Hong Kong is an investment destination for many businesses owing to its business-friendly tax system, ease of starting a company, its being a free economy and accessibility to mainland China and other Asian countries. For these reasons, many entrepreneurs would want to set up shop in Hong Kong.
What are the requirements to register a company in Hong Kong?
To set up a company in Hong Kong, follow these steps:
- Decide on the business legal structure suitable to your kind of company. The types of legal structures are discussed in the succeeding section of this post.
- Pick a name for your company
- Determine the structure of your company. Hong Kong law requires the following to be able to start a company in the region.
What do you need to set up a company in Hong Kong?
- Shareholders: There should be at least one shareholder, but not more than 50 who could either be Hong Kong residents or non-residents. At least one director should be a natural person 18 years or older. The rest can be corporate entities which are bound by stringent conditions. The government permits nominee shareholders as well as one hundred percent foreign ownership. A sole director can also serve as a shareholder.
- Directors: There should be at least one director who is a natural person, 18 years or older. The rest of the directors can be natural persons 18 years or older. Corporate entities can also become directors subject to stringent conditions. They can either be residents or non-residents of Hong Kong. A company can have as many directors as they can and nominee directors are also permitted.
- Company secretary: This position is required. The company secretary can either be a corporate entity or a local individual in Hong Kong. The sole director is not allowed to hold this position at the same time.
- Share capital. The company should have a minimum share capital of HKD1 with no ceiling.
- Registered local address. The law requires that for a company to register in Hong Kong, it should have a local address. A P.O. box is not admissible.
With an incorporated company in Hong Kong, you can open a business bank account there. Here’s our guide to opening a bank account in Hong Kong. If your business has a global footprint accepting and receiving international payments, then you may want to consider opening a virtual bank account which can save you the expensive fees and conversion charges and hassle of transacting with traditional banks. Learn more about the benefits of opening a B2B Pay virtual bank account here.
If your business is an exporting company, you may want to check our article about how to export from Hong Kong to Europe.
When deciding on the legal structure of your business, take into account the requirements, financial capacity, and size of your company against the attributes of each type of entity. Typically, these are the types of entity in Hong Kong:
1. Sole Proprietorship
If you’re looking for a straightforward registration, if your business is of small scale and has ample funding to run your business, requiring no additional financial funding and expertise, then a sole proprietorship may be the type of legal structure your business can assume.
As the name implies, a sole proprietorship is run by a sole owner. The entity is dissolved when the owner dies. The owner is required to submit only an annual tax return (BIR60) to the IRD. The marginal tax rate for this type of entity ranges between 7.5% and 15%. It is considered the entity type with the highest risk because personal assets are not protected from liabilities of the business.
A partnership involves at least two people working together running a business and sharing the same aim for profits. This partnership should be sealed with a partnership agreement expressing the rights, positions and liabilities in the business. You must apply for a Business Registration Certificate before your business reaches one month old. Tax rates for profits in partnerships range between 7.5% and 15% and annual tax returns should be filed using the BIR52 form. Partners hold personal liability for all the company’s debts and obligations. A partnership can be either of the two types: general and limited.
3. Limited Liability Company (LLC)
In Hong Kong, LLCs are classified as public or private companies and companies limited by guarantees or limited by shares.
4. Private Company Limited by Shares
Suitable for SMEs, this LLC entity requires no minimum share capital. Profits can be allocated to its shareholders. A member can share his/her shares but the company can disapprove such transfer. A shareholder is liable only up to the unpaid number of shares he/she bears.
At least one natural director, one shareholder, a company secretary who is a Hong Kong local and a registered office are required. It can have as many as 50 shareholders and a corporate director is permitted under rigid conditions.
5. Public Limited by Shares
Suitable for large corporations, this LLC type needs to have at least directors, a secretary who is a Hong Kong local, one member and a registered Hong Kong office. As with Private Companies Limited by Shares, a Public Limited by Shares shareholder is liable only up to the unpaid number of shares he/she bears. There is no minimum share capital requirement just like Private Companies Limited by Shares but unlike Private Companies Limited by Shares, there are no restrictions in trading shares. Shares of this LLC may or may not be listed on the stock exchange of Hong Kong.
6. Company Limited by Guarantee
If you are setting up a club, charity or non-profit organization for fundraising for humanitarian causes, then this is the LLC form for you. A registered Hong Kong office, at least two directors, a secretary who is a local of Hong Kong and one member are required. There is no profit distribution among members and no share capital for Companies Limited by Guarantee. When such a company is liquidated, members are liable up to a limited amount they have agreed upon.Other types of business entities in Hong Kong include a Hong Kong branch and a representative office.
What documentation do you need to register a company in Hong Kong?
To open a company in Hong Kong, here are the documents required:
- Application form
- Copy of Hong Kong IDs for each director and shareholder who are Hong Kong Residents
- Copy of passport and proof of address of residence for each of the foreign director and shareholder
- Copy of Articles of Association
- Copies of all company paperwork for corporate shareholders
When forming a company in Hong Kong, you need to submit an application for the Hong Kong Companies Registrar or CR to approve your submitted company name. Once it has been approved, file all documentary requirements to the CR.
How long does it take to register a company in Hong Kong as a foreigner?
It is possible to register a company online in Hong Kong within 24 hours and open the business straight away, thanks to the streamlined process of incorporation and requirements. As a foreigner, you are allowed to have complete ownership of your company in Hong Kong.
If you want to delegate the legwork to an agency to do the processing for you, you can hire their services for a fee. You can find many agencies online, but you have to do your due diligence in finding an honest professional service provider you can trust to help you in setting up your firm.
- 1. What are the requirements to register a company in Hong Kong?
- 2. To set up a company in Hong Kong, follow these steps:
- 3. What do you need to set up a company in Hong Kong?
- 4. Legal structures
- 5. What documentation do you need to register a company in Hong Kong?
- 6. How long does it take to register a company in Hong Kong as a foreigner?