Nature and key conditions of a private company limited by shares
- Company
name
- Must be unique and must not include certain restricted words. It may be in
English or Chinese or both.
- Share
capital - There
must be a share capital, but there is no restriction on the minimum or
maximum share capital.
- Shareholders
- There may be anything between one and 50 shareholders. The liability of
each shareholder is limited to the share capital they have invested.
- Registered
office - A company must have a registered office address in Hong Kong. This
serves as the company's legal address for notices and proceedings and can be
different from the business address.
- Directors
- One is sufficient. Directors may be corporations unless the company is
part of a listed group, or individuals of any nationality, domicile and
residence.
- Company
secretary - The company, however, must appoint a company secretary (to
ensure compliance with ongoing legal returns, accounts, audit and other
requirements) who, if an individual, must ordinarily reside in Hong Kong, or
if a body corporate, have its registered office or a place of business in
Hong Kong
.
- Registration
- A company is incorporated by submitting the necessary paperwork and fee to
the Registrar of Companies.
- Ongoing
compliance �V A company must observe its statutory obligations under the
Companies Ordinance and file annual returns, specific forms etc within the
prescribed time period on an ongoing basis.
- Tax -
Profits tax is payable on profits generated in Hong Kong. In Hong Kong, many
items are tax deductible.
Process
and cost of incorporating a private limited company
Investors
may engage advisers to help with this process:
Step
1 - check whether the proposed company name has already been used by another
company by conducting a name search a the Companies Registry��s Cyber Centre on
the internet (website:
Branch Offices of Overseas
Companies
Where a
company incorporated outside Hong Kong establishes a place of business or branch
office in Hong Kong as an extension of the investing company, it is referred to
as an "oversea company". Unlike a subsidiary, a branch can leverage
off the credit rating and more of the overseas owner. The key differences
between a branch and a representative office are the operating scope and tax
treatment.
Nature and key conditions of a branch office
- Branch
- is an establishment of a place of business in
Hong Kong
where the oversea company carries on business.
- Legal
and tax treatment - Such branch offices are generally subject to the same
legal and tax consequences as companies incorporated in Hong Kong.
- Registration
- oversea companies must register their branch with the Registrar of
Companies.
- Ongoing
compliance- Branches are legally required to file returns, audited accounts
and more, on an ongoing basis
Process
and cost of establishing a branch office
The
oversea company must apply for registration within one month of establishing a
place of business in
Hong Kong
. It is advisable to apply before business commences.
Step 1 - Submit the undernoted to the Registrar of Companies:
- A certified copy of the
instrument defining a company's constitution.
- A
completed Form F1 which includes particulars of the company's directors,
secretary and company's authorised representative in Hong Kong, the
principal place of business in Hong Kong and in the place of incorporation.
- A
certified copy of the company's certificate of incorporation (or its
equivalent).
- A
certified copy of the latest accounts of the company. It the company is
substantially a private company and is not required to publish or disclose
its accounts to the public, it may apply for exemption form filing the
latest accounts by submitting a lawyer��s/auditor��s certificate.
- The
prescribed fee of HK$1,720 and a registration fee of HK$20 for each
document. If the applicant is unsuccessful, the registration fee of HK$1,425
and the registration fee for each document may be refunded.
The
Companies Registry will process the documents and issue a Certificate of
Registration in about 18 workings days.
Step 2 - within one month, submit application and fee for Business
Registration Certificate (cost HK$2,600 for one year) (click
Representative Offices
Like a branch, this is
a means by which a company incorporated outside Hong Kong establishes a place
of business in Hong Kong. A representative office can only however fulfil a
limited range of functions. 'Rep offices' are particularly useful for foreign
companies that wish to analyse the Hong Kong market before making a bigger
investment in the city.
Nature and key conditions of a representative office
- Functions - Whereas
a branch and subsidiary can conduct full operations, a representative
office may only collect information or maintain contacts with customers,
so-called promotional and liaison work. A representative office cannot
enter into contracts, except for renting office space and for utilities.
- Business in Hong
Kong - A representative office is prohibited from carrying on any business
in Hong Kong. If it does, it is required to register as a branch (see
above).
- Registration - No
registration is required for a representative office.
- Tax - since a
representative office cannot undertake business in Hong Kong, it should
not generate any profits.
Process and cost of
incorporating a representative office
Step 1 - within one month, submit application and fee for Business
Registration Certificate (cost HK$2,600 for one year) (click
Partnerships /
Proprietorships
These bodies do not
have a separate legal entity, therefore the sole proprietor or partners are
personally liable for the debts and liabilities of the business. In the case
of limited partnerships (which are rare), liability is limited for only some
of the partners.
Nature and key conditions of a partnerships/sole proprietorship
- Liability - The sole
proprietor or partners have unlimited liability for the debts and
liabilities of the business ie their personal assets could be at risk.
- Partnerships -
Unlike corporate vehicles, partnerships do not have continual existence
and the maximum number of partners allowed is usually 20. Partnerships are
usually governed by a partnership agreement; if an agreement is not in
place, the partnership legislation is deemed to apply.
- Tax - Tax treatments
differ between corporate vehicles and partnerships/sole proprietorships.
Ongoing compliance - Ongoing requirements are less onerous for
partnerships/sole proprietorships than for corporate vehicles.
Process and cost of
establishing a partnerships/sole proprietorship
Step 1 - Within one month, submit application and fee for Business
Registration Certificate (cost HK$2,600 for one year).
Since no further registration, filing or procedures are required, a
partnership is quick and cheap to form.
