Incorporate Hong Kong Limited Company — All you need to know

Hong Kong has grown to be a city with one of the world’s freest economies. Starting your Hong Kong company can be one of the best things you do for your business when you consider all the benefits. If you are planning on incorporating your limited company in Hong Kong, then there are several things you need to know.

This article will provide you with the essential details you need to know when incorporating a private limited company in Hong Kong.

Private Limited Liability Company

In Hong Kong, the most common type of business entity is a private limited liability business. Any person that is above the age of 18 can set up a Hong Kong private limited company. The main benefit of a limited liability company is that it is a separate legal entity from the owner. This means that the owner’s personal assets are safe, and he is not personally liable for the business’s lawsuits. Private limited liability companies have a strong public perception in Hong Kong since they are endurance structures.

When compared to the other types of Hong Kong business entities, it is easier to raise capital and transfer the ownership of a private limited liability company.

Basic Facts and Requirements to know while setting up a Private Limited Liability Company in Hong Kong

When incorporating a business in Hong Kong, there are several things you need to know and requirements to meet. Here is a list of them:

• Company Name: You need to decide on a company name and make sure that it is not similar to any already registered business.
• Except for companies listed on the Hong Kong Stock Exchange, the Hong Kong companies ordinance requires companies to maintain a register of all the individuals who have major control over the business.
• Designated representative: Every company must hire a Designated Representative, this individual will be responsible for reporting to the local authorities when called.
• Director: There should be a minimum of one director with no limit for the maximum number of directors in the company. The director should be a natural person who is at least 18 years old. The director can be of any nationality and does not need to be a Hong Kong resident. The individual should not have been convicted of any malpractices and should not be bankrupt. Hong Kong does not require directors also to be shareholders. You can appoint a nominee director to the Hong Kong company, and board meetings can take place anywhere globally.
• Company Secretary: The company secretary will be responsible for maintaining the statutory records and books, ensuring that the company complies with the statutory requirements. It is mandatory to appoint a company secretary in Hong Kong when setup a company. The company secretary, if a person, should be a resident of Hong Kong. If the secretary is a corporate or a body, they must have a place of business or a registered address in Hong Kong. Note that a director or a shareholder can not be appointed as the company secretary. The company can also appoint a nominee secretary.
• Shareholders: A private limited liability company in Hong Kong can have a minimum of 1 and a maximum of 50 shareholders. A shareholder and a director can be the same person. There is no requirement for the shareholder to be a resident. The shareholder can be of 18 years or above with any nationality. An individual or a company can be a shareholder. Companies are allowed to have 100% foreign or local shareholders. Meetings can be held anywhere globally, and the appointment of a nominee shareholder is allowed.
• Registered Address: For you to register your private limited liability company in Hong Kong, you will be required to have a local registered address. This address can not be a P.O. box; it must be a physical address.
• Share Capital: In Hong Kong there is no requirement for a minimum share capital. But generally, when companies are incorporated in Hong Kong, they have at least one shareholder that holds one common share. The share capital is not restricted to the HKD and can be of any major currency. Bearer shares are not permitted. The shares can be easily and freely transferred but will be subject to the stamp duty fee.
• Tax: In Hong Kong, the corporate tax is 16.5% of the company’s assessable profit. Since Hong Kong follows territorial taxation, only profits that are earned by conducting business activities within the city are taxable. The city does not have GST, VAT, withholding tax on dividends, or capital gains tax.
• AGM: The company should hold annual general meetings annually. The first AGM is to be held within 18 months of incorporation. After this, the next annual general meetings should be held within 15 months of the previous meeting.
• Companies Registry: Businesses are required to fie the details of the company with the Hong Kong Companies Registry. The company officers are to be stated in the file. You can appoint a nominee shareholder and a nominee director if you want to keep your information confidential.
• Public information: As per the Company Laws in Hong Kong, information about the business shareholders, directors, and company secretary is public information.
• Compliance: There are several ongoing compliances for businesses. They must maintain their accounts, have annual audits by certified public accountants in Hong Kong, and file annual tax returns in Hong Kong. These documents are to be filed with the IRD. The annual returns are to be filed with the Companies Registry. Companies are required to get their Business Registration Certificate renewed one month before it expires. Depending on the certificate, this can be done annually or once in three years.

Documents Required:

Articles of Association of the business. This is to be prepared, and a copy is to be submitted when registering.

An incorporation form is to be completed duly; this should include:

– Number of shares taken up by shareholders
– Share capital registered on incorporation
– Details of company secretary, directors, and shareholders
– Brief description of business activities
– Registered address
– Company name

For non-resident shareholders and directors: A copy of your passport and overseas residential address proof.

Directors & shareholders who are Hong Kong residents should provide: Hong Kong identity card copy, residential address proof copy.

Conclusion

Once you have all the documents and have filed them to their respective governmental authorities, you will receive a Business Registration Certificate, Articles of Association, NNC1- Incorporation Form, and Certificate of incorporation from the Hong Kong government. Once you receive these documents, your business has been incorporated. The next step will be to open a business bank account and start operations.

After the incorporation of the company, to make sure that everything goes smoothly, you should file your annual forms in time without delay.