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Open a company in Hong Kong
Hong Kong is an excellent place to do business for several reasons. With a well-regulated and stable jurisdiction, Hong Kong has a strong legal system and plenty of tax incentives for new business owners. It also has a highly developed infrastructure and a talented workforce.
If you want to open a company in Hong Kong there are many things to consider before starting the process, such as what type of company you want to register, how to meet registration requirements, and what happens after you successfully open a company in Hong Kong. In this article, we will outline the steps you need to take to open a company in Hong Kong and provide some tips on how to make the process as smooth as possible.
Step 1: Understanding Hong Kong Company Types
There are many different company types you can register in Hong Kong, each with its own set of benefits and restrictions. The most common types of companies in Hong Kong are limited liability companies, sole proprietorships, and partnerships.
A Limited Liability Company is the most popular kind of company in Hong Kong. This business is a separate legal entity with shareholders who are liable for the company’s debts only to the extent of their shares in the company. There are two types: public and private limited liability companies. The private option is most popular, as the liabilities of the owners are limited to the assets that are in the company. Given this, limited liabilities companies are relatively straightforward to register. They can be easily incorporated with the Companies Registry under the Companies Ordinance.
A Sole Proprietorship is a small-scale business owned and operated by one individual. It is one of the simplest types of business entities to set up, but it does not offer the same legal protections as large-scale corporations. For example, while the sole proprietor earns all the profits from the company, they are also personally responsible for any liabilities.
A Partnership is a company owned by two or more individuals. It is governed by the Partnership Ordinance and it presents its own set of unique benefits and disadvantages. Partnerships benefit from the combined expertise and efficiency of their owners and they do not have to solely rely on personal funds to raise capital. However, they must also share profits with each partner and, just like sole proprietorship, receive no protection of personal assets.
In addition to this, there are also foreign company offices. These are representative offices, subsidiaries, or branch offices set up in Hong Kong by foreign companies.
Step 2: Choosing a Company Name
Next, you will need to decide what to name your company. To do this, you will need to check the Company Registry to make sure that your chosen name is available and not already taken by another business. Once you have found an available name, you will need to reserve it with the Company Registry by paying a fee.
When selecting a name for your business, it may also be worthwhile to check online (such as on social media platforms) for pre-existing businesses with similar names before reserving your own. This way, your company’s name will not be associated with any other businesses once you decide to register your company.
In addition to this, you may also want to check the URL availability of your chosen name. If the selected name is available, it may be in your interest to buy the domain name for your company. Even if your company does not have plans of launching a website now, you may want to do so in the future.
Step 3: Selecting a Business Address in Hong Kong
When selecting a business address in Hong Kong, it is important to choose a location that is both convenient and strategic. The best place to start is by considering your company’s industry and target market. For example, if you are in the financial services industry, you may want to be located in Central, which is Hong Kong’s commercial district. If you are targeting Mainland China as your primary market, you may want to consider locating in Sheung Wan or Wan Chai, which are close to the border and offer good connectivity to the rest of China.
Another thing to keep in mind when choosing a business address is the cost of rent and other operating expenses. Hong Kong is a relatively expensive city and office space can be quite costly, especially in prime locations. However, there are also several business districts with lower rents that may be a better fit for your company.
Step 4: Understanding Hong Kong’s Company Registration Requirements
When registering a company in Hong Kong, some requirements must be met. The most important of these are the company constitution, share capital, and appointing company directors and company secretary.
The Company Constitution
The Company Constitution lays out the rules and regulations that govern the company’s operations. It must include certain information such as the company’s name, registered office, business objects, and the rights and restrictions on the transfer of shares. In addition, the Company Constitution must be approved by the Company Registrar and filed with the Companies Registry.
Share Capital
In Hong Kong, the Companies Law states that there is no minimum share capital required to register a company. Exceptions apply. For example, a minimum share capital is required for companies operating with special permits or licenses such as banks, traveling agencies, and other financial institutions. The share capital for these types of companies is locally regulated by the relevant authorities.
Despite there being no mandatory requirements, most Hong Kong business entities set up with a minimum amount of, for example, 10,000 HK$. The shares, then, usually have a value of 1.00 HK$ each.
Appointing Company Directors and Company Secretary
A Hong Kong company must have at least one director and one company secretary. The director must be a resident or citizen of Hong Kong or another country that has a treaty with Hong Kong regulating business practices between the two jurisdictions. The company secretary does not need to reside in Hong Kong but must be qualified to act as a company secretary under Hong Kong law.
Step 5: Registering the Company
To register a company in Hong Kong, you must file the following documents with the Companies Registry:
- Articles of Association. These documents clearly describe a company’s operation regulations.
- A Company Registration Form containing the following details:
- The company’s name;
- The company’s registered address;
- A description of the company’s activities;
- Information on the company’s directors, shareholders, and company secretary;
- If the company’s shareholders or directors are non-residents, a copy of their passports and proof of residence in their countries;
- If the company’s shareholders and directors are residents, copies of their identity cards;
- Liabilities of the company’s directors;
- The share capital.
The documents can be filed online or hardcopies can be delivered at the Company Registry.
Once the documents have been filed, the Companies Registry will issue a Company Registration Certificate (CRC). This certificate confirms that your company has been registered and is now a legal entity in Hong Kong. The CRC must be displayed in a prominent location in your office.
The Company Constitution
The Company Constitution lays out the rules and regulations that govern the company’s operations. It must include certain information such as the company’s name, registered office, business objects, and the rights and restrictions on the transfer of shares. In addition, the Company Constitution must be approved by the Company Registrar and filed with the Companies Registry.
Share Capital
In Hong Kong, the Companies Law states that there is no minimum share capital required to register a company. Exceptions apply. For example, a minimum share capital is required for companies operating with special permits or licenses such as banks, traveling agencies, and other financial institutions. The share capital for these types of companies is locally regulated by the relevant authorities.
Despite there being no mandatory requirements, most Hong Kong business entities set up with a minimum amount of, for example, 10,000 HK$. The shares, then, usually have a value of 1.00 HK$ each.
Appointing Company Directors and Company Secretary
A Hong Kong company must have at least one director and one company secretary. The director must be a resident or citizen of Hong Kong or another country that has a treaty with Hong Kong regulating business practices between the two jurisdictions. The company secretary does not need to reside in Hong Kong but must be qualified to act as a company secretary under Hong Kong law.
Step 6: Opening a Bank Account
Once you have obtained a CRC, you can then go ahead and open a bank account in Hong Kong for your company.
You will need to submit an application to the bank you have chosen to open an account with. To review the necessary documentation required in the application, click here. This process may take up to 2 months depending on the banking institution you have selected. Once the bank has approved your application, however, you will be able to deposit money into your new account and start conducting business. Different banks will require different minimum deposits, so keep an eye out for that as well.
In addition to this, there are other fees you should be aware of. These include the appointment meeting fee (HK$1,200 – HK$1,350) and the account setup fee (HK$100 – HK$150.). Depending on the bank, there may also be processing fees and foreign transfer fees.
When opening a bank account, it may be worth considering selecting a bank that has experience dealing with foreign businesses. This will make it easier for you to manage your finances and avoid any potential problems that may arise.
Step 7: Understanding Tax Requirements
You must register your company for tax in Hong Kong within one month of incorporation. To do this, you need to file a Company Tax Return.
Hong Kong has a simple and straightforward tax system for businesses. The corporate tax rate in Hong Kong is 16.5%, which is one of the lowest in the world. In addition, there are several tax exemptions and tax-deductible expenses that can help reduce your tax liability.
For example, in 2017, Hong Kong introduced a two-tiered profit tax regime meant to assist new businesses. Under this system, the profits tax rate on the first $2 million of assessable profit is 8.5%, half what it would usually be. After the first $2 million, the profit tax rate returns to 16.5%.
It is important to note that profits earned by a company through its foreign branch are not subject to Hong Kong corporate tax, provided the branch operates per local laws and regulations.
To Sum Up
If you’re looking to open a company in Hong Kong, these are the steps you need to take!
So, if you’re looking to open a company in Hong Kong, these are the steps you need to take! First, you’ll need to determine your company’s name and an appropriate location to start your business. Then, you must understand the requirements for opening a company in Hong Kong and submit the necessary paperwork. Finally, you need to open a bank account and understand your tax filing requirements and possible exemptions as a new business. Although the task may seem daunting at first if you follow these steps you’ll be sure to have your company up and running in no time.
