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Establishing a Company in Hong Kong: Updated Conditions, Procedures, and Costs

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Establishing a Company in Hong Kong has long been renowned as a leading financial and commercial hub in Asia, attracting numerous entrepreneurs and international investors. Setting up a company in Hong Kong not only provides access to a vast market but also allows businesses to enjoy attractive tax incentives. However, to embark on this business journey, investors must clearly understand the conditions, procedures, and costs involved in company registration. In this article, we will explore the latest updated information on the process of establishing a company in Hong Kong.

Benefits of Establishing a Company in Hong Kong

Establishing a Company in Hong Kong: Updated Conditions, Procedures, and Costs

Low Tax Rates and Preferential Tax System

Hong Kong is renowned for its corporate tax rate of only 16.5% on income generated in Hong Kong, with no tax imposed on income derived from sources outside Hong Kong. This enables businesses to achieve significant cost savings compared to many other jurisdictions. Furthermore, Hong Kong imposes no value-added tax (VAT), no inheritance tax, and no tax on dividends, making the business environment highly attractive.

Simple and Fast Procedures

The company registration process in Hong Kong is transparent and swift. Hong Kong’s business administration system ranks highly in terms of ease and friendliness. The entire registration can typically be completed within 10–15 working days, allowing your company to commence operations promptly.

Access to International Markets

Establishing a company in Hong Kong not only provides access to the local market but also serves as a gateway to mainland China and ASEAN countries. Hong Kong enjoys a special trade relationship with mainland China through the Closer Economic Partnership Arrangement (CEPA), facilitating operations in both regions.

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Conditions for Establishing a Company in Hong Kong

To establish a company in Hong Kong, investors must meet several key conditions as follows:

1. Type of company: Select a business structure compliant with legal requirements.
2. Shareholders and directors: Minimum requirement of one director and one shareholder (can be individuals or legal entities; no residency requirement in Hong Kong).
3. Company secretary: Must appoint at least one company secretary who is a Hong Kong resident or a Hong Kong-based organization.
4. Registered office address: Must have a valid office address in Hong Kong.

In addition, there are no nationality restrictions for investors or directors, and no minimum capital requirement.

Common Types of Enterprises in Hong Kong

Establishing a Company in Hong Kong: Updated Conditions, Procedures, and Costs

Before establishing a company in Hong Kong, you should select the appropriate business structure based on your objectives and scale.

Sole Proprietorship

A sole proprietorship is considered the simplest form of business. It is owned and operated by a single individual or member. There is no legal separation between the owner and the business. This structure is most common among small businesses. However, the owner bears unlimited liability for debts and legal obligations.

– Advantages:
– Easy and straightforward establishment with minimal legal requirements.
– Full control and decision-making authority over all business matters.
– Profits are not subject to corporate tax but are included in personal income.
– Disadvantages:
– Unlimited personal liability for debts and legal obligations.
– Difficulty in raising capital.

Limited Liability Company (LLC)

The Limited Liability Company (LLC) is the most popular business structure in Hong Kong. It is widely chosen due to its flexibility, ease of management, and limited liability for shareholders.

Branch Office of a Foreign Company

For foreign companies intending to conduct business in Hong Kong, establishing a branch office is also an ideal option.

Partnership

Partnerships in Hong Kong are divided into two types: General Partnership and Limited Partnership, specifically:

  • In a general partnership, all partners bear unlimited liability for the partnership’s debts.
  • In a limited partnership, at least one partner bears unlimited liability, while other partners are liable only to the extent of their capital contribution.

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Dossier, Procedures, and Process for Establishing a Company in Hong Kong

Preparation of Dossier

Select a Company Name

  • Check availability: You can use the online search tool of the Companies Registry to verify whether the desired company name is available.
  • Avoid restricted names: Certain words or phrases are prohibited in company names if they are offensive, disruptive to public order, or affect national security.

Prepare Required Documents

  • Company Articles of Association: The articles must clearly state the company’s charter, including objectives, powers, and rights and obligations of directors and shareholders.
  • Form NNC1: This form includes basic company information such as name, registered address, and names and addresses of directors and shareholders.
  • Identification documents: Provide identification documents of directors and shareholders, such as passports or identity cards.
  • Proof of address: Provide evidence of the address of directors and shareholders.
  • Consent to act as director: Obtain written consent from each director to assume the role.

Submit Enterprise Registration Dossier

  • Submission location: You may submit the dossier directly at the office of the Companies Registry or by post.
  • After submission: The Companies Registry will review your dossier. If complete and compliant, you will receive the Business Registration Certificate. With this certificate, you can proceed with subsequent steps such as opening a bank account, tax registration, etc.

Application for Outward Investment Registration Certificate

  • Vietnamese investors must register outward investment if establishing a company involves the use of capital (money, machinery, intellectual property rights, property rights) transferred from Vietnam to Hong Kong.
  • Pursuant to Clause 13, Article 3 of the Investment Law 2020: “Outward investment activities refer to investors transferring investment capital from Vietnam abroad and using profits derived from such capital to conduct investment and business activities overseas.”
  • Thus, if capital, assets, or funds from Vietnam are used to establish a company in Hong Kong, the outward investment registration procedure must be carried out with the Ministry of Planning and Investment. If the outward investment capital in foreign currency equals or exceeds VND 20 billion, the Ministry will seek opinions from the State Bank of Vietnam.
  • The time limit for issuing an outward investment registration certificate under the Law is 15 working days if the dossier is valid.

Steps to Establish a Company in Hong Kong

**Step 1: Check Conditions and Prepare Dossier for Company Establishment in Hong Kong**

After reviewing the conditions, the investor prepares the dossier for company establishment in Hong Kong.

**Step 2: Submit Dossier and Receive Enterprise Registration Certificate in Hong Kong**

  • Submission location for company registration in Hong Kong: Dossier is submitted to the Accounting and Corporate Regulatory Authority (ACRA).
  • Dossier processing time: Within 2–6 working days from receipt of a complete and valid dossier, the Accounting and Corporate Regulatory Authority will issue an electronic Business Registration Certificate.
  • Upon confirmation of company registration, the establishment process in Hong Kong is essentially complete. ACRA will send an email notification containing the company registration code (UEN) along with the electronic Business Registration Certificate. If a hard copy is required, it can be obtained through consular legalization.

**Step 3: Open a Corporate Bank Account in Hong Kong**

When opening a corporate bank account, banks in Hong Kong typically require the following:

  • The account holder and company director must be physically present in Hong Kong to meet with the bank regarding the account opening.
  • The company must provide the dossier and sign necessary documents as required by the bank.

Documents commonly required by banks include:

  • Bank account opening application form provided and guided by the bank.
  • Valid company documents established in Hong Kong: Business Registration Certificate, company articles of association;
  • Passports of the director/account holder/shareholders.
  • Proof of address of the director/account holder/shareholders.
  • Cheque deposit.

Requirements After Company Establishment

Annual Reporting and Financial Auditing

All limited liability companies in Hong Kong must undergo annual auditing by a licensed auditing firm. The audited financial statements must be submitted together with the financial report to the Inland Revenue Department of Hong Kong.

Maintenance of Accounting Records

Enterprises must retain complete accounting records and financial books for 7 years to facilitate audits if required.

Open a Bank Account

After company establishment, you must open a corporate bank account to conduct business transactions. Major banks in Hong Kong such as HSBC, Standard Chartered, and Bank of China offer this service.

Outward Investment Consultation Services at BKC Law

The comprehensive outward investment consultation service at BKC Law provides an all-in-one legal solution for investors seeking to expand international business operations. BKC Law supports various areas including investment registration, legal procedures for establishing companies abroad, advice on capital management, and international legal regulations. We also assist in completing necessary legal formalities, resolving disputes if they arise, and ensuring compliance with legal requirements throughout the investment process, helping investors save time and effort in managing and developing overseas investment projects.

With a team of senior lawyers with many years of experience, solid legal knowledge, and strong bilingual consultation capabilities, BKC Law is confident in being one of the best legal partners to support foreign investors in carrying out investment activities abroad.

To receive free legal consultation at BKC Law, please contact our lawyers using the following information:

Telephone: 0901 3333 41
Email: info@bkclaw.vn
Branch in District 1: 9th Floor, Diamond Plaza Building, 34 Le Duan Street, District 1, Ho Chi Minh City
Branch in Binh Tan: 41 Ten Lua Street, Binh Tan District, Ho Chi Minh City

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