Hong Kong company formation and administration is regulated by the Companies Ordinance, Cap 622.
Hong Kong companies may engage in any legal business activity. Certain operations, such as banking and insurance, require specific licensing. A Hong Kong company may not solicit funds from or sell its shares to the public.
Hong Kong company formation timeframe
Hong Kong company formation normally takes around one week to complete. Shelf companies are usually available if an older company is required or if there is an urgent need for its immediate use.
Under Hong Kong law, a company registered in Hong Kong is not allowed to continue in another jurisdiction, nor is it possible for a foreign company to become registered and continue in Hong Kong.
Information held on public record
The Registrar of Companies maintains a copy of the company’s memorandum and articles of association and records of its shareholders, directors, secretary, registered office address, registered mortgages and charges. This information is available for public inspection.
A Hong Kong company may have its name in English, Chinese or both languages. It must end in “Limited” or “PLC” or the Chinese equivalents of these terms to indicate its limited liability status. Any proposed name which would be offensive or whose use would constitute a criminal offense or be contrary to the public interest will be rejected by the Registrar of Companies. Similarly, the company’s name may not imply any connection with the Central People’s Government, the government of the Hong Kong Special Administrative Region or any department of either government. Specifically, the name may not contain any of the words “Department”, “Government”, “Commission”, “Bureau”, “Federation”, “Council” or “Authority”.
The share capital may be denominated in any currency and a minimum of one share must be issued at the time of the Hong Kong company formation. Bearer shares are not allowed.
A Hong Kong company must have at least one shareholder. Shareholders may be natural persons or other companies. The use of nominee shareholders is possible if confidentiality is required.
A Hong Kong company must appoint at least one natural person as director. Any additional directors may be natural persons or bodies corporate. The directors may reside in any country. Professional directors may be appointed if required.
Shareholder and director meetings
Shareholders’ and directors’ meetings can be held anywhere and the legislation allows all meetings to be conducted by telephone conference. The shareholders are required to hold an annual general meeting (AGM) every year, with the first AGM to be held within 18 months from the date of the Hong Kong company formation. Subsequent AGMs must be held within 9 months from the end of the company’s financial year according to its financial statements.
The company must have a registered office in Hong Kong. This is where the company’s registers of members, directors and charges are normally kept, as well as the originals of the incorporation certificate, memo and articles, business registration certificate and all minutes of meetings or written resolutions. It is possible for these records to be kept at a location other than the registered office, provided that location is also within Hong Kong.
Hong Kong companies are required to appoint a company secretary located within Hong Kong. The secretary may be a natural person or a company. It is not possible for the same person to act as sole director and secretary.
Hong Kong companies are obliged to prepare annual audited financial statements. Unless the company is a private limited company, a copy of its financial statements must be filed with the Registrar of Companies, in which case they will be available to the public.
Annual filing and statutory obligations
The company is required to file an annual return with the Registrar of Companies and to submit a tax return to the Inland Revenue Department.
An annual business registration fee is payable, which varies each year. For the 2019/2020 fiscal year this amounts to HK$250.
Hong Kong companies are subject to Profits Tax on their net profit. A two-tier tax system applies. The first HK$2 million of taxable profit is taxed at 8.25% and any profits above HK$2 million are taxed at 16.5%. However, in cases where the same person or company controls more than 50% of the shares of multiple companies, only one company will be entitled to the reduced tax rate of 8.25%.
Dividend income received by a Hong Kong investment holding company is not subject to Profits Tax. But if the company is actively engaged in trading securities, any dividends received would be treated as normal business income and therefore be subject to tax.
Dividends, interest or any other income paid by a Hong Kong company to a resident or a non-resident of Hong Kong are not subject to any form of withholding tax.
There is no capital gains tax in Hong Kong. Consequently, any profit arising on the sale of shares held by an investment holding company or on the sale of real estate property is not subject to tax.
The fiscal year in Hong Kong runs from 1 April to 31 March.
Double tax treaties
Hong Kong has signed several double tax treaties with other jurisdictions, however conditions apply before a Hong Kong company is eligible for any benefits under these treaties.
Hong Kong companies are ideal as investment holding vehicles. Also, due to the location and status of the jurisdiction, a Hong Kong company formation would be well suited to carry out trading and commercial activities with China and the Asian region.