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Hong Kong

GENERAL INFORMATION

Hong Kong is situated on the southern coast of the People’s Republic of China and consists of a large number of islands.

On 1 July 1997 all of Hong Kong reverted from British Control back to China and became a Special Administration Region ‘SAR’ within the People’s Republic of China (PRC).

Hong Kong’s social, legal, and economic systems will remain unchanged. 

Hong Kong has autonomy in negotiating its own economic relations with other countries while China is responsible for Hong Kong’s foreign affairs and defense.

With an area of less than 1,092 square kilometers, few natural resources, and a population of 7 million people, the one-time coastal settlement has become the world’s seventh-largest trading economy. 

Hong Kong is an international business and finance center, a gateway for investments into and from China, and a springboard for companies accessing the Asian-Pacific region.

Hong Kong – Corporate Requirements

Company name: A Hong Kong company must be incorporated with any name other than one which already exists or may indicate a connection with the government. 

The name may be in English, Chinese, or both and must end with the word “limited”. 

The words Names require consent or license Department, Government, Commission, Bureau Federation, Council, Authority, Building society, Chamber of Commerce, co-operative, Kaifong, mass transit, municipal, savings, tourist association, trust, trustee, underground railway, bank, insurance, assurance, reinsurance, or any other specialized financial ending.

Incorporation: There are 2 ways to incorporate a company. 

There is the old way of submitting the M&A and forms.

It will take 4 days (according to the registry’s performance pledge). 

By manual submission, the company will receive a paper certificate of incorporation.

There is an electronic system that can incorporate a company within an hour or so. 

This requires the founding members and the first directors to be able to electronically sign the necessary forms online with pre-registered electronic certs and passwords with the HK government (which our clients are unlikely to have). 

The company will only get an electronic certificate of incorporation. 

Share Capital: Capital can be denominated in any currency or in multi-currencies.

There is no minimum authorized share capital requirement. 

Bearer shares and shares of no par value are not permitted. 

A minimum of one shareholder is required and may be either individual or corporate and need not be a resident of Hong Kong. 

Starting from the commencement of the new company ordinance, all HK company shares will have no par value.

Directors: There must be at least one director, who can be of any nationality and may be individual or corporate.

The directors need not be resident in Hong Kong.

Details of the directors must be filed with the Companies Registry and made available to the public.

Starting from the commencement of the new company ordinance, all private companies must have at least 1 individual director.

No restriction on residence or nationality.

Secretary: Every company must appoint a corporate secretary.

The person acting as the secretary must be a resident of Hong Kong.

A corporate secretary must have its registered office or place of business in Hong Kong.

Details of the Corporate Secretary must be delivered to the Registrar of Companies and are available for public inspection.

Registers: Each company must keep the following records: register of directors and secretary, register of shareholders, register of charges.

It is optional to keep a book of minutes at the Registered Office.

A Hong Kong company must also maintain accounting records.

These records must be kept at the Registered Office or elsewhere at the discretion of the directors.

Hong Kong companies are to keep and maintain a Significant Controllers Register (SCR), this document can be kept at the registered office of the company or any other place in Hong Kong.

The Register should be open for inspection by law enforcement officers upon demand.

Annual Requirements

Hong Kong Company must also keep accounting records. 

These records may be kept at the Registered Office or elsewhere at the discretion of the directors. 

Every company must appoint an auditor who must be a member of the Hong Kong Institute of Certified Public Accountants and hold a practicing certificate.   

Taxation

Hong Kong tax is based on the concept of “territorial” or “source” derived income. 

This means that taxation applies to income that has its source in Hong Kong rather than a tax based on residence.

Hong Kong does not, therefore, impose a tax on income generated outside Hong Kong even when remitted to Hong Kong.

The current rate of taxation for these companies with Hong Kong source income is 16.5% on profits.

There is no tax on capital gains nor is there any form of dividend or withholding tax. 

Business Registration Certificate

Renewed annually on anniversary date of incorporation.

Annual meetings

 A Hong Kong company must hold a shareholders annual meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it, the first being no later than 18 months from the date of incorporation and within every 15 months thereafter.

The meetings of both directors and shareholders may take place anywhere subject to the limitation of the Articles of Association.

The company shall held annual general meeting to appoint auditor and to be presented with the profit and loss account unless the same is done by written resolutions of the members.

Profit Tax Return

Around April every year, the Inland Revenue Department (“IRD”) will issue and mail to the registered office of the company, the annual profits tax return.

This return must be completed, signed, and returned to the IRD.

The deadline for filing the profits tax return is printed on each individual form.

It is usually 1 month from the date of issue. 

If the client has appointed a tax representative, the tax representative may apply for an extension for the client when necessary.

Accounting is required in order to have accounts for audit.

The accounting can be done by anyone. 

The audit must be done by HK CPA.

Audit fees are quoted on a case-by-case basis, depending on the volume of transactions and the turnover of the company. 

The minimum audit fee for a non-trading, holding company, minimal transactions, could be around USD 100 – USD1, 500.

The company will usually appoint an auditor (HK CPA) who will also act as the tax representative.

The tax representative will submit the profits tax return for the client. 

If the company has no business (thus no transactions/audit report/auditor), we can assist the client in forwarding the profits tax return after they sign and return the form to us.

Tax returns should be signed by directors.

Employer’s Return of Remuneration and Pensions

This return details the payments made to employees during the fiscal year, if any.

A cover form will be sent by the IRD to the company every year around April which must be signed by the company’s director and returned in original to IRD within the date therein specified (It is usually 1 month from the date of issue.).

Electronic record using Gov. HK is also acceptable.

If there are employees to whom salaries are paid, the company will need to complete a separate form for each employee (which can be downloaded) and submitted with the cover form.

We do not usually charge for forwarding this form to the IRD.

The person responsible for the signature of this return is the authorized signatory of the company.

Definitions of Employees: (a) Persons employed by Hong Kong companies include full-time or part-time employees; Hong Kong residents or non-Hong Kong residents; and persons who provide services in or outside Hong Kong.

*Disclaimer
Information contained in this publication does not constitute any kind of advice on any particular matters and should not be considered as such. 
OMC Group accepts no responsibility for clients’ decisions. LR_MR_0420

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