Company Formation in Hong Kong in 2024

As we navigate the complexities of 2024, the appeal of Hong Kong as a global business hub connecting to Asia remains as strong as ever. 

Being a Special Administrative Region (SAR) of China, Hong Kong offers a unique blend of economic and legal systems distinct from mainland China. For instance, Hong Kong adopted a Free Trade Policy and experienced less government interference than China.

This, combined with a common-law-based legal framework and a straightforward taxation system, including a low corporate tax rate of 8.25% and 16.5%, makes Hong Kong an ideal place of business for international entrepreneurs and a popular offshore banking location. Moreover, the Hong Kong government is considering waiving profits tax for 2023/24, capped at HKD 30,000 per case, pending legislative changes.

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.

Once you have decided to establish your company in Hong Kong, carefully consider which types of companies, businesses, or legal entities in Hong Kong best suit your business intentions. Deciding on the right structure impacts personal liability, taxes, setup ease, and administrative needs.

To make this simple, we have listed the uses and features of the most common types of business entities below.

A private limited company is an independent legal entity capable of acquiring assets, entering contracts, incurring debts, and forming legal agreements, all conducted in the company's name and separate from its shareholders. 

A private limited company 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. However, there are potential share transfer restrictions and a cap of 50 shareholders.

These entities are also commonly known as "private companies limited by shares," "limited liability companies," or simply "limited companies."

A Hong Kong branch office functions as an extension of the parent company. 

It allows an overseas company to operate directly in Hong Kong without requiring the lengthy process of establishing a separate legal entity or re-establishing itself locally.

This structure enables ease of setup and minimal administrative upkeep, as the parent company handles the main corporate formalities. All actions and liability are the responsibility of the overseas parent company.

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

 A representative office is occasionally referred to as a liaison office.

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

This means the owner is personally responsible for all the business's debts. This form of business carries the most substantial responsibility during a crisis.

While less appealing for larger enterprises, it can be an ideal choice if you're starting small and want complete control with minimal hassle. The registration process for a sole proprietorship in Hong Kong is often quick and straightforward, with only a few ongoing administrative requirements.

Sole proprietors are also commonly known as sole traders.

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

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 by looking at the necessary documentation to be filed with the authorities in Hong Kong.

Choosing a company name is a fundamental step. The local authorities in Hong Kong will use this official name to address the entity. 

When naming your Hong Kong company, you have the option to choose between English, Chinese, or both, but refrain from combining characters from both languages. If you decide on a Chinese name, you must use traditional Chinese characters, not simplified ones.

For Hong Kong Limited company, make sure that any chosen name concludes with "Limited." (not Ltd.) if it's in English, and with "有限公司" if it's in Chinese.

Your company name must not duplicate any existing company names. However, variations in letter case, spaces, and accent marks are not considered. We recommend having three options for the official name, as it’s common for company names to be already reserved.

You can search for company names online using the Companies Registry’s e-Services Portal and search the Trademark Register using Hong Kong's government public online search system. 

Alternatively, you can visit the Companies Registry's e-Services Centre, located on the 13th floor of the Queensway Government Offices, 66 Queensway, Hong Kong, to conduct the search in person.

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 such as manufacturing and ecommerce businesses.

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.

If you're unsure where to start, we suggest exploring this list of business nature codes and their descriptions.

Certain sales, activities, or specialised industries, such as the sale of alcohol, may require specific licensing. You can explore the Hong Kong Business Licence Information Service to determine if additional requirements exist for the business to operate legally.

After completing the first two steps, the next is to prepare 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 registered business address to receive official notifications.

These four pieces of information are essential for filling out the incorporation form, known as NNC1. You'll find more details in step 6, where we discuss incorporation documents.

Moreover, we suggest addressing these matters in advance, though not obligatory for incorporation documents. Doing so showcases your company's organised structure, enhancing convenience and ensuring compliance.

• Definition/Date of the end of the fiscal year. This will impact the date to declare taxes within the defined fiscal period.  
• A Designated Representative: An individual authorised to act on behalf of the entity. They must be a Hong Kong resident or, alternatively, an accounting, legal professional, or licensed service provider. Their details should be outlined in the significant controller document, which is vital for maintaining your Hong Kong company post-incorporation.

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.

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.   

The fundamental documents required for Hong Kong company formation are as follows:

The Companies Registry may request additional information or documents to support the application, such as a proof of address in Hong Kong.

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.

You can submit your incorporation documents to the Hong Kong Company Registry through the following channels:

• Online via 24/7 Companies e-Registry
• By mail or in person at the Companies Registry address: 14th floor, High Block, Queensway Government Offices, 66 Queensway, Hong Kong

An offshore Hong Kong Company is a company incorporated in Hong Kong but administered from abroad. This structure provides foreigners access to Hong Kong's offshore tax exemption.

The process of offshore Hong Kong company formation is similar to the usual Hong Kong company formation, but it requires additional documentation to uphold the offshore status and proof to the authorities that no activities are conducted within Hong Kong.

After submission and approval of the documents, the Hong Kong Authorities, including the Companies Registry and the Inland Revenue Department, will issue identification documents to the newly established Hong Kong companies.

The two most common documents are the certificate of incorporation and the company registration, detailed below.

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 this document, which includes the identification number and date the company was officially established. 

To authenticate a Certificate of Incorporation, you can use the Companies Registry e-services portal (Formerly the Integrated Companies Registry Information or ICRIS). This government platform allows the public to verify company information, such as its presence in the records, name changes, and date of incorporation. While basic information is accessible for free, more detailed documents can be downloaded for a fee.

Another essential document is the Business Registration Certificate. This certificate is mandatory for any profit-generating activity. The Hong Kong Inland Revenue Department will issue this document to indicate that the company is in operation.

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

Banks often require a current or valid Business registration certificate to verify the company's existence before opening a business account for companies.

As important as establishing your company in Hong Kong is maintaining it and ensuring smooth operation. Here are the essential regulatory compliance measures you need to uphold to maintain 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. 

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. 

The Annual Return is a form that includes essential details of an established company, such as the company's ownership structure, directors, secretary, and a summary of shares held. 

This form must be submitted annually, starting within 42 days of the company's anniversary date.

Annual returns are filed using the NAR1- Annual Return form.  

Our survey of 120 Hong Kong companies shows that the average Hong Kong company formation cost is HKD 9,053.

To break it down, if you’re handling Hong Kong company formation on your own, your primary cost will be a government fee ranging from HKD 3,745 (online delivery) to 3,920 (hard copy delivery) as of 2024-2025, along with variable costs associated with CPA certification (possibly HKD 200 - HKD 500 per passport), company secretarial services, and obtaining a registered office address.

However, if you use Hong Kong company registration services, the cost ranges from around HKD 6,000 to HKD 12,000, depending on what services are included. 

Figuring out the actual cost can be challenging due to various factors, such as the complexity of the company, the need for extra licenses, and the number of shareholders, which all contribute to the overall expense. 

In most instances, the incorporation process takes 5-7 business days after the submission of documents, with the license from the Hong Kong Companies Registry typically requiring around 4 to 5 days.

Please note that if your business structure is complex, in a risky industry, or if there are mistakes in paperwork, the process may take longer.

Yes, foreigners can register a company in Hong Kong.

Hong Kong is open to foreigners for company formation, and non-residents can establish and maintain a local limited company there using the same process described above.

However, you'll need a business address and a company secretary in Hong Kong. If you are unfamiliar with these or do not have one, we recommend seeking assistance from local professionals to help you set up.

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 Hong Kong company incorporation services providers. These professional services for company set-up can save you both time and money.