A total of 72,588 local Hong Kong companies were newly registered during the first half of 2023, according to the Companies Registry, bringing the total number of local companies registered under the Companies Ordinance to 1,416,643 as at the end of June this year.
The Companies (Amendment) Ordinance 2023 came into operation on 28 April 2023, providing flexibility for companies to hold general meetings in various ways. It expressly provides for fully virtual or hybrid general meetings, providing flexibility for companies to conduct corporate affairs smoothly and effectively having regard to their own circumstances and needs.
In the first half of 2023, 422 non-Hong Kong companies also established a place of business in Hong Kong and were registered under the Companies Ordinance. The total number of registered non-Hong Kong companies reached 14,621 by the end of June 2023.
Setting up a company in Hong Kong is quick and easy; company registration costs are low, there is no statutory requirement for a minimum amount of paid-up capital and the overall environment encourages businesses to thrive.
There are no restrictions on inbound or outbound investment and there are no nationality restrictions on company ownership. Foreigners can invest in almost any business and own up to 100% of the equity. Directors’ and shareholders’ meetings can be held anywhere in the world.
Under the two-tiered Profits Tax regime, corporations pay only 8.25% on the first HKD2 million of assessable profits arising in or derived from Hong Kong, rising to 16.5% for profits above that amount. Hong Kong operates a territorial tax system, so profits from overseas are not taxed in Hong Kong even if they are remitted to Hong Kong.
With its strategic location, its highly competitive tax regime, its common law legal system, its strengths in banking and capital markets, and its business-friendly policies, Hong Kong provides a high-quality platform for businesses and investors from all over the world.
Private limited companies can be registered in one to two working days and can then take advantage of all the tax benefits and concessions available to any fully incorporated business in Hong Kong, including the Closer Economic Partnership Arrangement (CEPA) with China, which gives Hong Kong products and firms preferential access to the China market.
To assist, Sovereign Trust (Hong Kong) Ltd has compiled a step-by-step guide to registering your private limited company in Hong Kong.
Step 1: Choose your company name
The first step in registering your company in Hong Kong is to choose a name for your business. A company name can either be in English or Chinese, or both, but cannot be a combination of English and Chinese.
A new company name must not be the same as a name already appearing in the Companies Registry and should not infringe the intellectual property rights (IPRs) of a third party. There are also restrictions on the use of certain words in relation to government bodies or licensable activities.
Sovereign will assist you by checking the availability of your preferred name using the online search function provided by the Hong Kong Companies Registry and the Trademark Register maintained by the Intellectual Property Department.
Step 2: Choose the business structure
Sovereign will assist you to choose the type of company that best suits your business. The common types of business structures in Hong Kong are sole proprietorship, partnership and limited company. A limited company is the most popular option because it offers the protection of corporate limited liability.
Step 3: Choose a business address
All companies registered in Hong Kong are required to have a registered physical address in Hong Kong for official correspondence. Sovereign will provide clients with a registered office address as part of its domiciliary services offering.
Step 4: Appoint a company secretary and a director
Every private company in Hong Kong must appoint a company secretary and at least one director.
The company secretary is responsible for ensuring that a company complies with all legal and regulatory requirements. The company secretary must be a Hong Kong resident or a licensed Trust & Corporate Services Provider (TSCP) like Sovereign.
Every private company must appoint at least one director who is a natural person (i.e., an individual). There is no requirement under the Companies Ordinance that a director must be a Hong Kong resident. The sole director of a private company cannot also be the company secretary.
Step 5: File the incorporation documents
The next step is to file the incorporation documents with the Companies Registry. These must include:
- Incorporation Form
- A copy of the company’s Articles of Association
- A Notice to the Business Registration Office
There is no requirement on the minimum amount of a new company’s paid-up capital.
Step 6: Obtain a Business Registration Certificate
After your company is incorporated, you must obtain a Business Registration Certificate (BRC) from the Hong Kong Inland Revenue Department (IRD). This certificate is required for conducting business in Hong Kong and must be renewed annually.
Generally, for applications delivered in hard copy form, the Certificate of Incorporation and BRC will be issued within four working days from the date of delivery. For applications delivered in electronic form, the certificates will normally be issued within one hour after delivery of the documents at the e-Registry.
Step 7: Open a bank account
Finally, you need to open a bank account for your company. You can choose from a range of traditional or online banks in Hong Kong. Each bank has its own strengths and weaknesses so you should do your homework first.
A company – be it resident or non-resident in Hong Kong – will require a bank account to undertake any kind of business. Opening a business bank account in Hong Kong used to be a relatively straightforward process but has become more difficult due to recent regulatory changes.
Customer identification requirements vary depending upon the size and type of business. A financial institution will request information showing the legal existence of the entity, such as certified articles of incorporation, a business licence or a partnership agreement, as well as details about individuals with ownership or control over the account, including beneficial owners, signatories and guarantors.
Hong Kong banks are more likely to approve an application if a company can show real substance in Hong Kong – premises, staff, customers or suppliers.
As a professional services provider in Hong Kong, Sovereign has long standing relationships with a broad range of Hong Kong banks. We know the policies and criteria of different banks and can help to determine which one will be the best fit for you. We can then guide and assist you with preparing your application and supporting documentation to maximise your chances of success, before effecting an introduction to your chosen bank.
Sovereign Hong Kong Company Registration services
Sovereign Trust (Hong Kong) has over 30 years’ experience in company registration, governance and administration in Hong Kong. We can assist with all the above steps to streamline your company registration process in Hong Kong. For further information or to arrange a free consultation, please contact us.