Wednesday, May 27, 2020

The 2020 Guide To Opening a Company in Hong Kong

The 2020 Guide To Opening a Company in Hong Kong

Introduction

 

With the right knowledge and support, setting up a company in Hong Kong can be quick and easy. Few regulations allow companies to set up within one week! But where to start? Below we list out the main requirements and steps you need to consider to get your company up and running smoothly.

 

  1. Company Name

 

First things first, you need to decide on a company name. It can be in English and/or Chinese, but a mix of characters from both languages is not allowed. You can pick pretty much any name, as long as it is not already registered in the Companies Registry, is not offensive or contrary to public interest. If you include words like “department”, “authority”, etc., prior approval will be required. Do note also that all company names must end with the full word “Limited”. You can check the availability of your preferred company name at the Companies Registry’s Cyber Search Centre, but if you plan to use a corporate services provider, they will help you to check before registration anyway.

 

  1. Business Nature

 

Next, you’ll want to think about your business nature, i.e., the common description of your business. The business nature will be shown on the Business Registration Certificate (a.k.a. your business license!), and it cannot be more than 60 characters long, including spaces. It can be brief, but not too vague. Generally, Hong Kong companies can carry out any legal business regardless of their officially reported business definition. Although, if you will be operating a regulated business (i.e., a license is required to run), it would be wise to check with the related license issuing authority if there are any special requirements for business nature.

 

  1. Registered Address

 

Companies must also have a local business address and registered office, and both cannot be a P.O. Box.

The registered address can be different from the actual business address used by the company for operations. As all the government mails will be sent to the registered address, it is recommended to use the address of your appointed Company Secretary. This way, your Company Secretary will receive these important mails and inform you of what you need to do in respect of those mails to maintain your company correctly.

 

  1. Shares and Share Capital

 

Companies can issue shares with different rights attached to them, such as voting rights and rights to dividends (e.g., ordinary shares and preference shares). If you issue shares with different rights, you’ll need to specify the particulars of the rights attached to those shares in the incorporation form. If you are a sole shareholder, or if you hold a company with a partner with equal rights, you could simply issue ordinary shares.

 

There is no minimum capital requirement for non-regulated companies. Said that it is common to incorporate with capital ranging between HKD1,000 to HKD10,000. For regulated companies, you may be required to maintain a minimum capital (e.g., travel agencies must have a minimum of HKD500,000 capital when they incorporate). You can check regulated business requirements via the government’s SUCCESS portal (a.k.a Support and Consultation Centre for SMEs). Note that share capital can be in any convertible currency, not just in HKD.

 

  1. Shareholders

 

You must have at least one shareholder, and there is no restriction as to who the shareholder of a company can be. This means a company’s shareholders can be of any nationality, a resident of any country (not necessary to be a Hong Kong resident!), an individual, or a corporate body. Whereas the maximum number of shareholders you can have is fifty. Shareholders are only liable for any amount unpaid on the shares they own in the company.

 

  1. Directors

 

Just like the company’s shareholders, you must have at least one, but there are no restrictions as to who can be a director of a company. Directors can be a resident of any country, nationality, and either an individual or a corporate body. However, take note that a corporate entity cannot be the sole director of a company, i.e., you should always have at least one individual person appointed as the company’s director at any given time. Usually, directors are named by shareholders to represent their interests with the Board of Directors of the company. Their responsibility is to exercise reasonable care and skill in managing the company.

 

  1. Company Secretary

 

Hong Kong companies are legally required to appoint a company secretary. The company secretary is responsible for maintaining the statutory books and records of a company, and for ensuring that statutory requirements are complied with. A company secretary can be either a natural person or a corporate body with a registered address in Hong Kong. You can even appoint the company director, but only if he/she is not the sole director. If you are going to appoint a corporate company secretary, make sure to check they have a valid Trust and Corporate Services Provider (TCSP) license, as is required by law. You can check their license status via the Companies Registry’s TCSP dedicated site.

 

  1. Filing Time!

Once you have decided on your company name, business nature, etc., you’ll need to prepare the necessary documentation to be filed for the incorporation. Required documents include forms to be submitted at the Companies Registry and Inland Revenue Department, and internal documentation such as Articles of Association, First Written Resolutions, and the Appointment of First Directors. You’ll have to submit these forms for filing with the required administrative fees. Once done, you will be issued a Certificate of Incorporation and Business Registration Certificate.

 

Conclusion

 

Technically it’s not that difficult to set up a company in Hong Kong. Still, it does take some knowledge and expertise to arrange. With that said, if you have time to research, fill in all the forms, and submit, etc. yourself, you could do so. However, if you prefer to use your time taking care of your business and focusing on development, you may want to consider obtaining the assistance of a serious, qualified provider.

 

Besides, don’t forget in the long run you will need to maintain the company. Set up is just the beginning. Maintenance is where the real challenges come in as you need to keep track of deadlines, etc. Don’t underestimate the amount of work and knowledge of rules and regulations it involves.

 

About Incubee

iNCUBEE is a platform that connects entrepreneurs to cloud-based solutions for company setup, maintenance, and management worldwide.

Their services include company incorporation, accounting, audit and tax filing, payroll and MPF handling, trademark registration and much more.

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