Guide to setting up a company in Hong Kong

Introduction to setting up a Hong Kong limited company

For entrepreneurs and businesses considering expanding their operations to Hong Kong, understanding the intricacies of starting a company in Hong Kong is crucial. This comprehensive guide will walk you through the step-by-step process of company setup in Hong Kong SAR, addressing key considerations and providing valuable insights.

Hong Kong company pre-registration checklist

Choose a Hong Kong business structure

When establishing a company, the primary step is selecting the appropriate business entity. The entity must align with your business objectives and goals. Therefore, researching each entity is advised to prevent any errors.

Types of business entities in Hong Kong

• Branch office
• Sole proprietorship
• Partnerships
• Company limited by guarantee
• Company limited by shares

Select a company name

Upon determining the suitable business structure, the next task is to pick a company name. The name can be in English, Chinese, or both. You cannot use company names already in use by other companies. A company name search can be conducted via the Cyber Search Centre or Company Search Mobile Service. The Companies Registry also offers guidelines on registering Hong Kong company names.

Determine officers and shareholders of your Hong Kong company

Before registering your company, you must appoint officers, as the registration process necessitates providing their information.

Directors of a Hong Kong company

• Minimum: one individual
• Maximum: unlimited
• At least one director must be a natural person
• Either natural persons (aged 18 or above) or body corporates (permitted under strict circumstances)
• Can be Hong Kong residents or non-residents

Shareholders of a Hong Kong company

• Minimum: one
• Either natural persons (aged 18 or above) or corporates
• Can be Hong Kong residents or non-residents
• 100% foreign ownership is permissible
• Sole director can serve as a shareholder

Share capital:

• Minimum: HKD 1.00
• Maximum: unlimited
• Bearer shares are prohibited

Hong Kong Company secretary

• Compulsory by law
• Either a Hong Kong local individual or corporate
• Sole director cannot act as the company secretary

Hong Kong Company Registered address

A physical local address is required for company registration in Hong Kong as P.O boxes are not permitted. At Monx we can provide you with this address when you choose us for your Hong Kong company registration.

Each year, numerous investors express interest in establishing businesses in Hong Kong due to its array of advantages. These benefits include its economic freedom, currently ranking second according to the 2020 Index of Economic Freedom.

This index, published by the Heritage Foundation, gauges the impact of liberty and free markets globally. The 2020 Index underscores the significant positive correlation between economic freedom and progress. Supportive government policies, 100% foreign ownership, low tax rates, a skilled labor force, and excellent infrastructure collectively contribute to Hong Kong’s high rank.

Business registration

Registering your Hong Kong company

You must register your business in Hong Kong with the Companies Registry, responsible for incorporating your company. Documents can be submitted via the e-Registry or CR eFiling mobile application, or in hard copy at the Shroff on the 14th floor of the Queensway Government Offices.

These documents include:

• Incorporation form – Form NNC1 (company limited by shares) or Form NNC1G (company not limited by shares)
• A copy of the company’s articles of association
• A notice to Business Registration Office (IRBR1)
• A copy of passports and residential address proof for foreigners
• A copy of Hong Kong ID cards for Hong Kong residents
• Copies of all company documents for corporate shareholders

Post-registration

Certificate collection

Once your application is approved, you must download or collect the Certificate of Incorporation and Business Registration Certificate, issued either electronically or in hard copy, depending on the submission method.

Application submitted electronically

Electronic certificates are typically issued within one hour and sent to the email inbox of the application sender.

Application submitted in hard copy

Hard copy certificates are usually issued within four working days. Upon readiness, the person will be notified via fax. The certificates must be collected at the Registry, and the collector must present the Notification of Collection of Certificate(s) and identification document or company chop. If a representative collects the certificates, the individual who submitted the documents must provide written authorization and identification documents.

If you enlist Monx to incorporate your company, we will manage all these processes.

Opening a corporate bank account:

Your subsequent step is opening a company bank account. At Monx we have a selection of partners and banks which we work with to open you business account as quick as possible.

Upon selecting your preferred bank, you must prepare the following documents and personally visit the bank to submit them:

• Registered address and contact information of the company and business owners
• All documents required in the bank’s application form
• Incorporation documents of the company
• Certified true copy of the company’s identification documents
• Proof of business
• Details of beneficial owners for nominee shareholders/stockholders of a company
• Certified true copy of the company’s Business Registration Certificate

Obtain permits and licenses

Next, obtain permits and licenses required for your business entity. Various permit and license types depend on the nature of your business’s products and services.

Refer to the following resources to determine the necessary licenses or permits:

• Licensing & Permits section of GovHK
• Business License Information Service

Upon submitting the license application, you can track its status on the Online License Services.

Determine tax obligations

Your tax obligations vary based on charge scope, exemptions, deductions, and more. For companies generating profits within Hong Kong, the current profit tax rate is 8.25% on the first HKD 2 million of profits and 16.5% thereafter. There is no capital gains tax. Stay updated on rules and regulations via the GovHK website.

Annual filing requirements

Compliance with rules and regulations regarding annual filing of your company is mandatory.

Requirements include:

• Annual return filing each year
• Annual tax return filing to the Inland Revenue Department along with audited accounts
• Annual report filing requirements vary based on the business entity, Non-Hong Kong Company or Local Limited Company

Conclusion

Establishing a company in Hong Kong can be done quickly and remotely with the right provider like Monx. This guide prepares you in advance and ensures you meet all necessary requirements. Monx specializes in facilitating your business setup and bank account opening, providing support and advice on starting a Hong Kong company. Feel free to contact us at hello@monx.team for assistance.