There are four main types of business organization through which business can be conducted in Hong Kong; however the most common business organization in Hong Kong nowadays is private company. Since private company is a kind of limited company incorporated in Hong Kong and is limited by shares, the liability of its members is limited to the amount unpaid on their shares.
Although private company by definition cannot offer its shares to the public and the number of members cannot exceed 50, the less restrictive law applicable to private company well explain its popularity. Shown below is some useful information about the incorporation of a private company.
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Every private company in Hong Kong may be incorporated with a name in English or in Chinese or in both languages. However, the name selected must have the word “limited” as its last word unless exempted under the Companies Ordinance. In addition, if the name selected is equal to or very similar to the name of a company registered in Hong Kong, a different name should be adopted before the company can be successfully incorporated in Hong Kong. Therefore, name search should be performed before commencement of the incorporation procedure.
Every private company in Hong Kong from the date of its incorporation should have a registered office in Hong Kong for receiving legal and formal notice and correspondence e.g. the service of writ. |
| Shareholders (i.e. members) |
For the incorporation of a private company in Hong Kong, the minimum number of shareholder is 1 and the maximum number is 50. Shareholders are the owners of share in a company. The shares they owned usually entitled them to receive dividend provided the company has distributable profits and the declaration and payment of dividend is made in accordance with the provision of the Articles of Association of the company. In addition, the shares they owned usually carry voting right at the general meeting through which certain important business of the company such as the appointment and removal of directors is dealt with.
Subject to certain limited exception, almost any person (or company) who agrees to be a member of a company is eligible to become a member of that company irrespective of their nationality and residence status. Therefore, even non-resident and company incorporated overseas may become members of a private company.
After incorporation, shares may be transferred both to new and existing shareholders subject to the rule and restrictions as mentioned in the Articles of Association of the company. |
For the incorporation of a private company in Hong Kong, the minimum number of director is one and the Articles of Association of the company may specify the maximum number of directors. It is the board of directors who exercise most of the power of the company to run the business subject to restrictions as mentioned in the Articles of Association and subject to the Companies Ordinance.
Although the director in private company should have attained the age of 18 years, there is no requirement that he should be a Hong Kong resident. In addition, a private company can have a company as its director provided the private company is not a member of a group of companies of which a listed company is a member.
According to the law in Hong Kong, every private company incorporated in Hong Kong should have a company secretary. A company secretary can either be an individual or a company. If the company secretary is an individual, the individual must be a Hong Kong resident. If the company secretary is a company, the company must have its place of business or registered office in Hong Kong. If a company has only one director, the director cannot also be the company secretary of the company.
After incorporation, every company has to submit different statutory document (e.g. Annual Return) to different government department/statutory body within a stipulated period of time so as to comply with the Hong Kong legislation. In addition, every company is also required to convene general meeting and meeting of the board of director according to the company’s Articles of Association. It is the usual duty of the company secretary to prepare and submit these statutory documents, convene the necessary meetings, prepare minutes of the meeting according to the legislation in Hong Kong. In addition, the duty of the company secretary generally includes maintenance of statutory record (e.g. register of directors and shareholders), handling issue and transfer of shares and registering the address of the registered office together with any subsequent change with the government within stipulated period.
Since secretary is an officer of a company, he is liable to penalties if he fails to perform the duties of an officer according to the legislation in Hong Kong.
| Business Registration Certificate |
Every private company incorporated in Hong Kong should apply for a Business Registration Certificate and pay Business Registration Fee annually until the dissolution of the company. According to the law in Hong Kong, a Business Registration Certificate should be kept in each place of business in Hong Kong. Therefore, a branch business registration certificate should be obtained for each branch office in Hong Kong.
After incorporation, every private company must maintain Statutory Books. Some of them are:
- register of directors and secretary
- register of members
- minute book containing minutes of the meeting of the shareholders and directors
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It is the usual duty of the secretary to update and maintain all these Statutory Books so as to comply with the law in Hong Kong.
After incorporation, every private company must maintain proper books of account. According to
the law in Hong Kong, the books and record must be retained for a period of at least 7 years. In addition, the directors are responsible for the preparation of accounts in accordance with the Hong Kong Companies Ordinance and accounting standards issued by the Hong Kong Institute of Certified Public Accountants (HKICPA).
In addition, the annual accounts of a private company must be audited by a Certified Public Accountant (Practising) in Hong Kong so as to comply with the requirement of the Companies Ordinance in Hong Kong.
Unless exempted, every company carrying on business in Hong Kong is subject to Profits Tax on the profits arising in or derived from Hong Kong from such business irrespective of whether the company is incorporated in Hong Kong. Therefore, a company is not subject to Profits Tax if its business is not carried on in Hong Kong or its profits are not derived from Hong Kong.
Every private company is usually required to submit Profits Tax Return annually and the profits tax rate for the year of assessment 2012/2013 is 16.5% on the net assessable profits of the company. For more details, please refer to Taxation in Hong Kong.
Our Service In This Area
Setting up Limited Company in Hong Kong
In addition to setting up (a) Sole Proprietorship, (b) Partnership, (c) Branch of Foreign Company in Hong Kong, we can incorporate a limited company in Hong Kong according to your requirement. Once we obtain your completed Company Information Sheet, we can perform a name search and arrange the preparation of necessary documents on your behalf for the incorporation. After we receive the signed documents, we can commence the application of incorporation on your behalf. Under normal circumstances, we can obtain Certificate of Incorporation within 8 working days from the application. On the issue of Certificate of Incorporation, the limited company formally exists in Hong Kong.
However, if a private company is urgently needed, you can purchase a ready-made company and it usually takes not more than 3 days to complete the whole procedure.
After Incorporation Service
We provide comprehensive services to support our customer after incorporation. Some of them are as follows:
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We offer registered office and mail re-directing service to our customer.
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- We offer different kind of company secretary services to our customer e.g. registering the address of the registered office together with any subsequent change with the Registrar of Companies, applying Business Registration Certificate, providing company secretary, preparing statutory documents such as Annual Return, convening general meeting and director’s meeting, maintenance of statutory record, handling issue of share and transfer of share and report changes of registered information to the government etc.
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We also provide book-keeping and accountancy services to our customer. We can maintain book and records, prepare monthly or annual accounts and install computerized accounting system. We can also handle payroll and all other related matters such as Mandatory Provident Fund matters.
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Since we possess the legally required practicing certificate to perform annual statutory audit in Hong Kong, we are able and professionally qualified to provide auditing services to our customers. For details, please refer to Statutory Audit and Special Audit and Report.
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With all of these supports, we hope that our customer can have a peace of mind in dealing with his own main business.
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