Doing Business in Hong Kong (2)

//Doing Business in Hong Kong (2)

Doing Business in Hong Kong (2)

Belinda Wong

Belinda Wong

Author and Director of Leader Corporate Services Limited

Before incorporation, the following should be considered:

Who should be the director

A private company limited by shares requires only one director who does not need to be resident in Hong Kong. This person must be at least 18 years old. No share qualification. The 2nd and other directors could be a company.Who should be the shareholder and the number of shares to be taken up

Again, no residency requirement for shareholder. There must be at least one shareholder holding 1 share.

Who should be the company Secretary

An individual resident or a company incorporated or registered in Hong Kong has to be appointed to this role. If the company has more than 1 director, the other director could be appointed to this capacity if in HK.

Where is the registered office

A HK address has to be used for this purpose. No requirement for every company using one specific address. It is quite common for a number of companies using the same address as their registered office.

Share capital

HK has its own currency. However, a company is free to use any currency for its share capital as long as there is no restriction on that currency for share subscription in HK. Shares do not have nominal value. The subscription amount can be very small e.g. HK$0.0001. Initial share subscription is stated in the articles of association. Subsequent subscription amount is to be determined between the board of directors and incoming shareholder(s). As the lowest legal tender is HK$0.01, companies usually set the price at HK$1.

Is there a need to apply for a licence

A HK company can conduct any business as long as it is legal. Multiple business lines are also permissible.  However, for certain types of businesses, licences and regulatory oversight are in place e.g. banks, deposit taking companies, securities, construction, restaurants etc. The appropriate licence must be in place before commencement of operation.

Financial statements and fiscal year end

Audited financial statements have to be prepared and circulated to all shareholders. There is a mis-perception that no audit has to be done. This is far from the truth. The confusion arises from the fact that the Inland Revenue Department (IRD) may not require a company to file the audited financial statements nor profits tax returns if it has deficit.  If in loss mode, the company may only be required to submit profits tax return every 3 years. Not required to file with the IRD does not constitute an exemption under the Companies Ordinance (Cap 622).

By | 2020-04-10T11:57:33+00:00 April 10th, 2020|Categories: Articles|0 Comments

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