The principal Corporate Legislation is the Companies Ordinance (Cap 32). The type of Company used for international trade and investment is the Private Company limited by shares. A Hong Kong company has all the powers of a natural person. Off-the-shelf companies are available. The language of legislation and corporate documentation is English, but Chinese characters may be added if desired.
Trading and business activities are subject to the following requirements: a Company cannot undertake banking or insurance activities or solicit funds from or sell its shares to the Public.
It is possible to establish a Hong Kong registered corporate entity in two different ways:
- By incorporating a new Hong Kong Company.
- By registering an existing foreign company in Hong Kong under Part XI of the Hong Kong Companies
Incorporation procedure includes the submission of the Memorandum and Articles of Association and a Declaration of Compliance. A Notice of Situation of Registered Office must also be filed. This can either be done at the same time as the Memorandum and Articles of Association and Declaration of Compliance are filed, or within 14 days of the date of incorporation. As a matter of local company law, the company must maintain a registered office address within Hong Kong and appoint a local resident company secretary.
Hon Kong Company names are subject to the following restrictions (Hong Kong):
- It is not possible to reserve a name.
- It is essential to check that there is no similar or identical name on the register, which would prevent the company being incorporated.
- A name that implies criminal activity or is otherwise contrary to the public interest is prohibited.
- A name that implies royal or government patronage is not acceptable.
- Use of the following words in the name or their foreign language equivalents require consent or a license: Building Society, Chamber of Commerce, Chartered, Co-operative, Imperial, Kaifong, Mass Transit, Municipal, Royal, Savings, Tourist Association, Trust, Trustee, Underground Railway, Bank, Insurance, Assurance, Reinsurance, Fund Management, Asset Management, Investment Fund.
- The suffix “Limited” is required to denote limited liability.
The minimum number of directors is two. These may be natural persons or corporate bodies of any nationality, and do not need to be resident of Hong Kong. Full details of the directors must be filed with the Public Registry. There is no requirement for board meetings to be held within Hong Kong and directors may be resident anywhere in the world.
A Hong Kong company must appoint a company secretary, who may be a natural person or a corporate body, but the company secretary must be resident in Hong Kong.
The minimum number of shareholders is two. Their details must be filed on the public register. Corporate shareholders are permitted and anonymity can be assured by the use of nominee shareholders.
The standard authorized share capital is HK$ 1,000. The minimum issued capital is two shares with par value. Classes of shares permitted are as follows: ordinary shares, preference shares, redeemable shares and shares with or without voting rights; deferred, founders’ and management shares. Bearer shares are not permitted.
Annual Taxation and Fees
Taxation in Hong Kong has the following features:
Hong Kong does not impose tax on non-Hong Kong source income even when remitted to Hong Kong. Consequently if a Hong Kong company’s trading or business activities are based outside Hong Kong, no tax is levied. Hong Kong companies with Hong Kong source income currently pay a rate of taxation on profits of 16%.
Hong Kong foundations have no double tax agreement with any country, with the exception of a limited treaty with the USA relating to shipping matters only. Recently Hong Kong has entered into double taxation agreements, basically in relation to shipping and air activities with many countries worldwide.
The Business Registration Fee (BRF), currently HK$ 2,600, is due and payable within one month of the date of incorporation and then annually on the anniversary of the first payment.
Hong Kong companies are required to file audited accounts and must also prepare and file an annual return giving details of the current directors and of shareholders who have held shares in the company at any time during the year. A Hong Kong company’s accounting records may be kept at the registered office address or elsewhere at the discretion of the directors. Every company must appoint an auditor who must be a member of the Hong Kong Society of Accountants and hold a practicing certificate. There is a requirement to file accounts with the tax authorities but not with the Registrar.
Economy and Infrastructure
Hong Kong companies – the leading South East Asian center (centre) for both finance and commerce and ranks as the world’s third largest financial center (centre) after New York and London. There are more than 160 licensed banks, with 85 foreign banks having representative offices in Hong Kong and a further 32 licensed deposit-taking Finance Companies, all of which play an active role in the financing of international trade and commerce. There is a wide range of professional services available.
With China pushing forward with a modernization of its own economy, the PRC expects Hong Kong to assist in this endeavour. It is widely recognized that Hong Kong is and will continue to be a significant gateway to China. Under the “one country – two systems” philosophy, the HKSAR retains unchanged its capitalist system, legal structure and lifestyle. Hong Kong companies remain a free port with a free flow of capital and a freely convertible Hong Kong dollar which is officially pegged to the US Dollar. There is no exchange control.