This article describes essential elements and framework and local legal requirements and disclosures when incorporating a company limited by shares (a.k.a. “limited company”) in Hong Kong. All information herein is intended for our client’s consideration only.
Types of incorporation
– There are basically two routes by which to forming a limited company:
a) tailor or custom made – pick a new name for the new company and incorporate from scratch
b) buy a “shelf” company – an empty company already incorporated for the sole purpose of being purchased "off the rack" (hence the term)
Name of company
– If you choose to name the new company, the final name is subject to approval by Companies Registry (CR), the government body that governs registration of limited companies in HK.
– Company name must be unique. As part of our diligent service, we perform name checks prior to all incorporation to ensure the intended names are not being used by an active company.
– A local company has usually both English and Chinese names, but it is not a pre-requisite to have both. However, adding a name in the other omitted language at a later date is treated as an amendment to the existing name and that means additional cost and time.
– A shelf company is a company that has already been incorporated for this purpose but the company is inactive and has not commenced any business and carries no asset or debt. Please note a shelf company registered on or after 3 March 2014 has one “dummy” founding member/ shareholder, and one person acting as “nominee” director and a “nominee” company secretary appointed to meet the latest registration requirements. All titles are transferred and positions resigned immediately on purchase by the client.
– The minimum number of shareholders allowed is One. Each shareholder bears a minimum of one share. There is no nominal value on each share and is not limited to HKD.
– Minimum capital is 1 share for a payment of HK1.
Note: our fees include registration fee charged by CR.
– A shareholder can be a person or a corporation, local or overseas.
Note: if you wish to increase the share capital of the company, there is no additional government capital duty.
– The minimum number of directors is also One, and can also be a person or corporation, local or overseas. Under the new Companies Ordinance, Chapter 622, a company must have at least one person acting as its director.
– A shareholder can also be appointed as a director.
– If an appointee is a person, by law he or she must be 18 years of age or older.
– Company Secretary (CS) is in addition to shareholders and directors. The duties of a CS include keeping the statutory records up-to-date and calling attendees to general meetings, e.g., AGM, at the instruction of the board of directors.
– Like shareholders and directors, a CS can be a person or a corporation. A shareholder or director can also act as CS, except for constraints below.
re new Hong Kong Companies Ordinance, Chapter 622
- Condition 1: the CS must be either a HK resident (with a valid HKID card) of age 18 or older or a locally registered corporation. Section 474
- Condition 2: if the company has only one director, this person cannot and must not act as CS. Section 475
- Condition 3: if the company (A) has only one director, it cannot have another company (B) acting as its CS whose only director is also the same director in the company (A).
Note: we usually request client to provide a local resident to act as CS. In situations where this is not possible, we offer nominee CS service to our clients to consider as alternative, i.e., we can act as the client’s CS for an annual fee.
Registered Office Address
– Each company by law must have a registered office address (RO). This is usually the address at which statutory records of the company are kept, but not always the case.
– Must be a valid address in HK : residential or business/ commercial, but no post office boxes.
– The RO need not to be the same as correspondence, mailing address, or business address.
Note: nominee registered address service is also available.
– Business Registration (BR) is a HKSAR government duty and not a part of the incorporation, but it is a legal requirement that all businesses operating in Hong Kong must obtain a BR annually and display the certificate at its place of business.
– Current duty is HK$2,250 per annum (from 1 April 2014).
Length of registration process
The process takes about 7 days from submitting the signed compliance declaration form and a draft copy of the Articles of Association (a.k.a. “dummy” AA) to issuing the Certificate of Incorporation by CR that affirms the successful incorporation and registration of the new company. At the same time, the BR certificate will also be issued.
It then takes an additional 3 working days to produce the company kit, which includes printed copies of the approved AA, the Common Seal, share certificates, company chops, statutory book, etc.
Other annual costs of a limited corporation
– Annual Return
Each limited company must file a document annually called the Annual Return (AR) that lists its shareholders, directors and other corporate information with CR.
The first AR is due on the first anniversary of incorporation.
There is a basic filing fee of HK$105 if filed within the specified period, thereafter the filing fee increases according to the amount of delay in filing.
As part of our dedicated service, we keep track of these filing dates and their expiry on behalf of clients, and alert the client ahead of the due date.
– Annual audit
Cost of an audit depends on the size of the business and amount of transactions for the year. We can discuss this at length when we meet with you to sign the incorporation documents.
Holiday office hours
Please note our office is closed on the following days 本公司將於以下假期暫停辦公
12/25 Christmas Day
12/26 Boxing Day
1/1 New Year
What is deregistration?
This is a procedure by which the shareholders can apply to Companies Registry (CR) to remove the company from its register as an active company.
What is the difference between deregistration and winding-up?
They are different methods of dissolving a company.
Winding-up is a procedure in which the affairs, assets and liabilities of a company are concluded, wound-up, processed with the intention to return (if any) remaining value to its members. Assets are sold off or reclaimed and liabilities repaid before returning remaining monies to the shareholders. Different winding-up procedures are covered in a separate article.
Notwithstanding possibility of requiring an audit prior to apply for deregistration, deregistration provides a cheaper and in most circumstances a quicker mean to dissolve the company.
Striking off is used by Registrar of Companies to remove the name of a defunct company from the register.
How to apply for deregistration?
Your company must meet all of the following conditions:
– A solvent company incorporated under Companies Ordinance, other than those companies specified in section 291AA(16) or registered under Part XI of the same Ordinance.
– All members and shareholders of the company must agree to the deregistration.
– It has not commenced business or operation, or has since ceased business or operation at least 3 months before the application.
– Has no outstanding or remaining external liability or debt.
– Receives written notice of no objection to deregistration from the Commissioner of Inland Revenue.
How long does it take to dissolve a company by deregistration?
About 5-6 months – from the time a no objection to deregistration is received from the Commissioner of Inland Revenue and filing it with form DR1 with CR.
Note all bank accounts must be closed prior to the company being dissolved. Failing to do so may require a court order and legal expenses to recover monies therein.
Do I still need to file Annual Return (AR) after applying for deregistration?
YES the company must continue to file annual return until the company has been declared dissolved by CR.
Note all companies must comply with its obligations under Companies Ordinance prior to being dissolved.
Do I still need Business Registration (BR)?
Depends. One possible scenario in which the BR can be cancelled by IRD prior to its renewal is that when its next renewal date (note not payment due date) is after an application for no objection has been filed with Inland Revenue Department.
Note any remaining fee on existing BR certificate on dissolution of the company cannot be refunded.
I am a creditor of a company that has been deregistered, what can I do?
Legal recourse is available to restore or reinstate the company through courts of law. Please seek legal advice on the subject.
- Why limited by shares?
– To minimize one’s investment liability
Your liability as a shareholder in the vested company is limited to the amount you have paid for your shares.
– To separate from one’s personal assets
Your other personal assets and investments are protected from your investment into a company because they are treated separately by the said limitation.
- What is the structure of a limited company?
See this detailed FAQ for information.
- What differences are they between a local HK company and an offshore company?
An offshore is incorporated and registered overseas. Contrary to popular belief, an offshore company does not automatically mean it is not liable or chargeable to HK corporation taxes. For details, please contact our office.
- What other types of companies are there?
The alternative is a sole proprietor business or partnership.