Hong Kong Legal Entities
Incorporating a company in a new jurisdiction requires a critical analysis of the correct means and setup requirements to do so. Incorp International has years of involvement in the company formation industry and the know-how to recommend the most suitable business model structure for your new Hong Kong company.
Hong Kong is known as the freest economy in the world due to its administration of provident economic policies, along with the provision of a secure and clear judiciary structure. Such an environment is ideal for entrepreneurial growth.Among the numerous ways of conducting business in Hong Kong, the most prominent ones include the following:
Selecting a Private Limited company structure in Hong Kong is the most popular choice for entrepreneurs due to a number of reasons. In Hong Kong, tax is not liable on income gained from business conducted abroad. Also, there are the least possible administrative procedures for company setup in Hong Kong. Other advantages for a limited company in Hong Kong include unrestricted flow of funds (due to no exchange control), a solid and reliable banking framework, phenomenal organizational infrastructure, superb communication technology and a self-motivated workforce.
Limited companies in Hong Kong are patterned after the British limited company structure and Hong Kong’s legal system is built on the British system.
A Hong Kong limited company is a separate legal entity in its own right. It can conduct any enterprise or action(s), separate from its members. This also gives it the ability to procure assets, enter into debt, take legal action (or vice versa), take part in contracts and conduct any legal type of commerce. Company shareholders’ liabilities for company debts are restricted to their individual shareholdings.
Hong Kong limited company incorporation requires:
A minimum of one Director (age 18 and above) of any nationality. There is no limit on the number of directors
A minimum of one Shareholder (age 18 and above) of any nationality. A shareholder can also be director. Nominee shareholders can also be hired.
A company Secretary who has to be a resident of Hong Kong. A company secretary cannot be a director or shareholder. A nominee secretary can also be hired.
A Hong Kong limited company must conform to annual accounts filing deadlines and requirements and have to submit audited accounts and annual tax returns.
Hong Kong limited company incorporation is a simple and hassle-free process. There is no requirement on a company’s minimum paid-up capital or number of shares projected to be issued. Also, there is no requirement for declaring the registered office address, the first director(s) and company secretary in the articles of association. No government approval is needed, as well.
The best use of incorporating a branch office is for a foreign company that wants to launch a presence in Hong Kong, for the sole purpose of selling to the Hong Kong market. As a lawful element enlisted with the Company Registry, a Branch Office is not a separate legal entity and is dealt with as an extension of the parent foreign company it represents. All profits, debts and liabilities incurred by the branch will be accountable to the parent company.
A branch can start conducting business for up till a whole month before it has to apply for registration. This provides an advantage for a foreign company that wants to commence business operations in Hong Kong on an immediate basis. A foreign company will then need to register itself as “Registered Non- Hong Kong Company.”
There is no mandatory requirement for a branch in Hong Kong to submit audited accounts, as long as it provides the following facts along with the Tax Return:
The place where the branch was incorporated
Whether the laws of the place of incorporation necessitate a statutory audit of the company’s global accounts
Whether the audit has been carried out
A short outline of the bookkeeping and budgetary records of the Hong Kong branch
The branch structure and its scope of activities are determined according to the Memorandum and Articles of Association (MAA) determined by the parent foreign company. The branch office does not need to have its own MAA. There is no minimum capital requirement for the branch. However, it must have a place in Hong Kong from where it conducts business.
A Hong Kong branch office must have an assigned officer who is a Hong Kong resident and who is approved to receive the branch’s legal notices. The official representative can be an individual or a corporate body.
The advantages of a Hong Kong branch office include quick, hassle-free and inexpensive setup, and zero audit costs. A branch is authorized to invoice local clients and earn income, as well as entering into local sales contracts.
A Representative Office setup is ideal for foreign companies seeking to gain insight and exposure to the Hong Kong market, before it decides to make any large investments and establish a complete office setup. In this regard, the representative office is looked upon as entity for promotion and liaison and not revenue generation, and it must limit itself to directing such undertakings only. A Hong Kong resident agent will have to be appointed for sales of goods and services.
There is no need for registered capital requirement to incorporate a representative office. There is also no filing or accounting requirements or statutory documents maintenance. As a non-earning body, it does not require to file tax returns. However, it needs to apply for a Business Registration Certificate with the Inland Revenue Department.
Hong Kong Shelf company with Bank Account
Not enough time to register a company in Hong Kong? Contact our specialists for Hong Kong Shelf Companies with Bank Account options.