Hong Kong is a city preferred by many investors and entrepreneurs to create a company due to its favorable legal system and its ease to conduct business.
Incorporating a company is a straightforward process that usually takes only a couple of business working days after completion of due diligence requirements.
Creating a company in Hong Kong is very simple
While in many countries, several restrictions apply to create a company, Hong Kong facilitates the incorporation of a business with very few restrictions. Noticeably, companies’ incorporation:
- Does not require a minimum registered capital
- Does not require a local director
- Is possible with 100% foreign ownership
- Does not have foreign investment restrictions
But a few additional elements are to be considered when creating a company:
- It is compulsory to have a local company secretary
- The company must have a local registered address
- The company must have at least of natural person director
- Accounting and bookkeeping must be done thoroughly as all companies are to be audited
- Due diligence and KYC requirements still apply to all Ultimate Beneficiary Owners (UBO) of companies and other company officers.
How to create your business in Hong Kong?
The company registration process is straight forward and requires following these steps:
- Decide on which type of business to create.
Indeed, different type of structures are available such as sole proprietorships, partnerships, representative offices, etc. We recommend opting for a limited liability company for which the detailed steps are as below.
- Prepare due diligence and KYC documents of the Ultimate Beneficiary Holders and company officers of the business.
- Select and reserve a name for your company.
The name can be in English and/or Chinese.
- All the incorporation documents must then be filed with the Company Registrar of Hong Kong.
- The Articles of Association
It is the main document that states the functioning of the company and includes:
- the company name,
- the share capital,
- the number of shares,
- the name of the company secretary,
- the name of the shareholders,
- the directors’ details and
- the drafting of rules and organization pertaining the company.
- The KYC requirements require to file for each company officers (directors, shareholders, and company secretaries) a copy of passport and recent proof of address.
- The company officers can be body corporate: shareholders, director, company secretary. In that case, the documents required are the business registration certificate, the copy of the directors’ passports, the proof of registered address and the Memorandum and Articles of Association.
- The incorporation (Form NNC1) form duly completed
- The Notice to Business Registration Office (IRBR1) duly completed
- A written resolution of the First Director. This will include a declaration of the registered office of the company, the appointment of a company secretary, the issuance of shares.
- The Articles of Association
- Application for a Business Registration Certificate from the Inland Revenue Authority (IRD)
- Preparation of the visas, licenses, and other annual filings before the required due dates.
Also, please note that even though Hong Kong recognizes the use of electronic signature, some of the company incorporation documents require signatures with wet-ink and this can slightly delay the process.
Other important considerations after the business incorporation
Entrepreneurs, founders and investors alike should keep in mind key elements related to doing business in Hong Kong. Here are a few of those. Check here how to register a company in Hong Kong.
The corporate tax on company profits in Hong Kong is set at 16.5%, but most companies can benefit from a reduced tax rate on the first HKD 2 million of profits.
|Profits declared by the company||Tax rate applicable to corporate profits|
|First HKD 2,000,000||8.25%|
|HKD 2,000,000 onwards||16.50%|
On another note, the taxation system in Hong Kong is territorial. The taxes are imposed on business activities located in Hong Kong that are trade, business, or profession. Thence, profits derived from outside Hong Kong are not subject to profits tax. Consequently, non Hong Kongese residents can also be taxed here.
The financial statements of the company are to be audited by a Chartered Public Accountant (CPA) and then file these documents with the Inland Revenue Department (IRD). The financial statements of the company along with the annual returns must be filed once per year.
Opening a bank or business account
Opening a bank account is necessary to process payments. It can be a complicated task in Hong Kong since physical presence of the signatories are frequently required to complete the due diligence requirements. With that consideration in mind, it is also possible to operate a company with a business account for which KYC and due diligence exercise are less stringent and faster processes.
MyBusiness in Asia offers to open a business account for its clients free of charge and with an average opening time of 2 weeks. So that you can operate your company quickly after incorporation.
All about sole proprietorship in Hong Kong here.
More than just being a company secretary, MyBusiness in Asia is able to incorporate your company and assist you with all the services that make starting and running your company easier. We provide packages including tax, accounting, payroll, company secretary services specifically tailored for entrepreneurs and SMEs. We are here to deal with your day-to-day compliance, accounting, and filings, but, more than this we can also assist with your share capital increase, registering new investors, issuing visa for your foreign talents and their families, etc.
All made digital, by our own team of experts.