Company Registration in Hong Kong
Hong Kong is arguably one of the most existing business hotspots in the world. Being touted for relaxed business norms, a robust legal system, and unmatched tax benefits, Hong Kong serves as a dream destination for any aspiring entrepreneurs seeking to make their venture shine globally. Securing the Company Registration in Hong Kong is the first step towards legalizing a business. This article seeks to shed light on what’s required while starting a new venture in this part of the world.
Why choose Hong Kong for your new venture?
Business favorable environment
Hong Kong has evolved to become a business-friendly nation for indigenous and global ventures. This favorable environment is fuelled by the government’s vision to reinforce an inclusive framework for diverse businesses no matter the national boundaries. Registering your business in Hong Kong means you have access to nominal taxes, efficient regulatory processes, zero paperwork, and minimal entry regulations. Hassle-free registration and business management no matter where you are.
You are not necessarily required to be in Hong Kong to register your venture. From incorporation to business management, almost all affairs can be handled remotely.
Simplified tax system
Even though Hong Kong falls under Chinese territory, it leverages an independent administration and tax system. China has no influence on this country whatsoever, especially when it comes to forming a business or addressing taxes.
Availability of a wider market landscape
Open accessibility to Chinese markets enables businesses of this nation to cater to a wider consumer base, thereby elevating profit and business presence. Presently, Hong Kong has bilateral trade agreements with 30 nations that help propel growth for entities seeking to become a global corporation.
Incorporation Checklist for Company Registration in Hong Kong
Companies Ordinance entails the norms relating to business incorporation in Hong Kong. Much like in other nations, legalizing a business in Hong Kong is mandatory since it helps span businesses under specific legislation. The Inland Revenue Department (IRD), which falls under the aegis of the Hong Kong government, oversees the licensing requirements. Anybody seeking business registration must apply with this authority and follow the given checklist.
- Every Private Limited Liability Company must have shareholders ranging from 1-50. As such, there is no cap on the shareholder’s nationality to form such an entity. A shareholder doesn’t necessarily need to be a person; a corporation can also serve as a shareholder. Even a director fits the definition of a shareholder.
- For a company formation in Hong Kong, you must ensure the appointment of at least one director. If there are more than two directors, one must at least be a person. There is no restriction on nationality or residency.
- Directors proposed to be appointed must have attained the legal age and their credit and legal background should be crystal clear. They helm the organization and ensure its seamless functioning through collective decision-making and optimal management.
- The Designated representative, legally aka, Significant Controllers Register (SCR), is a key position in the company that needs to be filled in. Such individuals oversee legal and compliance affairs to ensure the smooth functioning of the company from a regulatory standpoint. From directors, members, and accounting professionals to licensed providers of trust company must appoint a company secretary who belongs to the resident country. The CS plays a vital role in keeping financial and statutory records in check in the purview of applicable laws.
- Complying with applicable tax laws is vitally important for law-abiding companies. Hong Kong leverages a two-tiered profit tax system that provides a 50 percent concession to companies on their first profit, amounting to $2 million. Post this, every subsequent profit attracts a double rate of taxation, which is 16.5%.
- Establishing a company is not as complicated as handling its daily undertakings and financial affairs. Speaking of financial affairs, keeping a tab on financial compliance means keeping accounts updated and in check, performing fiscal audits as and when required, etc.
Documents required for securing Company Registration in Hong Kong
In general, you need to arrange the following paperwork to secure Company Registration in Hong Kong
- Completely filled registration form with details such as company name, scope of business, address, directors and members address, share capital, etc.
- Charter documents like Article of Association comprising key organization details pertaining to scope, members onus and role, internal management, etc.
- Form IRBR1- a key form to notify the Business Registration Office.
- Share capital details
- Article of association
Step-by-step guide to company registration in Hong Kong
The section below outlines the procedure for incorporating a company in Hong Kong.
Step 1- Select the right company structure.
Hong Kong provides an array of company structures to choose from. You can choose one of the following structures depending on factors like compliance threshold, business goals, scope of operation, and management hierarchy.
Sole Proprietorship:
Acknowledged as the simplest business structure, sole proprietorship is an apparent choice for small businesses. It is easy to incorporate owing to moderate compliance and paperwork. However, this structure is not ideal for businesses seeking to operate at a large scale or looking for protection against unlimited liabilities.
Partnership
A partnership business model is ideal for two or more individuals seeking to serve common business goals through collective endeavors. However, it is not as flexible as private limited entities when it comes to ensuring members’ protection against unlimited liabilities and reinforcing transparency among members.
Private Limited Company (Limited Liability Company):
This business model is best known for its flexible structure, amplified service life, and unmatched transparency, which translate to a hassle-free business journey.
LLC
This business structure is ideally suited to entities seeking tax benefits, liability protection, and management flexibility.
Step 2- Select your company name
Keep the given pointers in mind while going for name selection and reservation.
- Make sure to align with Companies Registries norms when choosing an apt name for your company.
- The company name should be unique and non-offensive,
- The name should be in a local or English dialect or a combination of both.
- If you intend to register the proposed name under the trademark registration, ensure its present status is unregistered in the trademark database.
Step 3-Prepare necessary documents
Upon selecting an apt name, proceed with the arrangement of mandatory paperwork. Key incorporation dossiers you need to arrange include incorporation forms, charter documents, an IRB1 application form, etc.
The steps you need to perform for company incorporation vary structure-wise. Therefore, it is important to have a thorough understanding of every available structure alongside their document requirements. The company’s directors must enclose their signature along with the business place address in charter documents.
Step 4- List out the company executives or employees (Companies Ordinance)
As per Companies Ordinance, maintain an apt list reflecting the details of company executives or employees, including directors, shareholders, designated representatives, etc.
Step 5- Allocate share capital
Share capital represents the overall valuation of the ownership stake through shares. Firms like Limited Partnerships or Limited Liability Companies are not liable to arrange a minimum share capital, but issuance of shares on a per-person basis is mandatory. There is no cap on the type of currency for share issuance. At the time of incorporation, the share capital is referred to as issued capital, which is estimated through the given mathematical expression
Issued capital = numbers of allotted shares x value per share
Step 6- Get a local registered address in Hong Kong
Securing a physical business place for undertaking business correspondence is a vital step towards incorporating a business in Hong Kong. Make sure that the proposed business address has the PO box number.
Step 7- Legalize the identity of officials with the Hong Kong Companies Registry
The step involves enrolling the details of all the key officials, including directors, shareholders, and designated representatives into the Hong Kong Companies registry.
Step 8- Hire a Company Secretary
Once you have enrolled the members’ details, proceed to appoint a company secretary belonging to the national territory to keep records and legal documents in check. The CS can be a person or a company.
Conclusion
Company registration in Hong Kong involves catering to various legal implications, registration compliances, and paperwork. Before you decide you delve into registration formalities, please refer to the above guidelines to stay ahead of the curve or let Adviso’s experts help you out.
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