For this guide, we only introduce the setup requirements and process of a private limited company in this chapter, as it is the most popular option for foreign investors.
The registration of a company in Hong Kong usually starts with the creation of the company name and ends with the issue of a Certificate of Incorporation and business registration certificate. During the process, mainly two government departments are involved, namely the Companies Registry and Business Registration Office under the Inland Revenue Department.
Step 1: Selecting a company name
A company may be registered with an English name, a Chinese name, or an English and Chinese name. However, a company name with a combination of English words/letters and Chinese characters is not allowed. Investors can determine whether the desired name is already registered (or if a similar name is already registered) in the Companies Registry. Also, the name may not infringe upon other parties’ intellectual property rights. It can be searched on the website of the Intellectual Property Department.
A limited company must include “Limited” at the end of its name unless a particular application is submitted for not having “limited” in the Companies Registry.
Step 2: Deciding the organizational structure, amount of capital, company secretary, and registered office address
After selecting a company name, the investor should decide the member of the board of directors of the intended company. The first shareholder (i.e., founder member) should obtain written consent from the director and, at the same time, obtain a copy of their passport or identification card and a copy of residential address proof from that person.
The investor should determine the amount of capital and the number of shares to be issued to the first shareholder(s). The Companies Ordinance (Cap. 622) does not restrict the minimum and maximum amounts of capital. It is the sole discretion of the investor to determine the amount of capital for the company based on the need of the operation and whether an extra license is required for the intended business activity. No par values are attached to these shares.
The Articles of Association (“Articles of Association”) should only state the number of shares and the amount of capital. The investor should contribute whatever amount stated in the Articles of Association immediately after registering the company.
All companies registered should appoint at least one natural person to act as its director. However, there are no restrictions on the nationality of the director.
The investor should also decide the company secretary, the designated representative of the significant controllers register, and the address of the registered office before registration. If there are two or more directors, one could act as company secretary. However, if the investor will be the sole director of the intended company, another person should be appointed to serve as company secretary. A written consent to act as company secretary should be obtained. The investor could also engage the service of a professional firm duly registered in Hong Kong to provide company secretarial service with a fixed annual fee.
The address of the registered office should be located in Hong Kong. There is no other particular limitation on the registered office address, but a postal box number cannot be used as the registered office address of a Hong Kong company.
If the founder does not plan to lease a physical office, they can also utilize the service of a professional firm. However, it should be ensured that the service provider must possess a Trust and Company Service Providers (TCSP) license.
Step 3: Preparing registration documents and registering with the Companies Registry
The investor should prepare the registration documents, including mainly the Articles of Association, the incorporation form, and a Notice to Business Registration Office, and submit the documents mentioned above to the Companies Registry for registration. At the same time, the investor should pay the application fee for incorporation and the business registration fee and levy.
The application fee for incorporation is HK$1,720 (US$220) (subject to a 10% reduction for incorporation through the “e-Registry” portal). The business documents mentioned above levy fee is HK$2,150 (US$274) for a one-year certificate and HK$5,650 (US$720) for a three-year certificate, in the period from April 1, 2022, to March 31, 2023. Investors can choose to register for one year or three years. If the documents are prepared in accordance with the prevailing laws and regulations, the Companies Registry will issue the Certificate of Incorporation together with the Business Registration Certificate, which signifies that the company legally exists.
Requirements of acting as Company Secretary and Designated Representative
The secretary of a company may be:
- An individual - must ordinarily reside in Hong Kong; or
- A body corporate - must have its registered office or a place of business in Hong Kong.
A company’s designated representative must be either:
- A director, employee, or member of the company who is a natural person resident in Hong Kong; or
- An accounting professional, a legal professional, or a person who possesses a Trust or Company Service Provider (TCSP) license.
Generally, companies can be fully registered online if the founder members are individuals and the individual user accounts have been registered with the e-Registry, but investors can also file a paper company registration. Excluding the time needed to prepare the registration documents, the whole registration process will take one to five working days.
Note that some business activities may require additional permits, certificates, and approvals, the details of which can be checked on the Business License Information Service under the Trade and Industry Department.
Step 4: Make the company chop and print the Articles of Asson
After the company is officially incorporated, the investor should find a service provider to make the company chop and print the Articles of Association. Hong Kong has simplified the execution of documents by companies, and it is now optional for companies to keep and use the common seal, and the Articles of Association of the company can be in electronic form.
What are the key compliance requirements for setting up a business in Hong Kong?
Annual compliance requirements
A company is a separate legal entity; that is to say, it is a legal person and separate from its owners. The benefit of limited liability through operating as a limited company also brings obligations in so much as the company must comply with the various provisions in the Companies Ordinance (Cap. 622).
These obligations include the timely disclosure and reporting of specified information about the company, its officers and shareholders, and the like. And any changes in such data to the Registrar of Companies so that members of the public can have ready access to the latest information of the company kept by the Registrar of Companies.
The annual compliance of a Hong Kong company includes:
- Annual return filing*;
- Business registration renewal;
- Annual general meeting;
- Auditor appointment;
- Audited financial statements arrangements; and
- Company structure changes update with Companies Registry.
Compliance with the significant controller register
Under the Companies (Amendment) Ordinance 2018 (“the Amendment Ordinance”), all companies incorporated in Hong Kong (except listed companies) need to comply with the significant controllers register requirements.
Some of the critical requirements prescribed by the Amendment Ordinance include:
- Identify and ascertain a person/ persons who has/have significant control over the company;
- Maintain a significant controllers register to be accessible by law enforcement officers upon demand;
- Designate at least one person as its representative to provide assistance relating to the company’s significant controllers registered to the law enforcement officers;
- Keep the significant controllers registered at the company’s registered office or a prescribed place in Hong Kong; and
- Keep the significant controllers register updated.
Failure to comply with the significant controllers register requirements in the Amendment Ordinance could qualify as a criminal offense.
A significant controller is a person or legal entity that meets one or more of the following conditions:
- Holds, directly or indirectly, more than 25 percent of the company’s issued shares or a right to share more than 25 percent of the capital or profits of the company;
- Holds, directly or indirectly, more than 25 percent of the voting rights of the company;
- Holds, directly or indirectly, the right to appoint or remove the majority of the board of directors of the company;
- Has the right to exercise, or exercises, significant influence or control over the company; or
- Has the right to exercise, or exercise, significant influence or control over the activities of a trust or a firm that is not a legal person but whose trustees or members satisfy any of the above four conditions about the company.
To identify a significant controller, companies can review their register of members, articles of association, shareholders agreements, or other relevant agreements and issue notice(s) to any person who is believed to be the significant controller and any person who is supposed to know the identity of the substantial controller and obtain their required particulars.
Compliance with anti-money laundering and counter-terrorist financing requirements for trust or company service providers.
According to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance Ordinance (Cap. 615) (AMLO) issued by the Companies Registrar, a person that carries on a trust or provides company services is required to possess a TCSP license.
TCSP licensees are required to:
- Take all reasonable measures to mitigate the risk of money laundering and terrorist financing; and
- Ensure that, among other things, the anti-money laundering and counter-terrorist financing requirements under the AMLO are complied with.
To fulfill the obligations mentioned above, TCSP licensees must assess the money laundering and terrorist financing risk of their businesses and develop and implement policies and procedures on:
- Risk assessment;
- Customer due diligence measures;
- Ongoing monitoring of customers;
- Suspicious transactions reporting;
- Record keeping; and
- Staff training.
Accordingly, companies must provide the due diligence documents to the service provider (TCSP licensee).
The inspection regime is implemented under the Hong Kong Companies Ordinance (Cap. 622), which protects the personal information of directors and other relevant individuals who appear on the Companies Register.
Under the new inspection regime:
- Correspondence addresses instead of usual residential addresses (URAs) of directors; and,
- Partial identification numbers (IDNs) instead of full IDNs of directors, company secretaries, and other relevant persons like liquidators will be made available on the Companies Register for public inspection.
Meanwhile, companies can withhold the URAs and full IDNs (except the first part) on the registers where the information is maintained from public inspection. (The first part of the IDN is decided by an established rule, which is usually the first half of the sequence number if the IDN is an even number or the part that begins with the first character in the sequence and ends with the character that falls on the middle of the sequence if the IDN is an odd number.)
The URAs and full IDNs are regarded as “Protected Information” under the new inspection regime. Previously, the public could access the URAs and full IDNs of any company’s director, company secretaries, or other relevant persons.
By replacing URAs and full IDNs with correspondence addresses and partial IDNs, the protection of personal information will be enhanced. At the same time, it will ensure the transparency of the Companies Register by allowing the public to access it for the purposes stipulated under the Companies Ordinance (Cap. 622).
Since substantial modifications are being made to the integrated Companies Registry Information System (“ICRIS”), the new inspection regime is being implemented in three phases:
Phase 1: August 23, 2021
Under phase 1, companies may replace URAs of directors with correspondence addresses and full IDNs of directors and company secretaries with their partial IDNs on their registers for public inspection.
Phase 2: October 24, 2022
Under phase 2, Protected Information on the Index of Directors on the Companies Register will be replaced with correspondence addresses and partial IDNs for public inspection. Documents containing Protected Information that are filed for registration – after the commencement of this phase, i.e., October 24, 2022 – will not be provided for public inspection, except for “specified persons” upon application.
Phase 3: December 27, 2023
Under phase 3, data subjects (i.e., individuals whose URA and full IDNs are contained in documents filed with the Companies Registry before the new inspection regime’s commencement) can apply to the Companies Registry to withhold their Protected Information contained in documents registered with the Companies Registry from public inspection and replace such information with their correspondence addresses and partial IDNs. Same as phase 2, only specified persons can apply to the Registry to access the Protected Information of directors and other persons.
To meet the requirements of this regime, and if data subjects and Hong Kong-registered companies want to withhold their Protected Information from public inspection, they should contact their service provider to update their personal information accordingly and make corresponding applications.