Fascinated by attractive business environment and competitive tax regime, business people might be more desirable attentive to know how to set up a company in Hong Kong.
Due to its simplified incorporation process and requirements, applicants are able to register for a Hong Kong corporate and speedily get the ready documents within 24 hours to run their business immediately.
Taking the procedure step by step, you should select a suitable entity type, choose a company name, decide on the company structure, and make an application with the Hong Kong Companies Registrar (CR). A license or permit is mandatory if your business sectors are required by the CR.
Why choose to incorporate in Hong Kong
Ease of setting up a company: Foreigners are permitted to take complete ownership of their Hong-Kong-based corporations. The requirements for opening a company are simple and the registration procedure can be done shortly online within 24 hours.
Open-oriented market: As one of the freest economy, Hong Kong accept almost all legal business categories. Money transfer and currency exchange are permitted for any types. Additionally, Hong Kong companies are not limited by the Government to have bank accounts in any locations.
Business-friendly tax system: The corporate tax rates in Hong Kong are competitive as it follows a territorial principle system which exempts tax for all profit earned outside of Hong Kong, while the income derived from Hong Kong is charged marginally from 8.25% to 16.5% for the year of assessment of 2018/19 onwards. Furthermore, capital gain tax, dividend tax, HAT, VAT or sales tax and withholding tax are not applicable.
Accessible gateway to Mainland China and Asian countries: Hong Kong has a significant location advantage that it is possible to travel to China within one days and to most of Asian destinations with a five-hour flight.
Want to get more details on Hong Kong business climate? Check out our blog 6 benefits of setting up a company in Hong Kong
How to set up a company in Hong Kong
Let’s go through the full procedure of starting a Hong Kong company with us.
1. Select the appropriate company type
Initially, investors should consider their company’s needs, size, financial ability, and features of each entity type before incorporating a business.
Hong Kong entity types are usually divided into:
- Limited Liability Company (LLC): Private Company Limited by Shares, Public Company Limited by Shares, or Company Limited by Guarantee
- Sole Proprietorship
- Others: Branch office or Representative Office (Liaison Office)
The following instructions mainly shed light on the incorporation of a Private Company Limited by Shares in Hong Kong as it is most chosen by either foreign or local entrepreneurs.
You can refer to Hong Kong business entity types for detailed features along with the strengths and weaknesses of each company type.
2. Choose a company name
Unlike other offshore jurisdictions (BVI, Seychelles, Belize, etc.), the Hong Kong Companies Registry (CR) do not give provisional approval, or reservation, of company name.
Under the Companies Ordinance, the CR has the power to change a company name in specified circumstances.
A company name can be in English (must end with “Limited”), or in traditional Chinese (must end with “有限公司”), or an English name and a Chinese name. The combination of English and Chinese characters in a name is rejected.
The proposed name might be declined if it is:
- Same as or similar to a name appearing in the Companies Registry’s ‘Index of Company Names’; or
- Same as a name of a body corporate already incorporated or registered under an Ordinance; or
- Considered infringe on trademarks; or
- Offensive or otherwise contrary to public interest under the Registrar’s opinion.
Company names that give the impression to the Government of HK SAR by having words or expressions such as ‘Council’, ‘Department’, ‘Bureau’, ‘Commission’, ‘Government’, etc. must be sent for approval.
In addition, name of a Branch or Representative Office must be the same as its parent company.
In our previous article Requirements for registration of a Hong Kong company name, you can get a detailed description of which name should be eligible.
To save time, you should also check the name availability first with a company registration agency to avoid any delay with the incorporation.
3. Decide on the company structure
To set up a private company in Hong Kong, entrepreneurs must comply with the below requirements of a business entity:
Directors: At least one director who is either
- a natural person (from 18 years old) or body corporates (only allowed under strict circumstances)
- Hong Kong residents or non-residents
Nominee directors are allowed and the maximum number of company’s director is unlimited.
Shareholders: At least one shareholder who is either
- A natural person (from 18 years old) or body corporates
- Hong Kong residents or non-residents
Nominee shareholders and 100% foreign ownership are allowed. The sole director can act as a shareholder.
Company secretary who is either Hong Kong local individual or corporate
The role is mandatory by law and the sole director cannot be the company secretary
Registered address: a compulsory local address for company registration in Hong Kong. A P.O box is not permitted.
Share capital with minimum of HKD 1.00 and unlimited maximum. Bearer shares are not allowed.
4. Proceed to open a company in Hong Kong
There are 2 main steps in the process of Hong Kong company registration:
Step 1: Filing an application for approval of the proposed company name with the CR
Step 2: Submitting all required documents to the CR
You’ll have to submit the following documents to set up a company:
- Hong Kong application form;
- A copy of Articles of Association;
- A copy of each passport, residential address proof for foreigners;
- A copy of each Hong Kong ID card for Hong Kong residents;
- Copies of all company documents for corporate shareholders.
Recently, services of setting up a company in Hong Kong is offered by many professional firms like BBCIncorp Limited. Foreigners are able to register a Hong Kong company without a visit.
All you need to do is providing personal documents via email, and the digital corporate documents are ready in one day for a company with a simple structure.
Regarding a company with corporate shareholders, the CR ask for a form NNC1 signed by the directors and returns to them physically. This process often takes from 5 working days.
5. Apply for business licenses and permits
Most of business activities can be operated in Hong Kong freely.
However, the particular types are compulsory to have a license or permit issued by a corresponding department of Hong Kong Government.
The license or permit must be registered within one month after setting up the company to run the business. It can be attained in 2-8 weeks from the registration date.
To determine the right type of licenses for your Hong Kong business, check out the full list of Useful Checking Tools For Your Hong Kong Company Registration.
The below table shows popular business sectors that must be licensed by the listed departments:
|An employment agency||The Labor Department|
|A travel agency||The Commerce and Economic Development Bureau|
|A restaurant||The Food and Environmental Hygiene Department|
|An education business||The Education Bureau of Hong Kong|
|Financial & Insurance services|
|Investment services: ||The Securities and Futures Commission|
|A money lending business||The CR and IRD|
| ||The Office of the Commissioner of Insurance|
|A firm taking deposits from clients||The Hong Kong Monetary Authority|
|A pawnshop||The Hong Kong Police Force|
|A money/currencies changer, exchange broker, dealer|
|A trading company (specific import/export goods)||Depending on goods you are dealing with|
|Event Related Activities|
| ||The Television and Entertainment Licensing Authority|
|To sell liquor during an event||The Liquor Licensing Board|
|To operate a food stall during an event||The Food and Environmental Hygiene Department|
|A pets and accessories retail shop||The Agriculture, Fisheries and Conservation Department|
| ||The Department of Health|
6. Open a corporate bank account
Though you can have a corporate bank account in any country for the Hong Kong company, banks in the same territory are most recommended if you are going to use reputable payment gateway providers (like Paypal and Stripe).
It is sometimes difficult with banks in Hong Kong because they need the presence of directors at the branch, while some offshore banks only make a phone interview.
To help you narrow down the list of bank choice, let’s take a look at our ultimate list of best banks in Hong Kong that you must know.
No matter which country, the basic documents for an account opening process include:
- Account application forms;
- Corporate registration documents;
- Copies of passports of major members;
- Personal resume;
- A bank reference letter of each major member;
- A bank statement of each major member, or any related corporates;
- Proofs of business such as agreements, invoices, contracts, etc. of the current company or any related one.
The above list is not exhaustive, perhaps there are additional documents requested by the bank while they are doing the compliance check. Definitely, the provided paper must be in English (or Chinese for Hong Kong banks, or French for other offshore banks).
If you’re intending to open a bank account in Hong Kong but still wondered if your application may get rejected, check out our case study of 3 Reasons why Hong Kong banks may reject your application.
It is suggested that the applicant should arrange the requirements as detailed as possible in order to avoid confusion and incurred problems. Almost all banks are formed to work with transparency; therefore, the clearer information you provide, the higher rate of success your application will have.
7. Do the annual maintenance filings
To maintain the active status and prevent unexpected fine from the Government, a Hong Kong company must oblige to regulatory compliance.
Gain more oversight into corporate compliance requirements of over 18 jurisdictions. Get your results now!
Compact view of your company’s regulatory requirements
A quick breakdown of key reporting timelines
The ongoing compliance for Hong Kong company can be summarized as follow:
- Annual renewal of the Business Registration Certificate: Applying for the renewal one month before the expiry date
- Annual General Meeting (AGM): Holding the meeting within 18 months from the set-up date and no later than 15 months for each next time
- Annual return with the CR: Filing with the CR within 42 days from the incorporation anniversary
- Annual tax return with the IRD: Filing a profits tax return together with audited accounts in the 18th month from the formation date, then periodically every next 12 months
- Employer’s return with IRD: Filing each associated form in a specified prescribed period
Your company will be subject to a penalty or forced to cancel the business if you fail to comply with the annual requirements. You can keep track of the compliance schedule by following up on the government’s notices and calendar.
Alternatively, you can also try our Guide to Countries’ Annual Compliance to get a compact overview of your corporate obligations.
However, there are some cases in which some Hong Kong companies unintentionally or accidentally fail the compliances.
Things are easier with Hong Kong Company Secretary – a third party to ensure your company adheres to Hong Kong Annual Compliance Requirements such as tax obligation filing, bookkeeping, and other possible administrative matters.
Not only the attractive tax regime, and the world-class financial market, but also does the simplicity of Hong Kong company formation make this country one of the largest business centers for startups and business of all sizes.
This article clarifies how to set up a company in Hong Kong, and it is a pleasure for us, BBCIncorp Limited, to serve your convenience with a fast and easy incorporation process.