last update
28 Dec 2010
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
ë
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
ë
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.
ë
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.
ë
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.
ë
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 11 July 2008 has one “dummy” founding
member/shareholder, and one “nominee” director and company secretary
appointed to meet the latest registration requirements. All titles are
transferred and positions resigned immediately on purchase by the client.
Shareholders
ë
The minimum number of shareholders allowed is One. Each
shareholder bears a minimum of one share, usually at nominal value of HK$1.
ë
Minimum authorized capital is 1,000 shares of HK1 each.
ë
Our fees include registration fee charged by CR for an initial
authorized capital of 10,000 shares (of HK$1 each = HK$10,000 total), so you
can decide whether to allot or issue just one share or all the shares to your
shareholder(s).
ë
A shareholder can be a person or a corporation, local or
overseas.
ë
If you require the authorized capital to be increased to or to
incorporate with a share capital larger than HK$10,000, there is additional
government capital duty on the amount above 10,000 shares.
Directors
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The minimum number of directors is also One, and can also be a
person or corporation, local or overseas.
ë
A shareholder can also be appointed as a director.
ë
If an
appointee is a
person, he or she must be
18 years of age or older by law.
Company Secretary
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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.
ë
Like shareholders and directors, a CS can be a person or a
corporation. A shareholder or director can also act as CS, except for
restrictions below.
re Hong
Kong Companies Ordinance, Chapter 32, section 154
- 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.
- Condition 2: if the company has only one director, this person
cannot and must not act as CS.
- 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
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Each company must have a registered office address (RO).
ë
The RO does not need to be the same as correspondence, mailing
address, or business address.
Note: nominee registered address service is also available.
Business Registration
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Business Registration (BR) is not a part of the incorporation, but
it is a HKSAR government legal requirement that all businesses operating in Hong
Kong must obtain a BR annually and display the certificate at its place of
business.
ë
Current fee is HK$450 per annum (from 1 August 2009).
Length of registration process
The process takes about 7
days from submitting the signed compliance declaration form and a draft copy
of Memorandum and Articles of Association (a.k.a. “dummy” M&A) to issuing the
Certificate of Incorporation by CR that affirms the successful incorporation and
registration of the new company.
It then takes an additional
3 working days to produce the company kit, which includes printed copies of
the approved M&A, the Common Seal, share certificates, company chops, statutory
book, etc. At the same time, the BR certificate is also applied and issued.
Other annual costs of a limited corporation
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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.
ë
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.
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