With easy access to the markets of Mainland China, along with an independent and free trade policy, it makes perfect sense for foreign entrepreneurs and multinational firms to incorporate a company in Hong Kong, which can be the launch-pad of their operations in the region.
The major steps involved include deciding on a company-type and name, following the process of incorporation, and finally registering the entity with the Business Registration Office of the Hong Kong’s Inland Revenue Department within one month of starting the business.
Forming a Company in Hong Kong
We detail the step-by-step procedure for company formation in Hong Kong as below.
Decide on a Hong Kong company name:
companies incorporated in Hong Kong must have different and unique names as depicted in the index of company names kept by the Registrar of Companies. So to decide on your own company name, carry out a free search at the Registrar’s website to check its availability. It is also advisable to choose a name which depicts your company’s business activities.
Decide on a Hong Kong company structure:
there are three types of company types prevalent in Hong Kong, depending on your business requirements.
Branch Office: This is when a parent company – incorporated outside Hong Kong – wants to establish a place for carrying out its business in Hong Kong. Such a company may register in Hong Kong as a Registered Non-Hong Kong Company, and its branch office is not treated as a separate legal entity. Such an office can only leverage funds off the credit ratings of the parent company.
Representative Office: It is useful for companies incorporated outside Hong Kong, looking to explore the business scene in the region before making a larger investment. Such office cannot engage in profit-making activities and can perform only certain functions, e.g. back office or administration.
Private Companies Limited by Shares: This is a most common type of company incorporated in Hong Kong, and can enjoy the benefits of the Closer Economic Partnership Arrangement (CEPA), a free trade agreement with Mainland China.
Do note, in Hong Kong such companies require:
- a registered office inside Hong Kong
- one company secretary, who might be a natural person (must then be ordinarily residing in Hong Kong), or a body corporate (must then have its registered office or place of business in Hong Kong)
- at least one director who is a natural person, but can be a non-resident in Hong Kong
It must be noted though that if the company incorporated has one director only, he or she cannot also function as the company secretary.
In terms of shareholding, in Hong Kong, there’s no requirement for shareholders to be residents, and the director can also be the sole shareholder.
It must also be noted that in Hong Kong, it is mandatory for a company to maintain up-to-date beneficial ownership information in the Significant Controllers Register, which should be open for inspection by enforcement upon demand. This is to enhance the transparency of corporate beneficial ownership in the jurisdiction.
Incorporate a Hong Kong company (private company limited by shares)
After the name and structure are decided, an application for company incorporation can be made, which will include a simultaneous application for a business registration certificate. The documents required include:
- Incorporation Form (Form NNC1 for a company limited by shares)
- A copy of the company’s Articles of Association
- A Notice to Business Registration Office (IRBR1)
Also note that the fees charged by the Companies Registry for incorporation of a company limited by shares are HK$1,720 (If unsuccessful, an application for a refund of HK$1,425 may be made) and for application for the business registration certificate is HK$250 (it depends on the Hong Kong Budgets from time to time) ((If unsuccessful, an application for a full refund may be made).
The applications can be submitted either online – 1) via the 24-hour portal e-Registry, 2) via the “CR eFiling” mobile application, 3) or by delivering the documents in hard copy to the Companies Registry with the prescribed fees.
Staying true to Hong Kong’s business-friendly reputation, online applications for company incorporation is normally processed within an hour. Hard copy application generally takes four working days.
Register the Business in Hong Kong
Importantly, as noted above, businesses must be registered with the Business Registration Office of the Hong Kong Inland Revenue Department within one month of starting the business. After the company has done this, it is required by law to display its Business Registration Certificate at its place of business. Normally, application for company incorporation includes a simultaneous application for a business registration certificate.Thus to apply for incorporation of company and business registration certificate together, you must also deliver the Notice to Business Registration Office (IRBR1) Form, along with the Incorporation Form (NNC1), to the Companies Registry (CR) while making the incorporation application.
The certificate of incorporation and the business registration certificate would be issued and available for collection on the business day after the date of incorporation of the company.
The dynamic city of Hong Kong while serving as the perfect launch platform for companies looking to trade in Mainland China, is also one of the most tax-friendly jurisdictions in the world.
That’s why Hong Kong is placed fourth in the world’s easiest place to do business – by the World Bank’s Doing Business 2019 Report; first in the world’s lowest tax jurisdictions – by the World Bank’s Doing Business 2019 Report; fourth in world’s business environment rankings – by the Global Financial Centres Index 25 2019; second in world’s fastest place to start a business – by the Global Competitiveness Report 2018; as well as first in world’s freest economy – by the Index of Economic Freedom, 2019.
If you want to take advantage of all the above, contact us. Our team of Hong Kong corporate services experts will guide you in your journey of Hong Kong company registration.