. Once your company name is approved, you are ready to proceed to the next step with incorporating a Hong Kong company.

Companies Ordinance:

According to the company’s ordinance amendment effective from 1st March 2018, every incorporated company in Hong Kong must maintain a register for all the designated personnel with a significant role in the company. Companies listed on Hong Kong Stock Exchange are exempted from this specific requirement. All companies must appoint a designated representative responsible for reporting to the SCR to local authorities when required and needed.

Directors:

A private limited liability company must have a minimum of one individual as a director; However, there is no limit in appointing several directors. The company director can be unlimited. The director must be a natural person and can be of any nationality; the director doesn’t need to be a Hong Kong resident. The director must be 18 years of age and must not be convicted for any malpractices or must not be bankrupt. Directors can also be shareholders if they want to; no specific requirement refrains them from doing so. Moreover, there is no limitation in appointing nominee corporate directors other than individual directors. There are no restrictions in conducting directors’ board meetings; they can be held anywhere globally.

Share Holders:

There is a certain limitation in having many shareholders. A Hong Kong private company can have a minimum of one shareholder and a maximum of fifty shareholders. They can belong to any nationality except those countries banned by the Hong Kong government to do business in Hong Kong. A company director can also be a shareholder; the shareholder must be eighteen years of age. The shareholder can be a person or a company; 100% local or foreign shareholding is allowed, and appointment of nominee shareholders is allowed. Last but not least, shareholder meetings can be held anywhere globally.

Company Secretary:

It is mandatory to appoint a company secretary when setting up a company in Hong Kong. There are a few critical conditions that need to be fulfilled in the case of the company secretary. It is a must for a secretory to ordinarily reside in Hong Kong; in the case of a body corporate, it must have a registered office or place of business in Hong Kong. One important thing to note here is that in the case of a sole director or sole shareholder, the same person cannot act as a company secretary. The company secretary is responsible for maintaining the statutory books and records of the company. The secretary ensures the company’s compliance with all statutory requirements. Any nominee secretary can also be eligible for an appointment.

Share Capital:

In terms of share capital requirement, there are no minimum share capital requirements. The rules are flexible, and generally, at least one shareholder with one ordinary share issued on their formation is required. The share capital can be expressed in any major currency, and it is no restriction to the Hong Kong dollar. The shares can be transferable, and there is no hard and fast rule in transferring the shares; only a stamp duty fee is required. Furthermore, bearers’ shares are not allowed.

Registered Address:

There are certain rules regarding providing the address when registering a company in Hong Kong. The provided address should be a local Hong Kong address as the registered office address. The registered address must be a physical address; no PO box is allowed; it is invalid and unacceptable by law.

Public Information:

According to the Hong Kong company laws, all the information about company officials, directors, shareholders, and company secretaries is public. It means that anyone has the right and can know the company’s information regarding hierarchy, shareholders, and company secretary.

Hong Kong Companies Registry:

As per Hong Kong company law, it is mandatory to file and share the details of company officers with the Hong Kong companies registry. If you want to maintain the company confidentiality, you can appoint anyone from corporate shareholders and individual nominee directors by taking the services from any professional services firm.

Taxation:

Hong Kong follows a territorial basis of taxation, which is only profits that are collected, arise, or derived from Hong Kong are subject to tax in Hong Kong. The Hong Kong setup companies are subject to 16.5% of assessable profits as corporate tax or, in exact terms, profits tax. There are no other taxes such as capital gains tax, withholding tax on dividends, or GST/VAT in Hong Kong. In terms of tax benefits, Hong Kong is quite a unique and business-friendly country.

Ongoing Compliance:

In terms of compliance fulfillment, certain mandatory things should be taken care of while having a company in Hong Kong. The company should maintain accounts properly and get them audited annually by certified public accountants in Hong Kong. You should fill the audited accounts and tax returns annually with the inland revenue department. Moreover, every company should file annual returns with companies registry and pay the annual registration fee.

Business Registration Certificate:

It is mandatory to renew business registration certificates annually one month before the expiry or once every three years as the case may be. A business registration certificate is necessary to operate a Hong Kong company.

An Annual General Meeting (AGM)

An annual general meeting should be held every calendar year. The first AGM should be held within the 18th month of incorporation. After that, no more than 15 months can be elapsed between the previous meeting and the next one. If all the directors and company secretary are not available, then a written resolution is also permissible instead of a general meeting.

If you need assistance applying for Hong Kong Private Limited Company, contact our experts.

Requirements for Foreigner in Hong Kong Company Formation:

As per Hong Kong laws and regulations regarding company registration. Any foreigner or outside residents of any country except the countries that the Hong Kong government department bans to do any business in Hong Kong. Anyone regarded as a foreigner who wants to register an offshore limited liability company in Hong Kong must follow and consider the following points:

  • There is an obligation and law that refrain any foreigner from becoming the sole director or sole shareholder of a Hong Kong company. There are no residents requirements.
  • Due to flexible company laws, there is no compulsion and need for a person’s physical presence at company registration. But it may be required when opening a bank account. It depends on the chosen bank, whether or not it requires a physical presence of an individual at the opening of a bank account.
  • Any foreigner who doesn’t want to shift or move to Hong Kong can operate and function their offshore Hong Kong company from overseas.

Required Documents for Company Registration:

If you are interested in opening a Hong Kong limited liability company, you should require certain documents and paperwork to open a limited company. Normally they consist of the following documents. Always check thoroughly and fulfill all the requirements before submitting your limited company documents to the concerned department.

Article of Association: The first document required for opening a private company in Hong Kong is an article of association. It is usually prepared and provided by the firm that provides you with professional services and assists with incorporating the company.

Incorporation Form: After AOP, a duly completed incorporation form is required that have the following information:

  • A Company name per Hong Kong company’s name rules and regulations.
  • Registered Office Address, it can be any physical address in Hong Kong.
  • A brief introduction of the company and its business activities.
  • Details and Particulars of company shareholders, directors, and company secretary.
  • Roles and liability of members.
  • Details of share capital registered on incorporation.
  • Amount and number of shares taken up by subscribers

For Foreigners and Non-Resident Shareholders and Directors: If the director and company shareholders belong to another country or are foreign residents, then they need to submit the following documents as proof:

  • Copy of their passport
  • Oversees/foreign residential address proof.

For Hong Kong Residents: If the company director and shareholders are local and are residents of Hong Kong, then they need to submit the following document along with other company registration documents:

  • A copy of the Hong Kong identity card.
  • A copy of residential address proof.

For Corporate Shareholder and Directors: If the company has corporate shareholders and directors rather than individuals, the following documents are required for submission.

  • Copy of parent company registration documents, such as Certificate of incorporation and Article of Association.

Note: In the case of non-English documents, you should provide an English version of such documents to the concerned department.

Importance of Hiring a Professional firm for Company registration:

There are a lot of benefits for hiring or taking services of a professional services firm. The firm takes responsibility and is familiar with necessary procedures and formalities from the beginning until the registration process. Though company registration seems easy, it still requires some professional assistance, especially if you are a non-Hong Kong resident. Hiring them saves both your time and resources. It’s not a one-time engagement; good and reputable firms believe in long-term relationships and assist when required. A good firm will do the following:

  • It collects all the necessary incorporation details and identification documents from you.
  • Secure the company’s name as per your choice, and prepare all the required incorporation documents (including article of Association AOP) that are later filed with the company registrar. All these documents require your signature.
  • After filling out the incorporation form and other related documents to the company registrar’s office, they will obtain the certificate of incorporation.
  • The firm will obtain a business registration certificate from the inland revenue department.
  • They will also assist the client in opening a bank account.
  • A good firm will also do some small but necessary things like:
  • Company seal and stamp.
  • Share certificate and share register
  • Make Statutory books.
  • They will also further assist you in annual tax fillings, help you in filling visa business licenses, and longing statutory compliance.

Hong Kong limited company is one the best and most commonly used business entity for SMEs and trading companies in Hong Kong. Due to its attractive and unique features like separate legal entities. For understanding it better, let’s explore its other features, benefits, and advantages:

Advantages, benefits, and features of Private Limited Company:

Easy to Set up a Company:

It’s an easy and simple process to set up a private limited company in Hong Kong. Normally it takes 24 hours or less to register a company through a registered agent. You can use any company formation service provider to open an enterprise on your behalf by submitting all the necessary and required documents.

Company Hierarchy and Shareholders:

A Hong Kong limited liability company doesn’t require any long list of members and shareholders. This type of business entity is set up with a minimum of 1 member and 50 shareholders. One natural person as a director can be a foreigner or Hong Kong resident. One secretary should be Hong Kong local and is responsible for maintaining accounts and statutory books.

Separate Legal Status:

A private company has its own distinctive business entity status and is a separate legal entity. Therefore it can acquire dispose of assets, take part and enter contracts, sue, and be sued under its name.

Limited Liability:

The limited liability provides extra protection to shareholders by securing their assets. It means that if the company runs into loss, the personal assets of shareholders of this company are not at risk. They can sell their company shares to clear their debt without affecting their assets.

Easy Transfer of ownership:

It is easy and simple to transfer or sell the shares of a private company. You can sell it as a whole or sell it partially; whatever the requirement is, it provides great ease while transferring the ownership.

Strong Public Impression:

In Hong Kong, a private company is considered more credible than any other type of business entity because of its stable business structure and other prominent characteristics. It is easier to raise capital for the private company than other entities; banks and other financial institutions also prefer it and take it seriously.

Tax Benefits:

A Hong Kong private company enjoys a favorable tax regime. The company’s first 2 million HKD of taxable income is taxed at 8.5%, and the remaining amount is taxed as 16.5%. You need to pay almost half the tax percentage for your company’s first 2 million Hong Kong dollars. Moreover, suppose you show and prove that the income earned by your company is generated by doing business outside the HongKong. In that case, that income will be completely exempted from corporate income tax.

Disadvantages of Private Limited Liability Company in Hong Kong:

Every picture has two sides; one must see both sides before reaching any point. As discussed above, the many advantages of opening a private limited company in Hong Kong have disadvantages. Any business person or entrepreneur understands that with greater benefits comes greater challenges. However, these are not as serious as they may sound, but still, they may be a concern for many.

Compliance Requirements:

As per Hong Kong company laws, there are many requirements and compliance that need to comply and are compulsory to follow. A few of them are:

  • Annual general meetings between directors, shareholders, and company secretary.
  • Filling annual returns with companies registry and filing annual tax returns with the inland revenue department.
  • Other small requirements can be a hassle in the absence of a company secretary or a good consulting firm.

Information Disclosure:

It may sound odd to some investors or entrepreneurs, but it is mandatory for Hong Kong limited company to disclose its member’s information to be made available to the public. It includes the director’s name, shareholder details, company secretary’s name, and nature of business.

Complex Dissolution Procedure:

In case of company dissolution, it has to go through a complex winding-up process due to different debts in order situations that are compulsory to be taken care of before closing it down.

How to Open a corporate Bank Account in Hong Kong:

You can open a corporate bank account of a Hong Kong private company in any other country. Still, it is recommended to open it on the territory where the company is registered. If you are using any reliable online payment gateway like PayPal and stripe, it can also serve the purpose provided it can operate well in the respective country.

IIn Hong Kong opening a corporate bank account requires the presence of the company director. Some banks also offer interviews over a phone call for opening an account; whatever the scenario is, banks need a few mandatory documents for account opening. They are as follow:

  • Account Application form of the particular bank.
  • Company/corporate registration documents.
  • Copies of passports of foreign members or shareholders.
  • A bank reference letter of any designated person.
  • A bank financial statement of the company’s designated personnel.
  • Proof of business, such as invoices, contracts, or agreements

The banks generally require the above list of documents. Other additional documents are needed that depend and differ from bank to bank. All the provided papers/documents need to be in English. It is advisable to properly provide all the documents to avoid rejection of account opening. Banks works on the principle of transpierces and expect the same from its customer.

Opening an online bank account:

It’s a general perception that one can not open a bank account in Hong Kong without their physical presence. Still, in reality, overseas customers or foreigners can open a bank account in Hong Kong using several possible ways. The requirement of in-person visit create difficulties and problems for many non-Hong Kong residents; they can open a bank account with the following solution:

Branch Application:

Overseas or foreigners can use this option of bank application to open a bank account in Hong Kong. It minimizes the complexity and hassle of documents requirement. This option is provided by international banks that have a foothold in hong kong as well as overseas like HSBC. It is an easy way to complete and visit the bank branch in your own country and fulfill all the required documents before entering or visiting Hong Kong. One thing to note here is that every bank has its policy and requirements; please consult with your concerned bank and service provider and get all things sorted out.

Digital Account Opening:

Digital banking solutions make it possible to open an account using modern digital technology and verification methods; they replace the old school registration process that needs to open a bank account. Many reliable and recommended fintech companies offer quality digital account opening services such as Wise or Airwallex. Many banks in Hong Kong allow businesses to open their corporate bank account without a physical presence in Hong Kong. But it depends and varies from bank to bank; it is advisable to seek assistance from any professional service provider to tackle and handle all these problems regarding opening a bank account.

Open an offshore bank account for Hong Kong Companies:

If you plan to open a company in Hong Kong, you may also know about the problems in opening a bank account. To minimize this problem and provide a hassle-free experience, you can open a company corporate bank account outside Hong Kong. It is acceptable and allowed by the Hong Kong government. Other countries and banks welcomed cooperated accounts of Hong Kong companies due to their good reputation.

Frequently Asked Questions:

What is a private limited company in Hong Kong?

It is a type of Hong Kong company with legal capacity that offers personal assets protection to its founders. Its benefits make it an appealing option for those looking to set up a company in Hong Kong.

Is limited company in Hong Kong a corporation?

Under the Companies Ordinance, a limited liability company can be incorporated in Hong Kong by registering with the Companies Registry. Companies are separate legal entities from their members. A company can be a limited liability company or an unlimited company.

How do I set up a private limited company in Hong Kong?

  • Familiarize yourself with local institutions and organizations
  • Decide on a name for your company
  • Choosing the right legal vehicle for your company
  • Nominate a company secretary
  • Choose your company’s registered address
  • Prepare the incorporation documents
  • Please submit your application to the company’s registry
  • Make sure you pay the appropriate government fees
  • Licenses and permits relevant to your business
  • Make sure you pay your taxes on time

What is a Hong Kong company?

Private Limited Companies incorporated in Hong Kong, also known as Hong Kong limited companies or Hong Kong companies, are widely considered to be the top vehicle for doing business in Hong Kong.

What is the difference between private and public limited company?

Public limited companies are listed on a recognized stock exchange, and their stocks are traded publicly. In contrast, a private limited company is neither listed on a stock exchange nor traded. The company is privately owned by its members.

Does my company need to submit an accounting and auditing report if it operates entirely outside Hong Kong?

The Companies Registry and the Inland Revenue Department require every Hong Kong company to file an annual return. No matter where the business activities occur, the annual compliance obligations include accounting and auditing reports.

Can my Hong Kong company get Offshore Claim (tax-exempt status)?

As soon as you file your first annual tax return with Hong Kong Inland Revenue Department (IRD), you can apply for offshore status. During the investigation, IRD will ask questions of directors. This could take several months. Offshore claims can be implemented in 3 or 5 years; however, annual auditing is always required.

What kinds of businesses do you need to have a license in Hong Kong?

If the business is operated in Hong Kong, licenses or permits are required for employment agencies, event-related activities, travel agencies, schools, restaurants, and retail stores.

It is mandatory to have a license if you have an insurance agency or financial services business in Hong Kong, regardless of where you are based.

What taxes does my Hong Kong company have to pay?

The government in Hong Kong imposes no tax on capital gains, dividends, interest, or VAT income, so Hong Kong companies only need to pay profit tax.

Hong Kong’s corporate profits tax rate is 8.25% for the first 2 million HKD of assessable income and 16.5% for the rest.

Is it necessary to present in Hong Kong to incorporate?

It is possible to form a Hong Kong company remotely through a professional service provider like Stephen M.S Lai & Co CPA Limited. After one day of registration, you will receive the digital documents.

Approximately how long does it take to register a company?

The usual time for e-filing and registration is one working day.

Do I need a Corporate Secretary?

Yes. When registering a Hong Kong company, choosing a company secretary is a legal requirement.

How much does it cost for Hong Kong company registration?

It depends greatly on the business type, capital structure, industry, etc., and how much it costs to incorporate your business.

Several businesses require significant initial capital to start, while others, such as microbusinesses and home-based businesses, have lower financial entry barriers.

A business plan is one way to estimate the cost of incorporation. The financial section of your plan should show your estimated revenue, profit, and expenses.

We also have a Hong Kong Cost Planning Tool, which allows you to estimate your finances. As a result of the tool, you can determine how much capital you need to prepare when incorporating your business.

Conclusion:

Hong Kong is ranked as the most business-friendly country in the ease of doing business indexes. Setting up a company in Hong Kong is a relatively straightforward process; you can set up a company within 24 hours if you fulfill all the requirements and documentation.

It is the best opportunity for investors and entrepreneurs with many advantages, flexibility to operate, and tax exemptions. We have explained all the necessary details and requirements to open a company. It is advisable to get some professional services to make your process smooth and hassle-free.

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