Company Formation in Hong Kong in 2023

As we navigate the complexities of 2023, the appeal of Hong Kong as a global business hub remains as strong as ever. As a Special Administrative Region (SAR) of China, Hong Kong offers a unique blend of legal and economic systems distinct from mainland China. 

This, combined with a common-law-based legal framework and a straightforward taxation system, makes Hong Kong an ideal destination for international entrepreneurs and a popular offshore banking location. 

This article will explain in detail the steps to open a company in Hong Kong, the types of legal entities available, and the post-incorporation documents that you must be aware of before starting a business in Hong Kong.

Types of Legal Entities in Hong Kong

Once you have decided to establish your company in Hong Kong, carefully considering which legal entity best suits your business intentions is crucial.

To make this simple, we have listed the uses and features of the most common types of legal entities in Hong Kong below.

Private Limited Company

This is the most common way to establish a business in Hong Kong, as the business is seen as legally separate from its owners. This means that they benefit from limited legal liability, so any debts or financial obligations that are accrued won’t be the personal burden of the owner, unlike unlimited personal liability, where the company debts can be paid with the owner's personal assets, as in the case of a sole trader. There can also be multiple shareholders with easily variable amounts of responsibility and control over the business.

Branch Office

This legal entity allows an overseas company to operate directly in Hong Kong without requiring the lengthy process of re-establishing itself locally. All actions and liability are the responsibility of the overseas parent company.

Representative Office

This allows an overseas parent company to have a presence in Hong Kong to research the market and conduct promotional activities. However, this entity type does not allow profit-making or independent legal activities.

Sole Proprietorship

This legal entity allows individuals to register themselves as the sole holder of all liability and obligations imposed upon them as the company holder.

However, it is extremely important to note that with this type of legal entity, the sole proprietor is subject to unlimited personal liability, unlike members of a private limited company.

Partnerships

A partnership is an agreement between two parties to share the responsibility of the holding and running of the company. Hong Kong has two types of partnerships: the General Partnership and the Limited Partnership.

How to Open a Company in Hong Kong

To demonstrate the step-by-step process of company registration in Hong Kong, we will use the most common legal entity type as an example: the Private Limited Company. 

We will look into the requirements for registering a company, including choosing a company name, selecting directors and shareholders, defining share capital, and appointing a company secretary and designated representative. We'll conclude with a look at the necessary documentation to be filed with the authorities in Hong Kong.

1. Choose a Company Name

Choosing a company name is a fundamental step. The local authorities in Hong Kong will use this official name to address the entity. We recommend having three options for the official name, as it’s common for company names to be already reserved.

💡 Tip: The Hong Kong Company Registry will not approve company names that could cause confusion or controversy, and this selection process is based on their discretion.

2. Defining the Company's Purpose

Once you have selected your company name, the next step is to define the intention and outline the intended business activities in Hong Kong. A Private Limited Company in Hong Kong is allowed to engage in various profit-making activities.

However, it must be ensured that all intended profit-making activities are included in the initial statement of purpose as that is all the company will be entitled to engage in.

💡 Tip: Certain sales, activities, or specialised industries, such as the sale of alcohol, may require specific licensing. Therefore, it is vital to research whether or not additional requirements exist for the business to operate legally. 

3. Organising The Company's Structure

After completing the first two steps, the next is to outline the internal structure of the Private Limited Company. As required by the Companies Ordinance law of Hong Kong, the following positions must be fulfilled:

• One shareholder (minimum).
• One acting Director (minimum).
• An acting Company Secretary (a person who is a Hong Kong permanent resident or a company in Hong Kong with an official certification).
• A Designated Representative (a person who is a Hong Kong permanent resident). 
• A designated registered business address to receive official notifications.
• Definition/Date of the end of the fiscal year (this will impact the date to declare taxes within the defined fiscal period)

4. Determining the Company's Initial Investment and Shared Capital

The minimum requirement for the initial investment is a share of HKD$1 (Hong Kong Dollar). The value of the shares or the number of shares can be modified and amended as the company's members see fit in the Articles of Association.

5. Planning the Company's Meetings

Regular shareholder meetings should be established to discuss the continued activities and oversee the company's changes and progress. It should be indicated within the Articles of Association how often a shareholder’s board meeting must be held to ensure that their voices are being heard in the continued running of the company.

It is mandatory to hold at least one AGM (Annual General Meeting) per year.

The decisions taken during these meetings, either special resolutions or ordinary resolutions, must be recorded and informed to the company members. The name of the record is called the meeting minutes.   

6. The Company Formation Steps

Once all of the steps outlined above have been completed, the remaining step would be to submit the incorporation form that includes the company's name, purpose, and Articles of Association with all the details of the member's particulars, share capital, and the meetings.

Incorporating a Company in Hong Kong usually takes 5 to 10 working days. Once approved, the authorities issue the corporate identification documents from the newly established entity. It is then possible for a Bank account to be established for the new legal entity.

Setting up an Offshore Hong Kong Company

A Hong Kong company can be operated and established from anywhere in the world without needing to be physically present in the country. This is referred to as establishing your business offshore. 

💡 Tip: Read our comprehensive guide on how entrepreneurs worldwide set up offshore companies in Hong Kong.

Post-Registration Company Documents in Hong Kong

After the proofs have been completed and submitted to the Hong Kong Authorities, such as the Companies Registry and the Inland Revenue Department, these agency bodies will issue identification documents to the newly established Hong Kong companies.

Here, we will detail the most common and relevant documents that the owners of Hong Kong companies must be familiar with

Certificate of Incorporation

The certificate of incorporation is one of the most essential documents for companies incorporated in Hong Kong. This proves not only the official existence of the company but also its legal right to operate.

The Hong Kong Companies Registry issues the document, which includes the identification number and date the company was officially established. 

Articles of Association

Before forming a company in Hong Kong, the owners and members must prepare a set of rules that will serve as operational guidelines. These are known as the Articles of Association. 

The Articles of Association will include the share capital amount, the corporate shareholder's rules, and other key regulations that members and employees of the new company must follow.

Business Registration Certificate

Another essential document is the Business Registration Certificate. The Hong Kong Inland Revenue Department will issue this document, indicating the company is in operation.

Additionally, this document shows the registration number, usually used as the tax identification number outside of Hong Kong.

Usually, banks will require a current or valid Business registration certificate to verify the company's existence before opening a business account for companies.

Maintaining Your Hong Kong Company

All companies, by law, whether local or overseas entities, operating in Hong Kong must have an appointed Company Secretary. A Hong Kong Company Secretary is the company's chief administrative officer responsible for ensuring legal compliance and good governance and maintaining communication with all the relevant government departments. 

The mentioned position can only be filled by a natural person who must be a Hong Kong permanent resident or a company certified in Hong Kong to provide this service. 

🔍 Tip: Find the right Company Secretary for your business based on verified Statrys client reviews.

The Significant Controllers Register in Hong Kong

The Hong Kong Significant Controllers Register is required since a new law was enacted in 2018. It names all the persons, either natural persons or legal entities, who hold "significant control" of the company. 

To be considered a significant controller, an individual or company must possess 25% or more of the shares or voting rights in the company.

The Designated Representative is responsible for the Significant Controllers Register. They must keep the physical document at the registered business address or another approved location. The document must be available for the authorities' inspection whenever requested. 

💡 Tip: Read our dedicated article about the Significant Controllers Register in Hong Kong to learn more about the record and the designated representative.

Conclusion

The company formation process can be confusing, especially if it is your first time. However, as long as you are patient and follow the steps in our guide, you should be able to register a company in Hong Kong. 

If you don’t have the time to deal with paperwork, we suggest looking at company incorporation services provided by various companies in Hong Kong. 

Statrys is one of the most popular options for company incorporation, where we provide a one-stop service at one price only. This makes it simple, and Statrys also provides a business account with the newly registered company. 

 Alternatively, you could explore other options, such as Osome and Sleek, to see how we compare. 

We hope this guide has been helpful. If you want to make a suggestion or add relevant or missing information, don’t hesitate to contact us via Live Chat or email at marketing@statrys.com.