Professional Directorship Services
A minimum of one director is required and full details must be filed with the Public Registry. Currently corporate directors are permitted but as of early 2014 a Hong Kong Company must appoint at least one natural person as a director. There is no requirement for board meetings to be held within Hong Kong and directors may be resident anywhere in the world. Board meetings can take place via electronic means.
Sovereign has the capacity to act as the professional director of your company. Please take the following points into account when evaluating hiring a professional director:
- Tax Residency: Most countries deem a company to be a tax resident in the jurisdiction in which it is centrally or effectively managed and controlled. With a Hong Kong professional director, your company can be managed from Hong Kong, thusly enjoying the tax benefits associated with Hong Kong’s treaties for the avoidance of double taxation. Alternatively, if it is the intention to avoid taxation of the Hong Kong company by your home country or in Hong Kong itself, offshore professional directors are required to make sure that central management and control is indeed offshore.
- Compliance with Local Regulation: With an experienced professional director such as Sovereign, you can be sure your business will be compliant with local regulations.
- Focus on Essential Activities: It is not uncommon that foreign companies create a Hong Kong branch or subsidy to facilitate business development in the region. With financial and administrative matters controlled by a professional director, your employees can focus on clients rather than performing back of house tasks.
Banking in Hong Kong is excellent and commensurate with what is to be expected of one of the world’s leading financial centres. Most internationally recognized banks have a presence which is supplemented by a reputable local contingent. Cash management facilities and internet banking are standard features in all major banks in Hong Kong, making monitoring accounts and managing business straightforward and transparent.
Opening a corporate bank account in Hong Kong is relatively straightforward, but is becoming more and more difficult due to regulatory changes. Sovereign Hong Kong can guide you through the process and help you prepare your documentation to facilitate the process. Our fees for attending to the account opening procedures would be from US$1,000 plus the costs of preparing any additional notarised documentation which a particular bank may require.
Registered Office Address
As a matter of local company law the company must maintain a registered office address within Hong Kong and must also appoint a Hong Kong resident company secretary. The secretary cannot be the sole director of the company. We would generally provide these services as part of the domiciliary service fee.
Dedicated Phone Lines
Sovereign offers a dedicated phone line for a very competitive fee, which means that a company does not share its telephone number. Dedicated phone lines will be answered with your company name by a Sovereign employee, who will then forward messages to the relevant party.
Re-mailing services are available in all Sovereign locations. All correspondence delivered to Sovereign Hong Kong on behalf of clients’ companies will be re-mailed immediately to the beneficial owners under the service agreement.
Fees for re-mailing are charged for the cost of setting up a re-mailing facility as well as a handling fee per item forwarded. Please contact a Sovereign employee for details [link contact us]
Active companies with no personnel in Hong Kong can hire the necessary staff to carry out its business on an hourly basis. Trade services include but are not limited to:
- Labelling and relabeling
- Payroll and Accounting Services
- Secretarial services
- Legal drafting and certification
- Handling letters of credit and shipping documentation
Although human resources procedures in Hong Kong are fairly straightforward, it is important to understand the legal formalities and employment legislation in Hong Kong to avoid unnecessary headache. Variations exist in the regulations for hiring local and foreign employees in Hong Kong, and Hong Kong’s labour laws legally bind employers and employees. Take caution and understand all variables before entering into a contractual agreement as either an employer or employee.
The Hong Kong Employment Ordinance
The Hong Kong Employment Ordinance [link to HK employment ordinance] clearly states the main terms and conditions of Hong Kong employment laws. The Employment Ordinance covers all employees, regardless of whether they are full-time, part-time or temporarily employed, excluding the following:
- A family member who lives in the same dwelling as the employer;
- An employee as defined in the Contracts for Employment Outside Hong Kong Ordinance;
- A person serving under a crew agreement under the Merchant Shipping (Seafarers) Ordinance, or on board a ship which is not registered in Hong Kong; and
- An apprentice whose contract of apprenticeship has been registered under the Apprenticeship Ordinance, other than certain provisions of the Employment Ordinance.
All employees under the Ordinance are entitled to the rights and protection mentioned therein. Basic terms and conditions of employment are defined which must be met as a minimum standard. If an employee is not covered by the Employment Ordinance, a mutual contractual agreement with dictate the terms and conditions between employer and employee.
Contract Employees and Continuous Employment Contract Employees
Employees under the Employment Ordinance are further divided between employees under contract and employees under a continuous employment contract. Employees under an employment contract are entitled to basic protection under the Ordinance including payment of wages, restrictions on wage deductions, the granting of statutory holiday, and other conditions.
An employee under a continuous employment contract is defined by an employee working for the same employer 18 hours a week for a span of 4 weeks or more. This period of time entitles an employee on a continuous contract all the statutory benefits under the Employment Ordinance. These benefits include rest days, paid annual leave, sick allowance, severance pay and long service pay.
Employers are required to ensure that an employee’s contract meets the minimum requirements of the Employment Ordinance. Employment contracts may be oral or written, and can include both explicit and implied terms and conditions. If a contract is written, an employer must provide employees with a copy. Furthermore, employers must consult and receive permission from an employee before making alterations or additions to the contract.
Tax Requirements for Employers
Employers are also required to prepare tax forms for all employees and report their wages under the Income Tax Ordinance [link to Income Tax Ordinance]. A back log of payroll records must be kept for at least seven years.
Tax clearance is required for employees living in Hong Kong for a period of a month or more. Employers must notify Hong Kong Inland Revenue Department if an employee is expected to leave Hong Kong with at least one month’s notice. This is intended to ensure that departing employees leave Hong Kong in good standing and have paid all taxes. Employers must withhold wages from the employee once notice of leaving Hong Kong has been given until Hong Kong IRD does a tax assessment and confirms all taxes have been paid by issuing a letter of release. Please take note that this applies only to employees who intend to live abroad or quit their Hong Kong position. Employees who travel frequently for work need not be declared.
Requirements for the Mandatory Provident Fund (MPF) Scheme
All employees aged 18-65 are required to contribute to the MPF, regardless of whether they are full-time, part time, casual or temporary staff. The only exceptions to this regulation are as followed:
- Domestic employees
- Self-employed hawkers
- People covered by statutory pension or provident fund schemes, such as civil servants and subsidized or grant school teachers
- Members of occupational retirement schemes that are granted MPF exemption certificates
- Foreigners who enter Hong Kong for employment for less than 13 months, or who are covered by overseas retirement schemes
- Employees of the European Union Office of the European Commission in Hong Kong
Employers and employees are required to contribute 5% of the employee’s monthly cash income each into a registered MPF Scheme, with mandatory contributions capped at HKD $1,000 for employees earning more than HKD $20,000 a month. If an employee’s salary is below HKD $5,000, only the employer is required to contribute 5% towards the MPF leaving the employee exempt from this regulation. Casual employees who are paid daily and their employers must contribute on a separate scale.
Recruitment Regulations and Procedures
Hong Kong is an equal opportunity work environment that encourages employers to fairly recruit based on skill, experience, and ability to perform the job. The Labour Department actively assists employers in avoiding discrimination by gender, age, race, religion, marital status or disability.
The legal age to work in Hong Kong is 18 years, although in some cases young persons aged from 13-17 are able to work. Please note that there are restrictions to the type of position and number of hours a week that a young person can work. At the moment, there is no mandatory retirement age in Hong Kong but the average person retires around 60-65 years of age.
Students too are capable of working under certain circumstances. Students who are Hong Kong citizens or Permanent Residents are capable of being hired on a full time or part time basis without restrictions. Students are entitled to MPF contributions, while interns typically are only paid a monthly salary.
International students of a full-time, locally accredited university or degree level program whose study period is not less than one academic year can be hired as interns under certain conditions. The internships must be related to the topic of study and arranged or endorsed by the educational host institution. Furthermore, the internship cannot exceed one academic year, or one third of the normal duration of the full time academic program, whichever is shorter.
Students, international or otherwise, are able to take up to 20 hours per week of on-campus employment and employment during the summer holiday months.
Hiring Foreign Employees
Hong Kong requires that employers must give preference to local hires before considering foreign applicants. Foreign applicants who possess special skills, experience and knowledge not readily available in Hong Kong are allowed to take employment in Hong Kong.
To work in Hong Kong, a foreigner must have a valid work visa. Employers are required to apply for a work visa on behalf of your employee. Once approved, the employee may commence work legally.