Hong Kong is the most popular and successful place for businesses. It is a republic state that comes under mainland china. Several local and foreign companies are performing great in Hong Kong. A Hong Kong company can be related to different types of businesses.
Due to the good reputation of Hong Kong companies, foreigners also like to build a branch office of their parent company that has no independent legal standing in Hong Kong. Hong Kong government is supporting a lot to these business structures.
These non-Hong Kong companies are doing a fabulous job in terms of business. Non-Hong Kong company has no separate legal entity or business entity. The Hong Kong government doesn’t require any profit tax returns, and they are free from all tax consequences.
A representative office is also a great business structure in Hong Kong. They are only allowed to perform promotional or marketing work of the parent company. A Hong Kong representative office is a good business type for foreigners.
However, companies’ registry reserves under the parent company and no other department will get involved in the registration. Only a registration certificate will be required to build a branch office of the non-Hong Kong company.
A foreign parent company is allowed to do different businesses in Hong Kong. But, these businesses have some limited authority compared to other companies. The most common types of business in Hong Kong for an overseas company are as follows.
All of the business types mentioned above are very famous in Hong Kong. An overseas parent company will be required to manage the Hong Kong branch. But, the representative office in Hong Kong is the most suitable one. They don’t need any Hong Kong companies registry to start their business.
Hong Kong government has introduced a new corporate body that is an easy business structure than Hong Kong subsidiary company. A representative office is a branch office in Hong Kong of a foreign corporation. A foreign parent company will monitor the business activities.
The main business owner of a representative office will be the same as the overseas company. It is a great option to invade new business structures in the Hong Kong market. The Hong Kong branch office will be a local representative office of the parent company.
This representative office in Hong Kong has limited authority and can only work as a liaison office. They are forbidden from participating in any profit-making activities. Also, the Hong Kong taxation department or inland revenue department will not take profits tax from a foreign company.
However, all the debts and hiring of the staff will be the responsibility of the company incorporation. As there will be no annual profit tax returns, the financial position of the representative office in Hong Kong will be good.
But, to establish an office in Hong Kong, the company registrar has to perform the registration procedure under the parent company’s name. They will get a business registration certificate from a business registration office.
To establish a non-Hong Kong company, the business representative office in hong kong has to fulfill some terms and conditions. Several things should be noticed while making a representative office.
Although starting a new business in Hong Kong looks easy, you must fulfill some major conditions to open a representative office. Also, it is important to know some terms related to the representative office in Hong Kong before getting in-depth.
Legal entity means that the specific company or business will be under the control of the government. But, in the case of a representative office, this condition is not valid. A non-Hong Kong company is treated as a temporary branch office.
A representative office of a parent company doesn’t have any legal entity; that’s why all the debts and liability will be the responsibility of the foreign parent company. If the company goes under any loss, the parent company has to pay it all.
Hong Kong representative offices are liaison offices that can only engage in promotional and market research-type tasks. These representative offices of limited companies cannot generate profits or do any commercial work in Hong Kong companies.
These branch offices are permitted to make any goods contract in Hong Kong. All of the work will be done in the foreign branch office. These representative offices are also not allowed to give any fee-based consultation.
A company name is the main identity of a business. A name will be the first source for a customer to contact a business. That’s why the company name plays a major role for a branch office.
The name of the branch office will be the same as the name of the foreign company. But, in any case, if the company name infringes on another company name, then a new name approval process for the Hong Kong representative office will be required.
The main foreign branch company will need to hire an officer to manage the company incorporated. The officer must be a person from the parent company. This officer can appoint other staff like company secretary and professional accountants to make a business environment in the branch office of Hong Kong.
The company secretary ensures that all the work is done properly. The professional accountant will submit accounts to open a business bank account. However, the Hong Kong representative office staff can be from a foreign company or Hong Kong.
As discussed above, a representative office is only a branch office of the parent company; that’s why they don’t require any companies registry to establish a business in Hong Kong. Also, the minimum capital requirement is not compulsory for business registration.
A representative office is like a private limited company and doesn’t need a companies registry. The branch office doesn’t earn while doing business in Hong Kong; that’s why they also don’t need to show any statutory documents.
While doing business in Hong Kong, the body corporate also has a big advantage of not filing tax returns because the procedure of this process can be very hectic. The business activities will be under the parent company’s control, and the inland revenue department will not charge any tax.
For doing business in Hong Kong, the non-Hong Kong company will need a permanent address in Hong Kong. Then the inland revenue department will issue a business registration certificate with a business registration number.
The most important document in Hong Kong for establishing a representative office is a business registration certificate. You will need to submit some important documents to get the business registration certificate for business registration.
Below is the list of the documents required for the business registration certificate.
Once you are done collecting the above documents, you need to make an original copy of each document. You can read the instructions on the application form about the number of copies required for the registration procedure.
A representative office in Hong Kong doesn’t need a companies registry. The only document required to start a commencing business in Hong Kong is a registration certificate. This certificate can get easily from an inland revenue department.
Make sure that the business registration certificate should be issued within one month of the start date of the business. After providing a successful receipt of the application, you can get a business registration certificate within a day.
The representative office must display the business registration certificate on the office premises every time. However, if the branch office goes through any changes in business particulars, they have to notify the inland revenue department.
One more thing that the staff should notice is to renew the business registration certificate. Different business registration certificates have different expiry dates. If your certificate is valid for three years, you can renew it once in three years.
But in most cases, the reasonable period for a registration certificate is one year. You have to visit the inland revenue department and renew it before one month of the expiry.
Once you are done with all the work related to the registration and get the business registration certificate, you will require a corporate bank account. A representative office can work without a suitable bank account.
A bank account will be the main source to know the financial position of the branch office. However, the parent company owner will have the overall authority of the bank accounts.
For a representative office, the bank account should be in Hong Kong. An overseas bank can’t be responsible for the branch office. You can open a new bank account at any popular bank in Hong Kong. But, make sure that you have received the business registration certificate before opening a bank account.
A representative office is a big source of promotion for any non- Hong Kong company. Hong Kong is very famous for such companies and allows all countries to do business in their place. They don’t charge any tax and support them to build a great business.
The registration process of a representative office is very quick and simple. You don’t need to go through a time-consuming method and easily get the business registration certificate by providing the required documents.
Also, a branch office doesn’t have any legal status; that’s why all the losses will be the owner’s responsibility. It is a good option for marketing your business before penetration. However, you can also go for the other two options; branch office and subsidiary company.