When a business considers incorporating a company in Hong Kong, they often have a range of questions about the specifics of company formation. Here we want to set out the most common questions and answers relating to forming a company in Hong Kong.
Forming a Company in Hong Kong
What are the different types of business classification in Hong Kong?
There is a range of options available for businesses considering operating in Hong Kong. Here we set out the main business types:
- Private company limited by shares. This is the most common type of company in Hong Kong. This type of company is privately owned by shareholders, and has limited liability. It is limited to 50 shares in total, and shares cannot be made publicly available for sale. A private company limited by shares can be a subsidiary of an international company.
- A private company limited by guarantee. This is a private company without shares and usually has a charitable/non-profit mission.
- Public company limited by shares. The company has limited liability, and shares, but the company is publicly ‘listed’, with the public able to buy shares. There may be more than 50 shares issued.
- Representative Office (RO). This is not a separate business entity, but represents a company incorporated overseas and is permitted to operate in Hong Kong in a highly restricted way. It is designed for temporary activities, such as market research and initial meetings before profit-making activities are engaged in, and the business is formally incorporated in Hong Kong.
- Branch Office. A Branch office is a registered business entity in Hong Kong but is not a separately incorporated company. It is a branch of the international enterprise that is incorporated elsewhere but makes profits and pays corporate tax in Hong Kong.
- Partnership. In a partnership, several individuals own the company as partners. This is a common structure for professional services firms such as law and accountancy firms. Usually, this is not limited liability, and it is not a common way for international businesses to set up in Hong Kong.
- Sole proprietorship (known as a sole trader in some countries). In this structure, there is no legal distinction between the individual and their business, and their liability is unlimited.
- Joint venture. Not, strictly speaking, a distinct legal form, a joint venture is a contractual arrangement where an international business ‘joins forces with a local venture, and may or may not involve the incorporation of a company.
What are the minimum requirements for forming a company in Hong Kong?
When incorporating a company limited by shares, the following requirements must be satisfied:
- The proposed name requires approval. It cannot be the same, or sufficiently similar to, another name on the Companies Registry: Nor can it infringe on the trademarks or intellectual property of existing companies. While the name may be in either English or Chinese, it cannot have a mix of English and Chinese characters. The name must end with ‘Limited’
- There must be at least one shareholder
- There must be at least one director
- At least one share must be issued
- There is no minimum share capital
- There must be a company secretary. Whether an individual or a company is appointed as company secretary, they must reside in Hong Kong. A sole director cannot be the company secretary
- Each company requires a ‘Designated Representative’. This person is responsible for reporting relating to the ‘Significant Controllers’ register: This is a register kept by the company explaining who controls the company and can be inspected by law enforcement officers.
How long does the Hong Kong company incorporation process take?
It generally takes around one week for the company to be incorporated. Where documents must be couriered internationally, more time will be required.
Do I need a physical address in Hong Kong to form a company there?
Yes. A post office box or virtual address is not sufficient. Note, however, that the physical Hong Kong address (which becomes the registered address of the company) could be a residential address.
Hong Kong Presence
Does a director need to be present in Hong Kong to form a company?
No. It is, however, usually required when you are opening a bank account. For this reason, business accounts from fintech and other providers are becoming increasingly popular.
Which documents are required in order to incorporate in Hong Kong?
You will need:
- A copy of your passport (if non-resident in Hong Kong)
- Proof of residential address
- A range of key details about the proposed company such as the company’s name, number of shareholders, initial directors, issued share capital, and the name of the company secretary.
Do I need to engage a third party to help me incorporate in Hong Kong?
It is not a requirement. However, if you are not present in Hong Kong (or another director is not present there), it can be relatively difficult to incorporate a company in Hong Kong on your own. It is a requirement, for example, that your company secretary is in Hong Kong.
Do I need to partner with a Hong Kong business to incorporate there?
No. There does not need to be a local shareholder or director.
Shareholders, directors, and employees
Do directors need to be ordinary/natural persons?
At least one director must be a natural person. Other directors may be nominee companies.
Do shareholders need to be ordinary/natural persons?
No. Shareholders may be companies (including holding companies).
What is a ‘member’ of a Hong Kong company?
Once the shareholders of a Hong Kong private company limited by shares have been registered, they become ‘members’ of that company.
How old do directors and shareholders need to be?
Any directors who are natural persons must be 18 years of age or older.
What currency can share capital be in?
Most currencies are permitted. The Hong Kong dollar is the most common, but China’s Renminbi (RMB) is becoming increasingly popular.
Are bearer shares permitted in Hong Kong?
Bearer shares (unregistered shares evidenced only by a physical document) are not permitted in Hong Kong for any form of company.
Is shareholder and director information made publicly available?
Yes. However, confidentiality can be maintained by using a nominee company to hold shares and act as a director. Note, the true identity of any individual or company that ‘controls’ a Hong Kong company will still be available to authorities via the Significant Controllers register.
Can Hong Kong companies hire foreign employees?
Yes. However, a visa will be required and it will usually need to be demonstrated that the individual has skills, experience, or qualifications that are not readily available in Hong Kong.
Costs of forming a company in Hong Kong
How much does it cost to form a company in Hong Kong?
Incorporating a company requires that two key fees be paid:
- The ‘Incorporation Fee’, which is paid to the Companies Registry, and the
- ‘Business Registration Fee’, which is paid to the Inland Revenue Department.
As of 2022, the incorporation fee is HKD $1,545, while the Business registration fee (for a 3-year certificate) is HKD $3,950. Note, these fees are subject to change.
What are the ongoing costs of opening a company in Hong Kong?
It depends primarily on whether you carry out tasks yourself, or use a third-party firm. Keep in mind that you are required to have a Hong Kong-based company secretary, prepare annual accounts, and submit annual returns every year. There are also ongoing Business Registration fees (owable to the Inland Revenue Department), as well as the costs of maintaining a Hong Kong bank account.
How long does it take to open a bank account in Hong Kong for a new company?
It depends on the bank in question, but it might be achieved in as little as one week.
Company changes after formation
Can a company name be changed, post-formation?
Yes. By a special resolution of the shareholders of the company. Once this is done, a notice of this change must be filed with the Companies Registry within 15 days. On approval, a certificate will be issued recognizing the name change.
Is it easy to close a company in Hong Kong?
There are two key methods for closing down a company in Hong Kong. The first is deregistration: In order to de-register a company, it must have stopped trading for at least three months, have settled all debts, and be consented to by all shareholders.