Lowtax Network

Back To Top

Hong Kong Company Formation

Sponsored by Europe Emirates
18 March, 2019


Hong Kong is arguably the preeminent business and trade hub in the Asia-Pacific region and is widely acknowledged to be the world's third-largest financial centre after New York and London.

Although the territory's sovereignty was handed back to China by the United Kingdom in 1997 to become a Chinese Special Administrative Region, Beijing has pledged to maintain Hong Kong's free market system until at least 2047, and the SAR retains a high degree of control over its own affairs.

Companies in Hong Kong benefit from a low-tax regime; in 2018, the headline rate of corporate tax, known in Hong Kong as Profits Tax, is 16.5 percent, with the first HKD2m (USD256,000) in profits taxed at 8.5 percent. Unincorporated businesses pay 15 percent profits tax, with the first HKD2m taxed at 7.5 percent. There are also numerous tax concessions in place for businesses across a range of certain sectors.

Company law

In Hong Kong, companies are formed under the Companies Ordinance (Cap. 622) which mostly became effective from March 3, 2014.

Company Formats

The most common company forms used by investors in Hong Kong include the following:

  • Limited Company: The most popular company type business entity used in Hong Kong, a limited company is a separate legal entity from its owners. Hong Kong law permits both private and public limited companies. Owners can also take advantage of all the tax benefits and concessions available to any fully incorporated business. In addition, they can enjoy benefits such as the Closer Economic Partnership Arrangement (CEPA), a free trade agreement with Mainland China.
  • A Branch Office of a Parent Company: This is used by companies that are incorporated outside of Hong Kong and establish a place of business in Hong Kong. They must register with the Companies Registry as a 'Registered Non-Hong Kong Company' within one month of establishment. Unlike a subsidiary limited company, a branch office is not a separate legal entity from the parent and can leverage funds off the credit rating of its owner.
  • Representative Office: This format is useful for companies looking to explore the Hong Kong market before making a larger investment. A representative office cannot engage in profit-making activities and can only fulfil limited functions. If a decision is made to enter into a transaction which creates a legal obligation, it must change the business to a limited company or branch office.

Directors and secretaries

Most limited companies incorporated in Hong Kong are private companies limited by shares.

A private limited company in Hong Kong requires at least one director who is a natural person and one company secretary. If the company has one director only, the sole director cannot also be the company secretary at the same time. If the company secretary is a natural person, he/she should ordinarily reside in Hong Kong. If the company secretary is a body corporate, its registered office or place of business should be in Hong Kong. A non-Hong Kong resident can be appointed as a director.

The registered office of the company must be situated in Hong Kong. There is no requirement for shareholders to be Hong Kong residents. The sole shareholder can be a director of the company.

Company names

Limited companies incorporated in Hong Kong cannot have the same company name as those in the index of company names kept by the Registrar of Companies. A company name search can be made free of charge through the Companies Registry's Cyber Search Centre or the Company Search Mobile Service.

Significant Controllers Register

To enhance transparency of corporate beneficial ownership in order to fulfil Hong Kong's international obligations, the Companies Ordinance requires a company incorporated in Hong Kong to obtain and maintain up-to-date beneficial ownership information by way of keeping a

Significant Controllers Register. The Register should be open for inspection by law enforcement officers upon demand.

Registering a company

Companies must register with the Business Registration Office of the Inland Revenue Department within one month of starting business. Once registered, a company must display its Business Registration Certificate at its place of business.

Applications for company incorporations are made at the same time as applications for business registrations. In addition to the required incorporation documents the following must be submitted along with the application:

  • A Notice to Business Registration Office (IRBR1);
  • Business registration fee of HKD2,000 for a one-year certificate or HKD5,200 for a three-year certificate;
  • Levy to the Protection of Wages on Insolvency Fund: HKD250 for a one-year certificate; HKD750 for a three-year certificate.



 

« Go Back to Features

Features Archive

Event Listings

Listings for the leading worldwide conferences and events in accounting, investment, banking and finance, transfer pricing, corporate taxation and more...
See Event Listings »