(Recommended Grade: ★ ★ ★ ★ ★)
|Type of entity
|Type of law
|Shelf company availability
|Our time to establish a new company
||7 working days
|Minimum government fees (excluding taxation)
||US$65 (until 31 July 2012)
||16.5% or No Tax if profits sourced outside Hong Kong
|Share Capital or Equivalent
|Minimum paid up
|Usual authorised capital
|Directors or Managers
|Publicly accessible records
|Publicly accessible records
|Local or qualified
||Local, Hong Kong resident or corporation
|Requirement to prepare
|Requirement to file accounts
|Publicly accessible accounts
|Requirement to file annual return
Hong Kong is on the south east coast of China and consists of a large number of islands and a part of the mainland totalling approximately 1,064 sq km. On 1 July 1997 all of Hong Kong reverted from British Control back to China and became a Special Administration Region "SAR" within the People's Republic of China (PRC).
Approximately 7 million.
Hong Kong elects its own legislature and maintains its own court structure.
The Future of Hong Kong
Under the "one country - two systems" philosophy, the SAR has executive, legislative and independent judicial power. The capitalist system, legal structure and lifestyle remain unchanged. Hong Kong remains a free port with a free flow of capital and a freely convertible Hong Kong dollar.
With China pushing forward with the modernisation of its own economy, the PRC has expressed the wish that Hong Kong should assist in this endeavour. It has stated that its future development will be based on market led reforms with socialist characteristics and this has led to the opening up of its economy to foreign investments. It is widely recognised that Hong Kong is and will continue to be a significant gateway to China.
Operating from 2004, Hong Kong and Mainland China has been developing the Closer Economic Partnership Arrangement (CEPA). The Arrangement is to ensure Hong Kong is "economically interlocked" with the Mainland and that CEPA has offer lower entry thresholds for smaller players (capital/trading history requirements) in Hong Kong and 100% ownership of many China ventures. It makes Hong Kong the simplest, most profitable route into/out of Mainland China. CEPA offers preferential access to China’s markets, commitments made by China under WTO. It adds to the long list of reasons why international businesses choose Hong Kong as a base for their China and Asia operations nowadays.
Infrastructure and Economy
Hong Kong has excellent communication facilities and a major international airport.
Hong Kong is the leading South East Asian centre for both finance and commerce and ranks as the world's fifth largest financial centre. The Hong Kong Stock Exchange is the most active in Asia.
The official languages are English and Chinese, with English being used in the commercial and political context and Cantonese Chinese used widely in industry and domestic trade.
The Hong Kong Dollar, which is officially pegged to the US Dollar. (Approx: US$1 = HK$ 7.68 to HK$ 7.82)
Type of Law
Common Law based on English Common Law.
Principal Corporate Legislation
Companies Ordinance (Cap 32).
Type of Company for International Trade and Investment
Private Company limited by Shares.
Procedure to Incorporate
Submission of Memorandum and Articles of Association and a prescribed form with the Hong Kong Companies Registry. A Notice of Situation of Registered Office is also required to be filed within fourteen days of the date of incorporation.
Restrictions on Trading
Cannot undertake banking or insurance activities or solicit funds from or sell its shares to the Public.
Powers of Company
A Hong Kong Company has all the powers of a natural person.
Language of Legislation and Corporate Documents
Chinese and English.
Registered Office Required
Yes, must be maintained in Hong Kong.
Name Approval Required
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.
Shelf Companies Available
Time to Incorporate
Within 7 working days from the submission of documentation.
A name that is similar to or identical to an existing company. A name that constitutes a criminal offence or is otherwise contrary to the public interest. A name that gives the impression of which it is connected with the Government of PRC, the Government of HKSAR or any departments of either Governments.
Names Requiring Consent or a Licence
Building society, Chamber of Commerce, co-operative, Kaifong, mass transit, municipal, savings, tourist association, trust, trustee, underground railway, bank, insurance, assurance, reinsurance, etc.
Suffixes to Denote Limited Liability
Disclosure of Beneficial Ownership to Authorities
Authorised and Issued Share Capital
The usual authorised share capital is HK$10,000. The minimum issued capital is one share of par value.
Classes of Shares Permitted
Ordinary shares, preference shares, redeemable shares and shares with or without voting rights.
The principle of Hong Kong profits tax is that it is a tax on profits that has its source in Hong Kong rather than a tax based on residence. Income sourced elsewhere, even remitted to Hong Kong, is not subject to Hong Kong profits tax at all. Consequently, if a Hong Kong company's trading or business activities are based outside Hong Kong no taxation will be levied.
A factor that determines the locality of profits from trading in goods and commodities is generally the place where the contracts for purchase or sale are effected. "Effected" does not only mean that the contracts are legally executed. It also covers the negotiation, conclusion and execution of the terms of the contracts.
If a business earns commission by securing buyers for products or by securing suppliers of products required by customers, the activity which gives rise to the commission income is the arrangement of the business to be transacted between the principals. The source of the income is the place where the activities of the commission agent are performed. If such activities are performed through an office in Hong Kong, the income has a source in Hong Kong.
Certain sums, like royalties, paid or payable to non-resident persons for use of or right to use certain intellectual property are subject to withholding tax. The payer who claims deduction for the use of the intellectual property against its assessable income is required to withhold a prescribed percentage from the payment while that recipient is not subject to Hong Kong profits tax. The prescribed percentage is 4.95% on the gross payment if the payer and the recipient are not related, but 16.5% if the payer and recipient are related. The recipients of the royalties who are tax residents of Belgium, Thailand, or Luxembourg enjoy the respective treaty rates.
Special tax concession arrangement by the HKSAR is granted from now until 31 July 2012; the Business Registration fee of each company is HK$450 (equal to US$65).
Financial Statements Required
A Hong Kong company must keep accounting records, which 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. Although there is no requirement to file accounts with the Registrar, there is a requirement to file accounts with the Hong Kong Inland Revenue.
The minimum number of directors is one, who may be a natural person or a body corporate. Directors may be of any nationality, and need not be resident in Hong Kong.
A Hong Kong company must appoint a resident company secretary, who may be a natural person or a body corporate.
Minimum number of shareholders is one.
It does not constitute legal or other professional advice. CORE does not accept any responsibility, legal or otherwise, for any errors or omission.