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Set Up a Company in Hong Kong

How to Set Up a Company in Hong Kong in 2022?

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We can assure you that Hong Kong is an excellent service and high-end trading center if you want to establish a business there. You receive an independent global trade policy that gives you a practical way to access the markets in Mainland China. Therefore, all multinational corporations and overseas entrepreneurs seek Hong Kong company registration.

In this article, we’ll explain how to set up a business in Hong Kong, how to establish a company in Hong Kong, how it works, and what advantages does a company in Hong Kong set up have. What paperwork is required, and how to set up a limited company in Hong Kong? To put it briefly, the crucial procedures entail deciding on the business entity and its name, adhering to the establishment process, and registering the business with the Hong Kong government’s official business agencies.

How to set up a company in Hong Kong in 2022?

Let’s start the process of forming a Hong Kong corporation together.

Step 1: Choose the right company type

Before forming a firm, investors should consider each organization type’s needs, size, financial capability, and characteristics.

Entity types in Hong Kong are often separated into:

  • Limited Liability Company (LLC): Company Limited by Shares
  • Company Limited by Guarantee, or Private Company Limited by Shares
  • Solo Entrepreneurship
  • Partnership
  • Other: Representative office or a branch (Liaison Office)

The following instructions mainly explain how foreign or domestic business owners can form a Private Company Limited by Shares in Hong Kong.

Step 2: Pick a name for the business

The Hong Kong Companies Registry (C.R.) does not grant prior permission or reservation of the company name, in contrast to other offshore countries (BVI, Seychelles, Belize, etc.).

The Companies Ordinance mandates that the C.R. has the authority to change a company’s name under certain conditions. A company name can be written in traditional Chinese, English, or both (it must conclude with “Limited”). A name that combines Chinese and English characters is rejected. If any of the following apply, the suggested name can be rejected:

  • Identical to or similar to a name listed in the “Index of Company Names” maintained by the Companies Registry; or
  • Identical to a corporate body name already registered or formed under legislation; or
  • Deemed to violate trademarks; or
  • Offensive or, in the Registrar’s opinion, in any other way against the public interest.

Company names that imply the Government of the Hong Kong Special Administrative Region by using words or expressions like “Council,” “Department,” “Bureau,” “Commission,” or “Government,” etc., must be submitted for approval, as a Sector or Regional Office must also have the same name as its parent organization. The requirements for registering a Hong Kong company set up name are covered in full in our prior post; you can read them here. To minimize incorporation delays, you should confirm the name’s availability with a business registration agency to save time.

Step 3: Select the Registered Address.

All official correspondence and papers from the company must include this address.

The following factors should be taken into account while selecting a Registered Address:

  • The Registered Location can’t be a Post office Box or virtual office; it must be an address in Hong Kong.
  • Throughout business hours, the public must have access to the Registered Address.
  • Residential addresses are not permitted as the Registered Address.
  • Not in a residential residence or apartment, but instead in an industrial or commercial structure should be the Registered Address.

Step 4: Select the organizational structure for the business.

Entrepreneurs in Hong Kong must adhere to the following business entity rules to establish company in Hong Kong:

Directors: There must be one or more directors who are

  • A natural person (beginning at the age of 18) or a body corporate (only allowed under strict circumstances)
  • Residents of Hong Kong or visitors

The maximum number of directors for the company is unlimited, and nominee directors are permitted.

Shareholders: There must be at least one owner who is either

  • A natural person (beginning at the age of 18) or a body corporate
  • Residents of Hong Kong or visitors
  • 100% foreign ownership and nominee shareholders are permitted.
  • The lone director may exercise shareholder rights.
  • A local Hong Kong person or firm serving as company secretary
  • A local Hong Kong person or firm serving as company secretary
  • The position is required by law, and one director cannot also serve as the company secretary.

Registered address: A required local address in Hong Kong for the registration of businesses.

  • A P.O. box is prohibited.
  • Ordinary shares with an HKD 1.00 minimum and an HKD 1,000,000 maximum.
  • Bearer securities are not permitted for the setting up a company in Hong Kong.

Step 5: Go ahead and register company in Hong Kong.

The procedure of setting up a trust company in Hong Kong involves two key steps:

  • Requesting C.R. certification of the suggested company name
  • Submitting to the C.R. the necessary paperwork

To form a company, you must submit the following paperwork:

  • Application for Hong Kong;
  • A copy of the association’s articles;
  • A copy of every passport, evidence of foreign residents’ residence addresses;
  • A duplicate of each Hong Kong resident’s I.D. card;
  • Copies of all corporation shareholders’ documentation.

For a corporation with a simple structure, you must send personal documents by email, and the digital corporate documents are ready in one day.

The C.R. referred to a corporation with corporate shareholders. Obtain the directors’ signatures on the NNC1 form, then physically deliver it to them. This procedure typically requires 5 working days.

Step 6: Apply for business licenses and permissions.

In Hong Kong, the vast majority of business operations are permissible, whereas the specific categories must have a license or permit granted by the relevant Hong Kong government department. One month after forming the firm, the license or permit must register to conduct business. After the registration company in Hong Kong dates, it can be obtained in two to eight weeks. Check out the complete list of Useful Checking Tools For Your Hong Kong Company Registration to select the appropriate permits for your Hong Kong company establishment. Setting up offshore company in Hong Kong is not an offshore jurisdiction. In most countries, it is not listed on blocklists of jurisdictions with low or no taxes (including Russia since 2017).

Step 7: Opening a business bank account.

Although the Hong Kong corporation can open a corporate bank account in any nation, banks in the same area are most advised if you utilize secure payment method providers (like PayPal and Stripe). Hong Kong banks might be challenging because directors must be present in the branch, although some overseas banks merely conduct phone interviews.

No matter the nation, the following documents are required for account opening a company in Hong Kong:

  • Account application forms
  • Corporate registration paperwork
  • Copies of central members’ passports
  • A resume
  • Bank references for each significant member
  • Bank statements for each significant member or any related corporations
  • Business proofs like contracts, invoices, and agreements are all required.

The bank may ask for additional documents as part of its compliance assessment. The supplied paper must be written in English (or Chinese for Hong Kong banks or French for other offshore banks).

If you want to create a bank account in Hong Kong and set up new company in Hong Kong but are concerned that your application might be turned down, read our case study on the top three reasons why Hong Kong banks might turn down your application.

It is advised that the applicant organize the needs as precisely as possible to prevent misunderstandings and potential issues. Since almost all banks are designed to operate transparently, your application’s approval rate will be higher the more specific information you supply.

Step 8: Submit your annual maintenance reports.

A Hong Kong corporation must enforce regulatory compliance to keep its active status and avoid unannounced fines from the government.

Following is a summary of the continuing compliance for the Hong Kong company:

  • The Company Registration Certificate is renewed annually. Submitting a renewal application one month even before the expiration date
  • AGM, or an annual general meeting, holds the meeting no later than 15 months after the first configuration date and 18 months after that yearly return using the C.R.
  • 42 days after the anniversary of incorporation for submitting to the C.R.
  • Annual tax return with the Inland revenue department: In the 18th month following the date of formation, you must file a profits tax return along with audited accounts. After that, you must file it periodically every 12 months.
  • Employer’s return to IRD: submitting each related paperwork within the allotted time frame

If you don’t meet the annual standards, your company could face fines or be forced to close its doors. By keeping an eye on the notices and calendars provided by the government, you may keep records of the compliance schedule.

There are, nevertheless, rare instances where Hong Kong-based businesses negligently or accidentally fail to comply.

With a third party to verify your business complies with Hong Kong Annual Compliance Requirements. Such as tax requirement filing, bookkeeping, and other potential administrative concerns; things are easier to access, as it is where the Hong Kong business setup  Company Secretary comes in.

Motivating Factors for Opening of a Company in Hong Kong

Numerous large corporations, like PepsiCo, Starbucks, Apple, Facebook, Google, and the like, have investments in Hong Kong. Are you curious as to why?

Here are a few causes:

  • Fewer tax obligations
  • Decrease in business risk
  • Conductive to business

If these factors appeal to you, you need to consider the following strong arguments for establishing a business in Hong Kong, and setting up a business in Hong Kong as a foreign. Since foreigner set up company in Hong Kong, foreign investors are a significant factor in the economy’s rapid expansion, and the Hong Kong government has started special initiatives for them.

An excellent idea for investing in Hong Kong is if you wish to grow your business there. However, you may give this concept more weight by taking advantage of our priceless consulting services, which can assist you in starting a new business in Hong Kong.

Making the Best Business Structure Decision

When launching a business, you must consider several things. This covers a variety of factors, such as your target market, chosen product or service, specialty, marketing tactics, and more. Without putting these fundamentals first, your business will likely struggle and fail to accomplish its objectives.

how to set up a business in Hong Kong

But if you believe that these elements are in their appropriate positions now, it may be time for you to don your captain’s hat and begin expanding your company.

Our team will choose the best corporate structure for you based on:

  1. Size of the company.
  2. Capital expenditure.
  3. Number of workers.
  4. A business necessity.

Hong Kong’s typical business formats include:

Company Limited

Usually, small and medium-sized businesses create this kind of organization. As you set up unlimited company in Hong Kong to form a limited corporation, you must appoint at least one shareholder and one director. This business can be launched with no upfront capital.

Office branch

The parent company establishing a business in Hong Kong Branch Offices, whereas the corporate office decides all branch office activities. The parent business is responsible for the branch office’s debts and liabilities.

Associated Office

Like a branch office, a subsidiary office operates except that it is in charge of its debt and liabilities.

Reprographic Office

A representative office is an excellent method to learn more about the Hong Kong market before spreading your wings here. Here, an R.O. is prohibited from engaging in any profitable operations.

Solo Entrepreneurship

This company has one proprietor, making small businesses its ideal clientele. The business owner is in charge of and liable for any debts and is entitled to the earnings after paying taxes.

Partnership

A partnership business is created when two people join forces as part of a business arrangement. Partnership firms can be of two different types:

  • In a general partnership, the investor is solely responsible for the business, including partner decisions.
  • The most significant type of investment is a limited partnership, which allows you to contribute but not control any business operations. It is agreed upon by the limited partner and the general partner.

FAQs 

Is it simple to start a business in Hong Kong?

Hong Kong is one of the best cities in the world to start a business. Starting a business is comparatively quick and straightforward. There are modest startup cost of setting up a company in Hong Kong, and the business climate generally supports success. Invest HK is always willing to help Hong Kong-based companies.

In Hong Kong, is there an LLC?

Investors who want to form a Hong Kong LLC formation should know that it must have a minimum of one shareholder, one company director, and one secretary. There are no residency restrictions for the stockholders, and the highest number of stockholders for this kind of corporation is fifty.

Is it business-friendly in Hong Kong?

Hong Kong is the only MICE location in Asia that checks off every box, setting global trends in business and leisure thanks to its strong economy, top-notch infrastructure and facilities, global attitude, and dynamic culture.

What is Hong Kong’s workplace culture?

People in Hong Kong work extremely hard, and the idea of an eight-hour workday is entirely foreign to them. They build a career here and work longer hours even if their contracts do not mandate that they do so.

How long does it take to form a company in Hong Kong?

The incorporation of the company typically takes one week. It will take longer when documents need to be couriered internationally.

Can I register a corporation in Hong Kong without a physical address?

Yes. A virtual or post office box address is insufficient. Be aware, however, that the actual Hong Kong address (which serves as the company’s registered address) may be a residence.

What business flourishes in Hong Kong?

10 Successful Business Concepts to Launch in Hong Kong in 2022

  • Healthcare products
  • Online tutoring
  • Virtual security
  • Translation services
  • Baby formula
  • Security companies and online tutoring are just a few examples.
  • Online food stores
  • Homemade goods
  • Eco-friendly goods
  • Therapy equipment and fitness boot camps are all available.

Do I need to hire a third party to assist with my Hong Kong incorporation?

It is not necessary. However, it can be challenging to establish a corporation in Hong Kong on your own if you are not physically present there (or if another director is not). For instance, your business secretary must reside in Hong Kong.

Do I need to work with another company to incorporate it into Hong Kong?

No. A local director or shareholder is not required.

Conclusion

Hong Kong is one of the most prominent business destinations for startups and companies because of its competitive tax system, top-notch financial market, and easy company formation process. Once a business is registered in Hong Kong, it should be aware of its ongoing tax and compliance obligations. This includes maintaining correct financial records audited yearly and filing compliance returns to the Companies Registry.

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