A Guide to Forming a Hong Kong Company

Hong Kong is attracting more and more investors from across the world due to the various positive factors in the place. Corporate are finding that opening a company here would give them access to the huge markets in China and the rest of Asia. Though there are different forms of companies that can be started in Hong Kong, it is the private limited company that is the favorite of all the investors. The consultants available here help the investors to complete the formalities and incorporate the company.

The government of Hong Kong favors the formation of companies by foreign investors. The first thing these foreign investors must do is to know the types of companies that they can open in Hong Kong and the requirements for these. The consultants of Hong Kong can help them with these details and also advise them on which type of company is most suitable for each investor. This will depend on the kind of operations they intend to have and the size of the business.

Types of Companies In Hong Kong

Foreign investors coming to Hong Kong will have three options before them for the type of company that they can open. They can open a branch office, a representative office or a subsidiary company. All these types have their advantages and disadvantages. The branch office is the one most preferred by large corporates because the parent company has better control over the branch. This is not considered a separate legal entity and hence the liabilities will extend to the parent company. The tax and compliance requirements will be the same as any of the Hong Kong companies.

Read Also: Open an Offshore Company and Reap the Benefits

The second option is to open a subsidiary company or limited company where the foreign investors can have complete ownership of the company. This is most preferred by most of the small and medium-sized businesses. This company is a separate legal entity like the private limited company in Hong Kong. It is considered as a resident company and can enjoy all the benefits of a local company. The company can enjoy all tax exemptions and benefits like a local company.

A representative office is opened only for exploring the business opportunities in Hong Kong. It is not allowed to do any commercial activities. The company cannot enter into any contract or agreement with local entities. The only activities that you can undertake as a representative office are to promote the foreign company, liaise with local companies and look around for business opportunities.

Registering A Private Limited Company In Hong Kong

There are certain requirements and procedures for opening a company in Hong Kong. The limited company is most preferred by the foreign investors as its liabilities don't affect the parent company or the shareholders' assets. What you must do first for registering the limited company is to register the name. The name of the company should not be already in use or give any indication that it is related to the government. The name should have the word “limited” included in it. The name should not be vulgar or offensive.

There are certain requirements for opening the offshore company in Hong Kong and these need to be fulfilled. The company must have at least one director who can be either a foreigner or a local. The director need not be a shareholder. The company can appoint a nominee director. One of the main requirements in Hong Kong is for the company to have one Designated Representative. This person will be responsible for maintaining the significant controllers' register and submitting the same to the local authorities. 

The Advantages of Opening a Holding Company

Another form of company that is opened in Hong Kong is the holding company. This company can hold assets in Hong Kong without being involved in the day-to-day activities. The main aim of starting a holding company in Hong Kong is to do business with China. China favors doing business with Hong Kong businesses and the holding company will facilitate this.

The holding company can do the job of holding money earned from other countries as they are not taxed here. You can hold the profits earned in other companies in Hong Kong and invest them elsewhere when needed. There is no restriction on fund flow which means that you can move large sums of money without any interference from the local government. The Holding company is easy to set up and will take only a maximum of two weeks.