Incorporation in Hong Kong

There are different types of business entities to setup in Hong Kong, depending on which activities you wish to develop.

• Branch of Overseas Company: There is no specific requirements for its establishment. A Hong Kong Branch need to register within one month of establishing a place of business in Hong Kong.
• Limited Company: Most companies operating in Hong Kong are private companies limited by shares. The liabilities of the company to the shareholders are the total share capital as subscribed by each individual shareholder. The form would typically include greater convenience, high degree of flexibility associated with Hong Kong companies, wider acceptance both in Hong Kong.
• Sole Proprietorships: It is not considered to be a separate legal entity under the law, but rather is an extension of the individual who owns it. He/She is directly responsible for the debts and other liabilities incurred by the business. The profit or loss of the business is combined with the other income of an individual for income tax purposes.
• Partnerships: It is a legal entity recognised under the law and hence it has rights and responsibilities in and of itself. Each partner may be responsible for the liabilities of the business. An income tax return has to be filed by a partnership.

Incorporation of limited companies in Hong Kong is governed by the Companies Ordinance. The memorandum and articles of association are the primary legal document of a company, which states the power and the internal regulations of the company. They are required to submit to Companies Registry (CR) at the time of incorporation. After approval by the CR, a Certificate of Incorporation in name of that company is issued and the company is formed & registered.

The basic structure of the company is having at least 1 shareholder, 1 director and 1 company secretary. The secretary and the registered office address must be in Hong Kong.

You may find certified public accountants to do it on your behalf because it is very time consuming for a business starter to do it himself. Normally, they will offer 2 types of incorporation; namely: tailor-made method and shelf company method.

Tailor-made method suits your requirements in the company name, the share structure, number of shareholder/director and some clauses in the articles of the association. Whereas shelf company approach is that you buy a ready-made company by selecting the name of the ready company. It is normally having 10,000 shares of HK$1 and 1 issued share. The existing subscriber will transfer the issued 1 share to the potential buyer. The subscriber will sign a declaration letter concompanying that the selling company is clean and no business activity since its incorporation. This approach is fastest way to incorporate a company.

After incorporation of a company, there are numbers of procedures to be followed and the company secretary normally handles it on behalf. Hence he/she should be well-versed in the company law and its changes. An annual general meeting (AGM) must be held once in every calendar year and not more than 15 months after the last preceding AGM. However, a company need not hold its first AGM until 18 months of its incorporation. Every company is required to appoint an auditor each year at its AGM. An auditor must be qualified by virtue of the Professional Accountants Ordinance and completely independent of the company. In case of private company, its audited accounts must be laid before its AGM not more than nine months from its financial year end.