Setting Up in Hong Kong

Setting Up in Hong Kong | Bestar

Setting Up in Hong Kong

Setting up a business in Hong Kong offers numerous advantages due to its business-friendly environment, simple tax system, strategic location, and robust legal framework. Here's a comprehensive guide to the process:

1. Choose Your Business Structure:

Hong Kong offers several business structures, each with different legal and tax implications. The most common types are:

• Private Limited Company (Company Limited by Shares): This is the most popular choice for both local and foreign entrepreneurs.

  
  

  • Key Features: It's a separate legal entity from its owners, providing limited liability to shareholders (their liability is limited to the amount unpaid on their shares). It can have up to 50 shareholders.

  • Requirements: Minimum of one director (must be an individual, aged 18+) and one shareholder (can be an individual or a corporate entity). Both can be of any nationality and do not need to be Hong Kong residents. A local company secretary is mandatory.

  • Advantages: Limited liability, positive image, ease of ownership transfer, no minimum share capital requirement (HKD 1 is common).

    
    

• Sole Proprietorship: Simplest form of business, owned and operated by one individual.

  
  

  • Key Features: No legal separation between the business and the owner, meaning unlimited personal liability for business debts.

  • Advantages: Easy to set up and manage.

  • Disadvantages: Unlimited liability, may face difficulty opening business bank accounts or gaining client trust.

    
    

• Partnership: An arrangement between two or more individuals or entities who agree to cooperate for mutual interest and profit.

  
  

  • Key Features: Not a separate legal entity from its partners, leading to personal liability for debts.

  • Types: General Partnership (all partners share full personal liability) and Limited Partnership (limited partners' liability is restricted to their contribution). Limited Liability Partnerships (LLPs) exist but are typically reserved for law firms.

  • Advantages: Combines resources, relatively simple to form.

  • Disadvantages: Personal liability (for general partners), potential for disputes without a clear agreement.

    
    

• Foreign Company Offices (for overseas businesses):

  
  

  • Branch Office: Can conduct commercial activities, issue invoices, and sign contracts. Requires a local representative and business registration as a "Registered Non-Hong Kong Company."

  • Representative Office (Liaison Office): Limited to liaison activities, market research, or promotional activities. Cannot engage in profit-making activities.

2. Key Requirements for a Private Limited Company (Most Common):

• Company Name: Choose a unique name that is not identical to existing companies or trademarks. It can be in English (ending with "Limited"), Chinese (ending with "有限公司"), or both. Mixing English and Chinese in one name is not allowed. You can check availability through the Companies Registry's e-Search Services.

  
  

• Registered Office Address: A physical address in Hong Kong (not a P.O. Box) is mandatory. This will be the official point of contact for government correspondence. Many service providers offer registered office services.

  
  

• Directors: At least one individual director (aged 18 or above) is required. They don't need to be Hong Kong residents.

  
  

• Shareholders: At least one and no more than 50 shareholders are required. They can be individuals or corporate entities and do not need to reside in Hong Kong.

  
  

• Company Secretary: Mandatory for all limited companies. The company secretary must be a Hong Kong resident or a local corporate entity (e.g., a Trust and Corporate Service Provider, TCSP). This role is crucial for liaising with government agencies and ensuring compliance.

  
  

• Share Capital: No statutory minimum share capital requirement for private limited companies. A nominal amount like HKD 1 is common.

3. Company Registration Process (for Private Limited Company):

The process is streamlined, especially if done online.\

• Step 1: Prepare Documents:

  
  

  • Incorporation Form: Form NNC1 (for companies limited by shares) or NNC1G (for companies not limited by shares). This form requires details like the proposed company name, business nature, and director information.

  • Articles of Association: This mandatory document outlines the company's internal rules and regulations. Sample articles are often available.

  • Notice to Business Registration Office (IRBR1): This form simultaneously applies for business registration.

  • Identification Documents: Copies of ID for directors, shareholders, and company secretary (Hong Kong ID for residents, certified passports and proof of overseas residence for foreigners).

  • Proof of Registered Address: Documentation verifying the Hong Kong physical address.

    
    

• Step 2: Submit Application:

  
  

  • Online: Through the Companies Registry's e-Registry Portal (fastest, often within 1 hour for approval).

  • In Person or Mail: To the Companies Registry office. This typically takes around four working days.

    
    

• Step 3: Receive Certificates: Upon successful application, you will receive:

  
  

  • Certificate of Incorporation (CI): Issued by the Companies Registry, confirming your company's legal existence.

  • Business Registration Certificate (BRC): Issued by the Inland Revenue Department (IRD), authorizing your company to conduct business in Hong Kong. This is typically issued concurrently with the CI under the one-stop service.

    
    

• Step 4: Post-Incorporation Formalities:

  
  

  • Issue Share Certificates: Formally issue share certificates to each shareholder as proof of ownership.

  • Open a Business Bank Account: You'll need the company registration documents, identification for directors and shareholders, and sometimes proof of business operations or a business plan.

  • Apply for Licenses and Permits: Depending on your business activities, you may need specific government licenses, permits, certificates, and approvals. The Business Licence Information Service on GovHK can help you identify these.

  • Set Up Accounting, Bookkeeping, and Audit: Hong Kong companies have ongoing compliance obligations, including maintaining statutory records, filing annual returns with the Companies Registry, renewing their Business Registration Certificate, and (unless exempt) filing audited financial statements and profits tax returns with the IRD.

  • Mandatory Provident Fund (MPF): If you employ staff, you'll need to enroll eligible employees in an MPF scheme and make contributions.

  • Significant Controllers Register (SCR): Maintain a register detailing individuals or entities with significant control over the company, available for inspection by law enforcement.

4. Important Considerations:

• Taxation: Hong Kong has a simple and low tax system. Profits tax is typically at a concessionary rate, and there are various exemptions and incentives.

• Visa Requirements: If you are a foreign entrepreneur looking to reside and operate your business in Hong Kong, you'll likely need an "Investment as Entrepreneur" visa.

• Professional Assistance: Many firms specialize in company formation and corporate services in Hong Kong. Engaging a reputable service provider can simplify the process, ensure compliance, and provide ongoing support for company secretarial, accounting, and tax matters.

By following these steps and understanding the requirements, you can successfully set up your business in Hong Kong and leverage its dynamic environment.

How Bestar can Help

Bestar plays a crucial role in simplifying and streamlining the process of setting up and maintaining a business in Hong Kong, especially for foreign entrepreneurs who might be unfamiliar with local regulations and procedures. Here's a breakdown of how we can help:

1. Pre-Incorporation Guidance and Consultation:

• Business Structure Advice: We help you choose the most suitable business structure (e.g., Private Limited Company, Sole Proprietorship, Partnership, or Branch Office) based on your business activities, long-term goals, liability preferences, and tax implications. They explain the pros and cons of each.

  
  

• Name Availability Check: We conduct comprehensive checks with the Companies Registry to ensure your proposed company name is unique and compliant with Hong Kong's naming rules, saving you time and preventing rejections.

  
  

• Requirements Clarification: We clearly outline all necessary documents, identification, and information needed for incorporation, ensuring you gather everything correctly from the start.

  
  

• Initial Planning: We can assist with basic business planning discussions, helping you understand the regulatory landscape for your specific industry.

2. Company Formation and Registration:

• Document Preparation: We prepare all the required incorporation documents, including the Articles of Association (the company's internal rulebook) and the Incorporation Form (NNC1). This ensures accuracy and compliance with legal requirements.

  
  

• Application Submission: We handle the submission of your application to the Companies Registry and the Inland Revenue Department, often leveraging online portals for faster processing.

  
  

• Obtaining Certificates: We facilitate the issuance of your Certificate of Incorporation (CI) and Business Registration Certificate (BRC), which are essential for legal operation.

  
  

• Share Certificate Issuance: We can help with the formal issuance of share certificates to shareholders after incorporation.

  
  

3. Essential Statutory Services (Ongoing Compliance):

• Company Secretary Services: This is a mandatory service for all Hong Kong limited companies. Bestar acts as your company secretary, fulfilling crucial legal obligations:

  
  

  • Liaison with Authorities: Acting as the primary point of contact with the Companies Registry and Inland Revenue Department.

  • Statutory Record Keeping: Maintaining and updating all statutory registers (e.g., Register of Members, Register of Directors, Significant Controllers Register).

  • Annual Filings: Preparing and filing annual returns (NAR1) with the Companies Registry and profits tax returns with the Inland Revenue Department.

  • Meeting Management: Preparing minutes for board meetings and annual general meetings (AGMs).

  • Compliance Advice: Advising on corporate governance best practices and keeping the company informed about changes in relevant laws and regulations.

    
    

• Registered Office Address: Another mandatory requirement. Bestar offers a physical Hong Kong address for your company, which cannot be a P.O. Box. We handle the receipt of all official government correspondence, legal documents, and notices, often including mail scanning and forwarding services. This helps maintain privacy and provides a professional image.

  
  

• Designated Representative: For companies required to maintain a Significant Controllers Register (SCR), Bestar can act as the Designated Representative, ensuring the register is properly maintained and accessible for inspection by law enforcement.

  
  

4. Post-Incorporation Support:

• Bank Account Opening Assistance: Navigating the Hong Kong banking landscape can be challenging for new companies, especially those with non-resident directors/shareholders. Bestar has established relationships with local and international banks and can:

  
  

  • Prepare necessary documents for bank account applications.

  • Certify documents as required by banks.

  • Assist in scheduling bank meetings (or even facilitate remote account opening in some cases).

    
    

• Accounting and Tax Services:

  
  

  • Bookkeeping: Managing day-to-day financial records, expense tracking, and invoice processing.

  • Financial Reporting: Preparing management accounts and annual financial statements.

  • Audit Coordination: Liaising with auditors for the mandatory annual audit (all Hong Kong limited companies are required to be audited unless exempt).

  • Tax Filing: Preparing and filing profits tax returns, and advising on tax planning and optimization, including offshore tax claims if applicable.

  • Payroll Services: Handling payroll calculations, payslips, and Mandatory Provident Fund (MPF) contributions for employees.

    
    

• Visa and Immigration Services: If you or your staff need to relocate to Hong Kong, Bestar offers assistance with applying for relevant visas (e.g., Investment as Entrepreneur visa, employment visas).

  
  

• Business Licenses and Permits: Identifying and assisting with applications for specific licenses and permits required for your industry or business activities.

  
  

• Ongoing Advisory: Providing continuous support and advice on various corporate matters, restructuring, share transfers, director changes, and other administrative tasks.

Benefits of Using a Service Provider:

• Expertise and Compliance: We possess in-depth knowledge of Hong Kong's company law, tax regulations, and administrative procedures, ensuring your company remains fully compliant and avoids penalties.

• Time and Cost Savings: We streamline the process, allowing for faster incorporation and reducing the administrative burden on you. This frees up your time to focus on core business operations.

• Reduced Risk: Our experience minimizes the risk of errors or omissions in filings, which can lead to delays or legal issues.

• Local Presence: For foreign businesses, we provide the necessary local presence (registered office, company secretary) without requiring you to immediately rent physical office space or hire local staff.

• Professional Image: A reputable service provider's address and services can enhance your company's credibility and professional image.

• Scalability: We can offer a full suite of services that grow with your business, from initial setup to ongoing compliance, accounting, and even HR support.

In essence, Bestar acts as your trusted partner, navigating the complexities of Hong Kong's regulatory environment so you can establish and grow your business with confidence.

Request for Proposal