Having an idea for a new business or startup is great. Moving your foreign business to Hong Kong is great. But before actually setting foot to running your business and incorporating in Hong Kong, you need to be familiar with some tips on incorporation.
Tip 1: The Companies Ordinance states that all companies incorporated in HK must create and maintain a registrar of all persons who have significant control of the company. All companies must also appoint a designated representative who is responsible for reporting. The only exception is for the companies that are listed under the Hong Kong Stock Exchange (HKSE). This Companies Ordinance was updated in March 2018.
Tip 2: The company always need a name. The company name must be approved before you can proceed with the Hong Kong company incorporation. The name of the company can be a Chinese name or an English name. But mixing a name in both English and Chinese is not permitted.
Tip 3: The HK company must always have at least one individual director. It can have an unlimited number of directors. The director or directors must be natural persons (who are not entities). He/they can be anybody who have nationality of any countries other than Hong Kong. They do not have to possess HK permanent residence status, but must be at least 18 years old. The directors cannot have previous bankrupt records, or any records that indicate they have been convicted of crimes in malpractices. The directors do not actually need to be the shareholders of the company. Board meetings of directors can be scheduled and held at any location in the world.
Tip 4: In addition to a natural person being a director, nominee corporate directors can also be appointed.
Tip 5: The Hong Kong company must have at least one shareholders. It can have up to 50 shareholders. The shareholders do not have to reside in HK, but must be at least 18 years old. A director can also be a shareholder or one of the shareholders. There is no limitation to the nationality of a shareholder. i.e. The shareholder is not required to have HK permanent residence status.
Tip 6: The “shareholding” is flexible. It can be 100% local shareholding, or 100% foreign shareholding, or anything between the two extremes.
Tip 7: There is no minimum share capital requirement for a HK company. It will work fine when there is a minimum of one shareholder with one ordinary share issued for the company formation. In Hong Kong, the main currency is HK dollar, but the share capital may be in HK dollar or in other currencies. Shares are transferrable in a free manner, but must be subject to a stamp duty fee. Bearer shares are not permitted.
Tip8: Company tax (i.e. profits tax) is to be paid at 8.25% when the assessable tax portion is below HK$ 2 million. It becomes 16.5% after that. Hong Kong uses a territorial basis to determine if anything is taxable i.e. only profits that have happened within Hong Kong are subject to be taxed in Hong Kong. There is no capital gains tax. There is no withholding tax on dividends. There is no GST or VAT in Hong Kong.