Learning hub
Hong Kong Companies
| Company type | Private limited company |
|---|---|
| Share Capital | No minimum price for shares |
| Shareholders | 1 to 50 shareholders |
| Directors | At least one director |
| Company secretary | Must appoint a qualified company secretary |
| Designated Representative | Must designate at least one person as representative relating to maintenance of Significant Controllers Register |
| Annual Return | Required to file an annual return |
| Annual General Meeting (AGM) | Required to hold an AGM every year |
| Audit | Required to prepare Audited Financial Statements every year |
| Tax Return | Required to submit to the IRD every year |
General Information Regarding Setting up A Company in HK
Welcome to being part of the dynamic business community in Hong Kong!
This guide aims to provide general information about the initial set up, general statutory compliance and the tax environment of Hong Kong for your initial business set up and ongoing compliance needs. Should you require more detailed and formal advice, you are suggested to consult a qualified professional with relevant experience.
Part I: Setting up of a Hong Kong Company
OPTIONS: to set up a business entity in Hong Kong, you can register a Sole Proprietorship, Partnership or Limited Company. Owner(s) of both Sole Proprietor and Partnership are subject to unlimited personal liability, therefore for better protection, we usually recommend incorporating a Limited Company when conducting business transactions. This material is prepared based on conducting business by way of a private limited company incorporated in Hong Kong.
Methods Available
For incorporating a private limited company in Hong Kong, there are 2 methods: Shelf companies: Shelf companies are companies that have already been incorporated and available for client’s purchase. These shelf companies are also new companies and have never been used before – they are incorporated only to allow for immediate use by clients and the company name can be changed later. Acquiring a shelf company and completing the initial post-incorporation procedures normally take around 3 working days. Shelf companies usually come with a share capital of HK$1.00, clients may allot the shares in the future to increase the share capital if needed. All -new companies: Alternatively you can incorporate an all-new company from scratch. In this regard client needs to provide the proposed company name and after checking the availability with the Hong Kong Companies Registry’s record, an all-new company can be incorporated. Client can designate the amount of share capital and share structure, and tailor-make the Articles of Association and other details. Incorporating an all-new company and completing the initial post-incorporation procedures normally take around 10 working days.
Choice of Company Name
Name of a Hong Kong limited company must be in English, in Chinese or in both English and Chinese. It generally ands with the words “Limited” or “有限公司” except those granted a licence to dispense with it. It cannot be too similar to any other company name that is currently in use by another Hong Kong limited company. Names containing certain phrases such as “Trust” or “Chamber of Commerce” etc. require special approval.
Registered Address
Every Hong Kong company requires a registered address in Hong Kong. If in the initial stage after incorporation client does not rent their own office. We can provide our office as the registered address for client in Hong Kong and our registered address comes with parcel and mail forwarding services. This can reduce the cost as compared to renting your own office.
Share Capital
In order to be in line with international trend, right now a no-par shares system has been adopted for all Hong Kong companies. There is no minimum price for issuance of shares, no “authorized share capital” concept, though a company may state the maximum number of shares that it may issue in its Articles of Association.
Shareholders
Shareholders are the owners of a limited company. All private limited companies in Hong Kong require at least one shareholder and up to a maximum of 50 shareholders He/She can be any person over the age of 18 of any nationality or corporations from any countries. Copy of a valid passport and a residential proof of each shareholder are required upon incorporating a company.
Directors
The board of directors is the highest management body of a limited company. All private limited company in Hong Kong require at least one natural person to serve as director and He/She can be any person over the age of 18 (subject to a few exceptions, e.g., persons under a bankruptcy order) and of any nationality. Corporations from any countries may act as director, but sole corporate director is not permitted. Corporations can only be directors for a private limited company not being a member of a group containing a public company. A copy of the valid passport and their residential address proof of each director is required upon incorporating a company.
Company Secretary
Every limited company in Hong Kong requires a Company Secretary, and the role of the Company Secretary is to ensure the compliance requirements under the statutes are properly complied with. The Company Secretary should be an individual normally residing in Hong Kong or a company processing a TCSP license in Hong Kong. Through our affiliate company, we can provide complete Company Secretarial services for your company.
Designated Representative
To enhance transparency of corporate beneficial ownership in order to fulfil Hong Kong’s international obligations, every company incorporated in Hong Kong is required to obtain and maintain up-to-date beneficial ownership information by way of keeping a Significant Controllers Register (“SCR”). The Register should be open for inspection by law enforcement officers upon demand. We can help to establish and act as Representative of SCR to your company.
Confidentiality
Information regarding shareholders and directors are public information and are available to be inspected by the public at the Companies Registry.
Part II: Bank Account Opening in Hong Kong
Hong Kong is a free economy with no foreign exchange control, and funds can be remitted in and out of the territory basically without restriction. Client can open individual or corporate bank accounts at various banks in Hong Kong. Common choices including HSBC, DBS Bank, China Construction Bank and Bank of China etc. Banks in Hong Kong often provide full internet banking platform allowing client to conduct banking transactions fully online. For opening a corporate bank account, client generally needs to come to Hong Kong in person for the initial opening. The original passport and a residential address proof are required for all authorised signers, directors and shareholders. For residential address proof, they can be any documents such as personal bank statements, telephone bills or utilities bills that bears the holders’ name and personal address, issued within 3 months. We can also assist clients to open their bank accounts in other selected jurisdictions through our offices in Guangzhou, Shanghai, Beijing, Paris and Luxembourg.
Part III: Statutory Compliance
After the company is incorporated, there are various routine statutory compliance matters that need to be handled:
Annual Return
Every private limited company must submit an annual return (Form NAR1) to the Companies Registry within 42 days after its most recent anniversary of its date of incorporation. This annual return includes basic information regarding the company such as its registered address, directors’ information and capital structure etc. The filing fee for an Annual Return is HK$105.00.
Renewal of Business Registration
The Business Registration Office will issue a Business Registration Certificate and Demand Note to every company annually. Currently, the fee and levy for business registration is HK$2,250.00 per year.
Profits Tax Return
The IRD will issue the first Profits Tax Return (Form B.I.R.51) 18 months after the company incorporated. The company will be allowed 3 months of time for submission. For proper submission, audited financial statements and Profits Tax Computations have to be submitted together with the Profits Tax Return. In subsequent years, Profits Tax Return will be issued on an annual basis during April every year and the deadline of filing depends on the accounting year end of the company.
Annual General Meeting (AGM)
Every limited company shall hold an annual general meeting for each financial year. Under the Companies Ordinance, if the company’s first accounting reference period is more than 12 months, the company shall convene its first annual general meeting within 9 months after its first anniversary date, or within 3 months after theend of the accounting reference period. In subsequent years, the annual general meeting shall be held once a year. Unless otherwise exempted, the annual general meeting of private companies must be held within 9 months after the end of accounting reference period. The private company mentioned should not at aytime during the financial year, a subsidiary of a public company.
Employers’ Return
The IRD will issue an Employer’s Return of Remuneration and Pensions (Form I.R.56A and I.R.56B) to every limited company in Hong Kong during April every year. The company has the obligation to provide the details of each employee including their names, place of residence and full amount of remuneration to the IRD by filing in this Return and submitting it to the IRD within one month.
Part IV: Accounting and Record Retention
Accounting
Every company in Hong Kong should maintain sufficient accounting records regarding their income and expenditure to enable its taxable profits to be readily determined. In practice, all documents related to the business operations of the company including bank statements, sales and purchase invoices, receipts and invoices for expenses and all contracts signed by the company should be properly kept. Proper management account should be prepared on an annual basis in accordance with Hong Kong Accounting Standards or International Accounting Standards.
Audit Requirement
All companies also need to prepare audited financial statements on an annual basis. The audited financial statements should be prepared by a Certified Public Accountant in Hong Kong.
Record Retention
The accounting records of a company need to be retained for at least 7 calendar years.
Part V: Hong Kong Taxaton
Hong Kong adopts a territorial source principle of taxation. Only profits which have a source in Hong Kong are taxable here. Profits sourced elsewhere are not subject to Hong Kong Profits Tax. There are three main types of taxes in Hong Kong: Profits Tax, Stamp Duty and Salaries Tax. There is no tax on capital gain, dividend income, bank interest income or any income derived from overseas.
Profits Tax
Profits tax is levied on all corporations or company that engage in trade or business in Hong Kong. The two-tiered profits tax rates regime has be implemented from 2018 onwards. The profits tax rate for the first HK$2,000,000 of assessable profits of corporations is 8.25%, and 16.5% on remaining part of assessable profits over HK$2,000,000. Profits is taxable only if it arises or derived from Hong Kong. Therefore, if the business is outside of Hong Kong, theoretically it can be exempted. Using a company that engages in trading business as an example: in order for the profits of a trading company to be exempted from profits tax, the followings are some general criteria:
- No purchase is made in Hong Kong (i.e. no Hong Kong supplier)
- No sale is made in Hong Kong (i.e. no Hong Kong customer)
- Management and control outside Hong Kong (i.e. no office in Hong Kong)
In order to have profits exempted from profits tax, application has to be made to the IRD which will examine every case in details. A Hong Kong company applying for profits tax exemption will need to provide the necessary supporting documents and explanations requested by the IRD. Once a claim is successful, it is normally perpetual unless circumstances change (such as changes in the legislation or operations of the company).
Salaries Tax
Salaries tax is chargeable on individual’s salaries and incomes received from employment or pension during a year of assessment. Generally if a person resides in Hong Kong for less than 60 days and all his services are rendered outside Hong Kong, his/her income is generally exempted. However please note that remuneration received by directors of a Hong Kong company is general taxable. Salaries tax is charged on a progressive rate and the standard tax rate is currently 15%.
Stamp Duty
Stamp duty is tax levied on transfer of shares, properties and other instruments or documents. The rates for different instruments and documents vary and are stipulated in the Stamp Duty Ordinance.
Providing proposed company name(s)
Check for availability
Providing company structure
E.g. issued shares, Director(s) and shareholder(s)’s info, passport copy, address proof within 2 months.
Completing the payment
Preliminary stage
Preparation of the incorporation documents
2-4 working days
Submission of signed incorporation documents to the Companies Registry of HK
Set up Hong Kong company
8-10 working days
Why work with us?
50+ years of experiences
Accounting, audit & different levels of corporate services
Cross-border investment advisory expert for medium & large enterprises
Familiar with China, HK and Europe’s business regulations
Quality of Service: timely, professional and reasonable
More than 90 financial & corporate service professionals
Nous trouver
Hong Kong
10/F., Guangdong Investment Tower, 148 Connaught Road Central, Hong Kong
Tel: +852 2541-6632
Fax: +852 2541-9339
Email: info@fungyuco.hk
Hong Kong
10/F., Guangdong Investment Tower, 148 Connaught Road Central, Hong Kong
Tel: +852 2541-6632
Fax: +852 2541-9339
Email: info@fungyuco.hk
Shanghai
Suite 1206, Jing’an China Tower, 1701 Beijing Road West, Jing’an District, Shanghai, PRC
Tel: +86 21 6289 8813
Fax: +86 21 6289 8816
Email: info.sh@fungyuco.cn
Shanghai
Suite 1206, Jing’an China Tower, 1701 Beijing Road West, Jing’an District, Shanghai, PRC
Tel: +86 21 6289 8813
Fax: +86 21 6289 8816
Email: info.sh@fungyuco.cn
Canton
Room 1912, West Point Centre,
65 Zhongshan 7th Road, Liwan District, Guangzhou, PRC
Tel: +86 20 8762 0508
Fax: +86 20 3762 1108
Email: info.gz@fungyuco.cn
Canton
Room 1912, West Point Centre,
65 Zhongshan 7th Road, Liwan District, Guangzhou, PRC
Tel: +86 20 8762 0508
Fax: +86 20 3762 1108
Email: info.gz@fungyuco.cn
Pékin
Room 401-26, Yili Ecological Plaza, Building 1, 15 Guanghua Road, Chaoyang District, Beijing, China 100026
Email: info.bj@fungyuco.cn
Pékin
Suite1715, Building B, Vantone Financial Center, No.2 Fuwai Street, Xicheng District, Beijing, China 100037
Tel: +86 10 6591 8087
Fax: +86 10 8599 9882
Email: info.bj@fungyuco.cn
