Incorporation of Companies in Hong Kong

Company formation in Hong Kong has many advantages. One of the advantages is that you only have to pay
tax on income from sales outside Hong Kong when the management is not resident in Hong Kong.

LEGAL FORM

There is no ‘offshore’ legislation in Hong Kong. All companies fall under the same legislation – the Hong Kong Company Ordinance – whether they operate locally or ‘offshore’.

To do business in Hong Kong, one can set up a sole proprietorship, a partnership, or register one’s own company incorporated elsewhere as an overseas company in Hong Kong. However, the most common form of business entity in Hong Kong is the private limited company, which limits the liability of shareholders to the subscribed capital.

COMPANY NAME

Hong Kong private limited companies must use the suffix “Limited” to denote limited liability. The following names require a license to be used: “Bank”, “Insurance”, “Insurance”, “Reinsurance”, “Trust”, “Trust”, “Savings”, “Royal”, “Asset Management”, “Fund Management” “,” Investment Fund “,” Building Society “,” Municipalham “. Names indicating any connection to local, state or national governments are generally prohibited.

GOODS FOR ASSOCIATION

A company is incorporated in Hong Kong by a registration application filed with the Companies Registry. The statutes and declaration of the founding member of NNC1 must be logged with the Registry. The articles of association specify the activities that the company can carry out and the rules for the internal management of the company. A notification of domicile is also required to be filed in the NNC1 at the time of incorporation. A business registration fee must be paid to the Inland Revenue Department within 30 days of the date of the anniversary of incorporation and then every year thereafter. The government fee is $2.250 HK

SHAREHOLDERS

At least one shareholder is required, which can be an individual or a corporate body. Details of the shareholders must be filed and appear in the public file, but anonymity can be preserved through the use of nominee shareholders.

CAPITAL

Under the Companies Ordinance, Cap 32, companies established in Hong Kong and having share capital must have a par value attributed to their shares. This represents the minimum amount for which a share can be issued.

Companies can also declare in their articles of association the maximum amount of share capital that can be issued by the company (the ‘authorized share capital’ requirement).

The amount of the excess of the issue price of the share over its nominal value is referred to as the ‘share premium’. Under Cap. 32, there are restrictions on how a company can handle the share award and how it should be accounted for.

As a result of migration to mandatory no-par, relevant concepts such as par value, share premium and authorized share capital requirements are no longer necessary.

A company will have more flexibility to change its share capital in a non-pair environment. For example, a company will be able to capitalize its profits without issuing new shares and grant and issue bonus shares without increasing its share capital (paragraph 170 of the new CO).

DIRECTORS AND COMPANY SECRETARIES

A Hong Kong limited company requires at least one director who is a natural person. Details of the directors are displayed in the public file, but anonymity can be preserved through the use of nominated directors. There is no requirement to have resident directors.

All Hong Kong companies, other than listed companies, are required to maintain a ‘substantial register of controllers’ that will include up-to-date information on ownership.

Hong Kong registered companies must also have a secretary, who can be a company body or an individual resident in Hong Kong.

• Contact us if you are interested in our nominee director services.

REGISTERED OFFICE AND SECRETARY

Every company registered in Hong Kong must have a registered office and address there, which must be notified to the Companies Registry.

MEETINGS

Company meetings do not have to be held in Hong Kong. A general meeting can be held in more than one place, using any technology.

An Annual General Meeting (AGM) must be held once in each calendar year within 9 months of the end of the accounting reference period. However, a company does not have to have its first general meeting until 18 months after its creation. A company may dispense with holding a general meeting if everything required or intended to be done at the meeting is done by resolutions.

Companies may refrain from holding AGMs with unanimous shareholder consent.

INCORPORATION PERIOD

Incorporation time is usually between 7 and 14 working days.MAINTENANCE MAINTENANCE PAYMENTS

From the second year, there are recurring maintenance fees. These include:

Delivery of registered office / registered address
Provision of a company secretary
Appointed representative
Business registration certificate

TAXATION

Hong Kong is one of the few countries in the world that taxes on a territorial basis. Many countries levy tax on a different basis and they tax a company’s worldwide profits, including profits derived from an offshore source. Hong Kong profits tax is levied only on profits derived from a trade, profession or business carried on in Hong Kong. Therefore, this means that a company carrying on a business in Hong Kong but deriving profits from another jurisdiction is not liable to pay tax in Hong Kong on those profits.

If a Hong Kong company has multiple income streams, both from and out of Hong Kong sources, these streams must be eligible with proof. To be able to claim tax exemption for offshore income:

The company’s management must be located outside Hong Kong.
The directors/managers/employees should not come to Hong Kong to negotiate and sign contracts for business relationships with Hong Kong buyers.
The company should not maintain any operational office and warehouse in Hong Kong.
The company should not employ any staff in Hong Kong to carry out the company’s job duties there.
Hong Kong earned income is currently subject to a 16.5% tax rate.

AUDIT AND ACCOUNTING

A Hong Kong company must keep accounting records, which may be kept at the registered office address or elsewhere at the discretion of the directors. Each company must appoint an auditor who must be a member of HKIPA and hold a practicing certificate. Although there is no requirement to file accounts with the Companies Register, there is a requirement to file accounts with the tax authorities. An annual fee is required to the Companies Registry within 42 days of the date of incorporation and then every year thereafter. The government fee is HK$105.

Our services include :

Name check and approval
Filling of incorporation documents with the Register of Companies
A standard set of original company documents
Payment of the government fee
Provision of registered agent and address for one year
Provision of company secretary for one year
Appointed representative
rubber stamps
Note: If you are applying for a company bank account, you will need to order a full set of company documents with apostille when the account is opened outside Hong Kong.

DOCUMENTS required :

Provide the following documents to all directors, shareholders, beneficial owners and authorized signatories:

Notarized copy of a valid passport.
Original or certified copy of utility bill/bank statement (as verification of residential address, dated within three months).
Original or certified copy of bank reference letter (dated within three months).
In cases where shareholders and/or directors are corporate bodies, full set of corporate documents and certificate of good standing (for companies registered more than one year).

IMPORTANT NOTE: LICENSABLE BUSINESS ACTIVITY

If you carry out any activity without the required license or authorization issued by a relevant authority in any jurisdiction, KGN Services will not be able to assist you with the company incorporation or bank account establishment in relation to such unlicensed activity.

Activities subject to licensing include, but are not limited to: the provision of financial services involving trading/brokering in foreign exchange, financial and commodity-based derivative instruments and other securities; offering investment advice to the public; insurance and banking; operation and administration of collective investment schemes and mutual funds; payment processing services; money exchange, money transmission or money brokering; asset management; safe custody services; gambling, betting and lotteries.

Contact us if you need help with licensing your financial, Forex brokerage or gambling company.

FREIGHT COSTS

Shipping company documents or bank kits to your destination requires an additional fee and is automatically added to your order during checkout. Shipping costs for international courier services are set automatically depending on geographical zones.