Hong Kong is deemed as an excellent place for carrying out business by many entrepreneurs not only because of its status as a leading global financial centre. Hong Kong’s simple tax system with low tax-rate, coupled with its world class infrastructure and proximity to the mainland Chinese market, have attracted numerous companies to establish their beachhead in Hong Kong.
There are 3 common business structures for foreign companies who wish to establish a presence in Hong Kong. The choice of specific business structure depends on the business plans and goals of your company. You may choose to:
- Set up a private limited liability company in Hong Kong as a wholly-owned subsidiary of the non-Hong Kong company (a “Subsidiary”);
- Set up a branch office of the non-Hong Kong company; or
- Set up a branch office of an overseas subsidiary of the non-Hong Kong company.
4 steps to incorporate a private limited company in Hong Kong
Incorporation of a company in Hong Kong can be summarised in four simple steps.
Step 1: Conduct a company name search
The first step is to choose a company name which meets the requirements for the registration of a company name. An English company name must end with the word “Limited” (except in very limited cases such as charitable company) and the name must not be the same as a name appearing in the Registrar’s Index of Company Names, or that of a body corporate established under any Ordinances in Hong Kong. A company name search can be conducted at the Companies Registry’s Cyber Search Centre, Company Search Mobile Service or at its Public Search Centre on the 13th floor of the Queensway Government Offices, 66 Queensway, Hong Kong.
Step 2: Appoint director(s) and company secretary
It is mandatory to appoint at least one director who is a natural person (i.e. an individual) and one company secretary. The sole director cannot act as the company secretary of the same company.
Regarding the eligibility of company director, it can be an individual of (i) any nationality and (ii) attaining the age of 18 and (iii) has not been prohibited by law or disqualified from acting as a company director (due to bankruptcy, conviction of fraud or other other indictable offence involving dishonesty or persistent defaults). A corporation can also be a company director if the company already has at least one director who is a natural person.
Step 3: Submit incorporation documents and fees
The third step is to submit the required documents and fees to the Companies Registry. Normally the following documents and fees are required:
- A copy of the Articles of Association of the company;
- A completed Incorporation Form (Form NNC1), which includes information on the proposed company name, type of company, proposed address of the company’s registered office in Hong Kong, share capital and initial Shareholdings, information of founder members, information about the company secretary and directors’ particulars etc.;
- Notice to Business Registration Office (Form IRBR1); and
- Prescribed business registration fee and levy and other fees payable under the Companies (Fees) Regulation (Cap. 622K).
Step 4: Receive a Certificate of Incorporation and Business Registration Certificate
Lastly, a Certificate of Incorporation together with a Business Registration Certificate will be issued. Business operators may select for issue of business registration certificates that are valid for three years instead of one.
Company’s obligation to keep a Significant Controllers Register
To increase the transparency of corporate beneficial ownership so as to fulfil Hong Kong’s international obligations, the Companies (Amendment) Ordinance 2018 requires a company incorporated in Hong Kong to identify persons who have significant control over the company (“significant controllers”) and to maintain a significant controllers register (“SCR”) to be accessible by law enforcement officers upon demand.
Who is a significant controller of the company?
A person will be found as a significant controller if one or more of the 5 conditions are met:
- The person holds, directly or indirectly, more than 25% of the issued shares in the company or, if the company does not have a share capital, the person holds, directly or indirectly, a right to share in more than 25% of the capital or profits of the company;
- The person holds, directly or indirectly, more than 25% of the voting rights of the company;
- The person holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the company;
- The person has the right to exercise, or actually exercises, significant influence or control over the company; or
- The person has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or a firm that is not a legal person, but whose trustees or members satisfy any of the first four conditions in relation to the company
The significant controller is usually a registrable person, except (i) where the person or entity holds shares or rights in the company through a registrable legal entity of the company which has any of its shares listed on the Stock Exchange of Hong Kong; or (ii) the person or entity holds shares or rights in the company through a chain of legal entities with the last one in the chain being a registrable legal entity of the company which has any of its shares listed on the Stock Exchange of Hong Kong.
What is a designated representative?
A designated representative is a person that is designated as the representative of the company to provide assistance relating to the company’s SCR to a law enforcement officer. Each company must designate at least one person as its representative and it can either (i) a shareholder, director or an employee of the company who is a natural person resident in Hong Kong; or (ii) an accounting professional, a legal professional or a person licensed to carry on a business as trust or company service provider.
A significant controller can be appointed as the designated representative if he is (i) a director, employee or member of the company who is a natural person resident in Hong Kong; or (ii)an accounting professional, a legal professional or a TCSP licensee (i.e. a person licensed to carry on a trust or company service business in Hong Kong).
Published on HSBC VisionGo on 7 April 2020
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