Jurisdiction of the month: Hong Kong

2015 06 08 | Category: News

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Geography, population, languages

Hong Kong is located in the South China Sea, 160 km south-east of Guanzhou. Hong Kong consists of a large number of islands and a part of the mainland, with a total area of approximately 1,025 sq. km. The principal areas are Hong Kong Island, Kowloon and the New Territories. Separating Hong Kong Island and the Kowloon peninsular is Victoria Harbour. It varies in width from two to ten kilometres. An additional 13,517 sq. km of land has been reclaimed in the New Territories to provide additional dockyards and warehousing facilities. It is estimated that 100,000 containers a month pass through the port.

The population of Hong Kong is currently reaches approximately 7 million, most of whom are Chinese. It is one of the most densely populated areas in the world.

The official languages are English and Chinese, with English being used in the commercial and political contexts and Cantonese Chinese used widely in industry and domestic trade.
History, Political Structure and Law.

Until 1 July 1997, Hong Kong was a British Crown Colony. Britain gradually obtained territories that now form Hong Kong Special Administrative Region starting from 1842. In 1898 Lantau Island was leased from China to British government for 99 years. Hong Kong territory has remained unchanged since then.

Hong Kong Common Law is based on English Common Law with Ordinances being enacted locally.

Economy and infrastructure

Hong Kong is the leading South East Asian centre for both finance and commerce and ranks as the world’s third largest financial centre after New York and London. There are more than 160 licensed banks, with 128 foreign banks having representative offices in Hong Kong and a further 225 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.

Company Incorporation 

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 Ordinance.

Incorporation procedure includes the submission of the Memorandum & Articles of Association and Incorporation Form to the Companies Registry with relevant payment. 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.

Company names are subject to the following restrictions:

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 requires consent or a licence:
Building Society, Chamber of Commerce, Chartered, Co-operative, Imperial, 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. They may be natural persons of any nationality, and need not be resident in 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, except for a private limited company incorporated on or after 13 February 2004. For them the number is one.

Annual taxation and fees

Taxation in Hong Kong has the following features:

Hong Kong does not impose tax on non-Hong Kong source of 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 16,5%.

The Business Registration Fee is currently HKD 2600. Annual Return is HKD105.

Hong Kong companies are required to file annual return giving details of the current directors and of shareholders who have held shares in the company at any time during the year.

EditorJurisdiction of the month: Hong Kong