HONG KONG COMPANIES
Hong Kong is a distinctive location for the incorporation of companies and for international business due to its simplified taxation system, low taxation rate, lavish infrastructure and communication facilities, and high quality professionals.
Hong Kong offers limitless business opportunities, and serves as a platform to global economy and commerce, the advantages of setting up a Hong Kong company are many, therefore thousands of international businesses benefit from establishing Hong Kong Companies as far as a Hong Kong company does not provide any business in Hong Kong, and does not produce any incomes from Hong Kong sources, the company will not be taxable in Hong Kong.
Advantages of Setting Up Hong Kong Company
Well-established legal system. Based on English common law and equity that applied in UK and other Commonwealth countries. Hong Kong’s legal system is separate from China.
The economy system in Hong Kong is free and there are no restrictions on inward and outward investments. All currencies are settled freely between Hong Kong and other countries.
Hong Kong is one of the world’s primary financial centres with a world class banking system.
Hong Kong companies pay tax on a regional basis, income received from outside of Hong Kong is not subject to local tax.
Low tax rate. Only 16.5% of net profits. There are no other tax systems such as VAT, business tax, capital gains tax etc.
Cost of incorporation of companies and administration is competitive with other similar corporate domiciles.
Hong Kong has agreements with China which make the jurisdiction tax efficient for structuring investment into and trade with China.
No capital investment is required. The shareholder is only obliged to sign the M & A to declare that he will contribute capital to the company, and he does not require to pay money to the company.
No foreign ownership restrictions
Company names can be in English, in Chinese or in both English and Chinese. The company name must end with the word “Limited” or its equivalent in Chinese characters. The name of the company must be stated in the Memorandum of Association. A company name cannot be the same or similar with that of an existing company.
Memorandum & Articles of Association
Every company must have a constitution consisting of a “Memorandum of Association” and “Articles of Association”. The memorandum states the company’s name that its registered office will be in Hong Kong. It also states the initial authorised share capital and that the liability of its shareholders is limited. The Articles set out the principles governing the administration of the company including the procedures of the shareholder and directors meetings and any restrictions on the issue and transfer of shares.
One subscriber is needed to subscribe to at least one share in the share capital of the Company.
There is no limitation on amount of authorised or issued share capital. Capital duty at the rate of 0.1% of the authorised capital is payable to the Government on incorporation and successive increase of any amount of the authorised capital. Shares must be stated in fixed amount. Par value shares are not permitted. While it is usual for the share capital to be expressed in Hong Kong dollars, shares may be stated in other currencies. A multiple currency share capital is also permitted.
There shall be at least one director over 18 years old. A sole director of the company may not be the secretary of that company. A corporate company cannot serve as the secretary if the sole director is the only director of that corporate company.
There shall be at least one Hong Kong permanent resident or authorized Hong Kong company taking the position of legal secretary of the company.
There shall be at least one registered shareholder. There are no restrictions on the nationality or residence of the shareholder and shareholder meetings may be held in or outside Hong Kong. Bearer shares are not permitted.
There shall be one registered address in Hong Kong. A PO BOX is not permitted.
All companies are required to obtain a registration certificate by applying to the Commissioner of Inland Revenue. The certificate is valid for a twelve month period and must be renewed annually.
A general meeting of shareholders must be held at least once a year. At the meeting the Profit and Loss account and Balance sheet of the company are laid before the shareholders together with the directors and auditors reports.
Upon incorporation, the names and personal particulars of the director and secretary must be filed with the Companies Registry. If shares other than subscriber shares are issued, a Return of Allotment must be filed with the Registrar, revealing the identities of the members and their shareholdings. However, where nominee shareholders and directors are used, the beneficial owners need not be disclosed. Registers of the company’s members, director and secretaries, mortgages and charges (if any) together with its minutes and accounts must also be kept by the company but may only be inspected by shareholders.
A company is obligated to file an annual return each year within forty-two days of the company’s anniversary date of incorporation.
Accounts & Audit
Every company is required by law to appoint an auditor or audit firm. An auditor must be qualified by virtue of the Hong Kong professional Accountants Ordinance and be completely independent of the company.