Setting up a company in Hong Kong is fast, straightforward and inexpensive, and can be up and running in under a week. The same rules apply to everyone, local and foreign.
Here are the steps in setting up a business in Hong Kong:
1. Selecting a company name and structure
To register a local limited company in Hong Kong, you need to choose a unique company name. The Hong Kong Companies Registry maintains an index of company names and you can do an online check to see whether your desired company name is already in use.
There are different company structures to suit different business requirements:
The most commonly used company structure is a private limited company. The company must be incorporated at the Companies Registry and registered with the Business Registration Office of the Inland Revenue. Processing (incorporation) time is around four working days.
A branch of a foreign company: if a company incorporated outside Hong Kong establishes a place of business in Hong Kong, it is required to register with the Companies Registry within one month of the establishment of the place of business as an overseas company (under Part XI of the Companies Ordinance). It is not a separate legal entity from the parent. Processing time is from three to four weeks.
Another type of business is the Representative Office. Such an office is useful if a company wishes to explore the Hong Kong market before making a larger investment, or indeed if it is never intended to derive sales, e.g. if it is intended to be a marketing office only. It would typically fulfill functions such as promotion and liaison work. If a company needs to enter into a transaction that creates a legal obligation, its business structure will need to be changed to either a limited company or a branch office of a parent company.
All processing times are subject to completion of Client Due Diligence (”CDD”).
2. Company incorporation
Most of the limited companies incorporated in Hong Kong are private companies limited by shares. Incorporation can also be done online by approved service providers.
A private limited company in Hong Kong requires at least one director and one secretary. If a company has only one director, the director cannot be the secretary of the company at the same time. A non-Hong Kong resident, whether an individual or a corporate, can be appointed as a director. A company secretary is required by law and this must be (with very limited exceptions) a licensed Trust and Company Service Provider (“TCSP”).
All new Hong Kong private companies will have to have at least one natural person as a director. This does not need to be a Hong Kong resident, although there is a requirement for each company to have a Designated Representative, who must be a Hong Kong resident, or a TCSP.
The registered office of a limited company must be situated in Hong Kong. There is no requirement for shareholders to be Hong Kong residents. A shareholder can be a director of the company.
3. Opening a business bank account
Bank account opening can be as fast as 2 or 3 working days (DBS, a Singapore bank, and ABC, a Mauritius bank), but for the better-known traditional banks in Hong Kong 3 weeks upwards should be allowed for.
The traditional banks’ processing charges are from HK$1,200 upwards for a locally owned entity, but can range to HK$10,000+ for companies with an overseas ownership structure. Charges vary according to the number of overseas registers which have to be checked. Offshore or digital banks will typically be significantly faster and cheaper for bank account set-up
Required documents for bank account opening include but are not limited to:
- Company documents: Certificate of Incorporation. Business Registration Certificate, Incorporation Form/ Annual Return, official documents for the recent changes of the company
- Certified true copies of the identification documents and the proof of address of all the directors, shareholders with 10% of issued shares or above and beneficial owners
- Ownership structure chart showing the company name, ownership % and the information of all the layers until the beneficial owner of the company structure.
- Business proof such as confirmed order contract/agreement/ business plan/ communication with the business partners or clients, invoices, packing list, lease of office, company website, annual report and incorporation documents of parent or related company, latest financial information / source of wealth of the Beneficial Owners, etc.
4. Choosing business premises
Hong Kong has a wide variety of business premises even within a close distance from its CBD. While property prices in the premium “Central” location can be very high, Hong Kong’s compactness and excellent transport system mean that good-value sites can be found within a short travelling distance of the CBD. The central corridor on Hong Kong Island extends from Sheung Wan in the west to Quarry Bay in the east, whilst accommodation is generally cheaper in Kowloon (across the harbour).
Office searches are normally arranged through an agent and procedures are straightforward. Renovations and refurbishment can be carried out quickly and economically.
5. Hiring staff and applying for work visas
Please refer to the next chapter, “recruiting and visas”, for details.
6. Business licences
Some businesses will require licences or registration to conduct a specific activity. These include, among others: restaurants, travel agencies, employment agencies, banks, fund managers, insurance brokers and lawyers.