Company Formation in Hong Kong: Complete Guide
When you’re starting a company, there are many things to consider. What’s the process for Hong Kong company formation? In this blog post, we’ll walk you through everything you need to know about setting up a business in Hong Kong. We’ll cover the benefits of forming company in Hong Kong, the documents you’ll need to file, and the taxes and regulations that apply to businesses in Hong Kong. By the end of this post, you’ll be ready to take the next steps in starting your company!
Benefits of forming a Hong Kong company
There are many benefits to setting up a company in Hong Kong. Here are some of the most important ones:
- Hong Kong is a well-established and stable economy, with a strong reputation for doing business. This makes it an attractive place to do business, and investors have confidence in its legal system and financial infrastructure.
- Hong Kong has a low tax regime, with a corporate tax rate of just 16.5%. This is much lower than in many other jurisdictions, making it an attractive place to base your company.
- Hong Kong has a large and sophisticated financial sector, which can provide funding and support for your business.
- Hong Kong is strategically located, making it easy to do business with mainland China and other Asian markets.
- There is no restrictions on foreign ownership of companies in Hong Kong, meaning that you can 100% own and control your company.
Document required for company formation in Hong Kong
When you’re setting up a company in Hong Kong, you’ll need to file a number of documents with the Companies Registry. The most important ones are:
Memorandum of Association – this document sets out the name and registered office of your company, as well as its objects (ie. what it is purposebuilt to do).
Articles of Association
This document contains the rules that govern your company’s internal affairs, such as how directors are appointed and shareholder meetings are conducted.
This is the form you use to actually incorporate your company. Content should include:
- The name of your company.
- The company’s registered address.
- A description of the company’s activities.
- Details of the company’s directors, shareholders, and the resident company secretary.
- If your company has directors and shareholders who are non-residents, make sure to provide copies of their passports and proof of residence in their countries.
- In the case of local directors and shareholders, you need to provide copies of their identity cards.
- In the case of corporate shareholders, you need to provide a copy of the company registration for the parent company.
- Liabilities of the company directors.
- The share capital.
Declaration of Compliance
This document confirms that you’ve complied with all the requirements for setting up a company in Hong Kong.
If the documents are in a language other than English, you must also submit an English translation.
You’ll also need to appoint at least one director and secretary, as well as have a registered office in Hong Kong. Your directors and secretary can be individuals or bodies corporate, and don’t need to be resident in Hong Kong.
Once you’ve filed all the necessary documents, you’ll be issued with a Certificate of Incorporation. Soon, you will receive a pile of documents that represent your company officially formed Hong Kong, you may further explore the company formation documents in Hong Kong after successful formation
Process of Hong Kong Company Formation
Choosing the proper business entity is the first step in the corporate formation process. The entity must be tailored to your company’s objectives and goals. As a result, it’s advised that you do extensive research on each one to avoid making any errors.
Business entities in Hong Kong include:
- Company limited by guarantee
- Company limited by shares
- Branch office
- Sole proprietorship
Name Your Company
Once you’ve decided on a company structure, the next step is to pick a firm name. The name can be in any of the three languages. You will not be able to utilize names that have previously been used by other businesses. A company name search may be done through the Cyber Search Centre or the Mobile Company Search Service.
Decide on officers and shares of your company
Before you may start filing your paperwork, you must name officials since the registration procedure requires you to submit their contact information.
- Minimum: one person
- Maximum: unlimited
- At least one director must be a natural person
- Either natural persons (from 18 years old) or body corporates (allowed under strict circumstances)
- Can be Hong Kong residents or non-residents
- Minimum: one
- Either natural persons (from 18 years old) or corporates
- Can be Hong Kong residents or non-residents
- 100% foreign ownership is allowed
- Sole director can act as a shareholder
- Mandatory by law
- Either a Hong Kong local individual or corporate
- Sole director cannot be the company secretary
Registered Office Address
It is required to have a physical local address for company registration in Hong Kong as a P.O box is not allowed.
- Minimum: HKD 1.00
- Maximum: unlimited
- Bearer shares not allowed
Annual Maintance Requirement
The Inland Revenue Department (IRD) and Companies Registry in Hong Kong impose yearly filing requirements on both local and foreign businesses (incorporated subsidiary or registered branch). The following are the annual filing obligations for private limited corporations in Hong Kong:
Filing of Annual Return with Companies Registry
A Hong Kong incorporated private company is required to submit an Annual Return signed by a director, company secretary, manager, or authorized representative with the Companies Registry. However, a private firm that has applied for dormant status under the Companies Ordinance (i.e., no relevant accounting transactions in a financial year) will be free to refrain from submitting annual reports.
Filing of Annual Tax Return with Inland Revenue Department (IRD)
According to Hong Kong corporate law, every company incorporated in Hong Kong must file a Tax Return (also known as the Profits Tax Return) annually with the Inland Revenue Department of Hong Kong (“IRD”).
On the first of April, IRD issues notifications to businesses regarding tax return filing. The notification is generally sent on the 18th month since the incorporation date for newly incorporated company. Companies must file their tax return within one month after notification. If required, companies can apply for an extension. If you miss the filing deadline, you may be subject to a fine or even jail time.
Welcome to the exciting world of entrepreneurship in Hong Kong. While you’re developing value for your clients, don’t forget about your company’s foundations and legal obligations in Hong Kong. We hope that this article sets forth a clear vision of the steps you must take after starting your business. FastLane is a Hong Kong company that offers accounting, audit, tax filing, and other corporate services like company secretary to help you meet compliance standards for your rapidly expanding business.