HONG KONG LIMITED COMPANY

Hong Kong Limited Company

Incorporating a limited liability entity in Hong Kong (i.e. Hong Kong company registration) is the most common practice, in which the HK company can enjoy the low tax rate in Hong Kong. The company will carry an independent accounting book and bank account in Hong Kong.

Starting 2018/2019, the HKSAR government introduces a favorable two-tiered profit tax rate. Under the two-tiered profits tax rates regime, the profits tax rate for the first $2 million of assessable profits will be lowered to 8.25% (half of the standard rate). Assessable profits above $2 million will continue to be subject to the rate of 16.5% for corporations.

Let us explain the requirements, procedures, and advantages in Hong Kong company incorporation.

PROCESSING TIME

  • Normally take 4 working days.

  • Express service can be processed within a day.

BASIC REQUIREMENTS FOR HONG KONG LIMITED COMPANY INCORPORATION/FORMATION

Below are the requirements for Hong Kong company registry.

  1. Company name: Each company name will be unique as it is required to have the company name approval performed by the Hong Kong Companies Registry to ensure no repetition.

  2. Directors (aged 18 or over): Either a minimum of one director of any nationality or a company is allowed. There is no limit for the number of directors. Residency in Hong Kong is not a must. Directors need not be shareholders. Appointment of nominee director is permitted.

  3. Shareholders (aged 18 or over): Without any residency requirement, a minimum of one shareholder could be a person of any nationality or a company. A shareholder could also be a director. Nominee shareholders can also be appointed.

  4. A Company Secretary: Who must reside in Hong Kong or a body corporate that must have its registered office in Hong Kong. A sole director/shareholder cannot act as company secretary. A nominee secretary can be appointed.

  5. A Hong Kong Registered Address: Every Hong Kong company must have a registered office in Hong Kong. The registered address must be a local physical address and cannot be a PO Box. Prism provides different packages of virtual office to fit clients.

HONG KONG COMPANY SETUP/INCORPORATION PROCEDURES

The procesures for Hong Kong company incorporation:

  • Conduct company search in Hong Kong Companies Registry to ensure the proposed name has not been used by others

  • Consult and assess the client’s company structure and collect necessary documents for the company setup

  • Sign our Letter of Engagement to make confirmation of proceeding with the company formation

  • Prepare the company incorporation documents

  • Submit company incorporation documents to the Hong Kong Companies Registry and pay all government incorporation fees on the client’s behalf

  • Monitor the whole process and keep the client update for any news

  • Obtain Certificate of Incorporation and Business Registration from Companies Registry

  • Prepare Hong Kong company kit including the share certificates, company seal and company chop

  • Prepare a set of documents for bank account opening

  • Advise on bank account opening

  • Deliver the Hong Kong company kit to the client

ADVANTAGES OF HONG KONG LIMITED COMPANY

The advantages to incorporate in Hong Kong (as a limited company/entity).

  1. Limited Liability: The obvious advantage of a Limited Liability Company is the financial security that comes with business. The company’s shareholders will only be liable for any debt the company accrues according to the levels of their own investment and will not bear any debt beyond such investment. This can provide a comfortable feeling of security for shareholders in the company.

  2. Separate Entity: Due to its very nature, a limited company is deemed to be a separate legal entity from its owners. The company will exist beyond the life of its owners. If they retire or die, the company will continue to exist and operate. This ensures security for employees and other members and also is an advantage which other legal forms of business are not subject to.

  3. Ownership and Control: In the case of private limited companies, the directors are usually the main shareholders of the company. Thus both the ownership and control of the business remain in their hands. Decisions can be made quickly and easily, allowing for a more successful business management platform.

  4. Taxation Benefits: All profits made outside Hong Kong will not be taxed as long as it is booked and structured in a non-resident Hong Kong company.

  5. Management Efficiency: Management is observed by the shareholders of the corporation. The shareholders appoint directors to represent them. These directors make sure that the policy and the regulations are being followed by everyone. They are also there to monitor the progression of the daily affairs of the business.

DISADVANTAGES OF HONG KONG LIMITED COMPANY

  1. Complex to set-up: A private limited company is generally considered more complex, expensive and complicated to establish when compares to sole proprietorship and partnership.

  2. Disclosure requirements: A company has to make some particular information available (capital structure, personal particulars of shareholders, directors and secretary etc.) to the public by filing returns with the Companies Registry.

Prism provides several company incorporation/formation packages to meet the clients’ needs:


Hong Kong Limited Companies

Package Fee

Consultation for the best option of the company formation

Free name search to ensure the company name is available

Provide Companies Registry approved Articles of Association

Preparation of documents and Forms for the company formation

Submission of the documents to the Companies Registry and Inland Revenue Department

Monitoring the progress to ensure smooth processing

Collection of Business Registration Certificate and Certificate of Incorporation

Preparation 1 copy of Articles of Association, one signature chop, seal and a circle chop and share certificaten

Preparation of first minute of appointing first director(s) and first secretary

Provide one set of certified true copy of all company incorporation documents for bank account opening

Free appointment as a Corporate Secretary for the first year

Consultation of company compliance for the first year

Freely appoint us to file 5 changes (Preparation & submission of 5 forms) of the company structure for the first year, i.e. change of Director, change of name, change of address, etc. Except transfer of shares and allotment of shares

Including all government fee

Including first year tax representative service (original service fee for HK$1,000 per year)

Preparation of Annual General Meeting (AGM) Minutes

Package A

HK$9,000

Package B

HK$7,600