Top three things you need to know about setting up in Hong Kong
Hong Kong remains an exciting market in which to establish a new business, but make sure you get the basics of incorporation right so you’re up and running when you want to be.
Hong Kong’s highly-developed economy is an automatic first choice for companies looking to expand in the Asia Pacific region, especially those seeking a gateway into China.
It is renowned for ease of doing business, a skilled workforce, attractive tax rates and incentives and a strong economic environment. The first step to success is getting incorporation right from the start, avoiding costly delays.
Three main steps to incorporation
1. Name check
Choose a name that is not like that of another company and does not contain certain words requiring special approval (such as bank, law, school). Look at the Companies Registry's Guideline on Registration of Company Names for Hong Kong Companies for guidelines / requirements of a company name and check potential names at the Companies Registry’s Cyber Search Centre.
2. Appoint at least one individual director
Every private company incorporated in Hong Kong must have at least one director (a person) who is at least 18 years of age but of any nationality, occupation or residency. Additional directors can be an individual or a company registered in any country.
3. Register the company
The following documents should be submitted with incorporation and business registration fees either electronically through the Companies Registry’s electronic service portal e-Registry or in hard copy to the Companies Registry:
- Form NNC1
- Articles of Association
- a notice to the Business Registration Office (IRBR1).
Incorporation via the e-Registry can take as little as one day. Manual submission is likely to take five business days.
Key registration information
- Company name (in English and/or traditional Chinese)
- Nature of the business and Business Registration Certificate for one or three years
- Mode of registration (electronic filing or manual submission)
- Registered office (must be in Hong Kong)
- Number and liability of members
- Share capital and initial shareholdings
- Class of shares
- Total number of shares proposed to be issued
- Total amount of share capital to be subscribed by founder members (including currency)
- Total amount to be paid up or to regarded as paid up on the shares proposed to be issued (including currency)
- Founder members
- Name
- Address
- Share capital to be subscribed
- Directors (minimum of one individual director)
- Name
- Residential address (for individual) and address (for corporate)
- HKID/passport (for individual)
- Company number (for corporation registered in Hong Kong)
- Secretary (must be a Hong Kong resident or a company incorporated in Hong Kong. The sole director cannot act as secretary)
- Name
- Hong Kong address
- HKID (for individual)
- Company number (for corporation).
Key legislation
Section 67(1)(b) of Companies Ordinance (Cap. 622)
- For company registration, addresses of the individual director and secretary must not be 'care of' addresses or post office box numbers.
- Every private company incorporated in Hong Kong must have a company secretary and at least one director (a person).
- The sole director of a private company cannot be the company secretary.
- The residential address of a director (a person) must be submitted to the Registrar.
- If the director is a body corporate, provide the address of its registered or principal office.
- If the company secretary is a person, he or she must ordinarily reside in Hong Kong and must provide a correspondence address there.
- If the company secretary is a body corporate, provide the address of its registered or principal office in Hong Kong.
- Directors must complete and submit the Form NNC3 to the Registrar no later than 15 days after the day of incorporation.
Sections 5A (1) and 5D (2) of the Business Registration Ordinance (Cap. 310)
- An applicant for company incorporation must deliver a notice to the Business Registration Office (IRBR1), the prescribed business registration fee and levy and Form NNC1.
Common mistakes made when registering a company
- Individual directors must report their usual residential addresses. Addresses with “care of” or post office box numbers are not acceptable.
- Form NNC3 is not filed within 15 days of incorporation, incurring potential penalties of HKD600.
Challenges faced when incorporating a company in Hong Kong
Opening a bank account
Hong Kong banks have tightened their anti-money laundering procedures and requirements for opening accounts. They require substantial due diligence documents and information on a company’s business activities, the background of ultimate beneficial owner(s) and personal information on shareholders, directors and bank authorised signatories. Banks may also request information or corporate documents of all intermediate layers between the company and the ultimate beneficial owner(s).
A face-to-face meeting with ultimate beneficial owner(s) or director(s) is required by the banks. Some banks are very reluctant to open accounts for non-residents.
After interview and submission of required documents, your application will be subject to final approval from bank compliance.
Know Your Client (KYC) requirements
In March 2018, a new licensing regime for trust and company service providers (TCSP) took effect under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).
This new regime and licensing requirements bring about considerable incremental enquiries and requests for client’s due diligence information before commencing our services.
Based on TMF Group’s Global Business Complexity Index, Hong Kong is one of the easier jurisdictions in which to set up and operate. However, it is not without business challenges.
Armed with knowledge of the economic and business landscape of the territory, companies need to navigate administrative complexity - registering their companies and launching their ventures quickly and in the right way. To remain in good standing, it is critical to find partners with in-depth knowledge of local regulations and the operational expertise to help smooth the transition into a new market.
Talk to us
TMF Group can help you navigate all corporate secretarial hurdles. Whether you are considering incorporating a company in Hong Kong or want to streamline your Hong Kong operations using a solid entity management service, TMF Hong Kong’s expert team can help across the spectrum of HR and payroll, accounting and tax, corporate secretarial and regulatory issues.
Want to know more about our services? Contact us today.
