Unlock Growth Opportunities in Hong Kong: A Guide to Incorporation and Regulatory Compliance
At Shepherd Asia, we are frequently asked to assist with company registration in Hong Kong.
There are some key considerations to make before starting the business formation process. We will discuss them here, as well as common mistakes and the timeline to start a business in Hong Kong.
What you need to know when registering a business in Hong Kong.
Hong Kong Is the World’s Freest Economy
According to the Fraser Institute, Hong Kong consistently ranks as the location with the most economic freedom. The low tax rates and pro-business environment in Hong Kong will allow your company to maximize profits. In addition to the tax benefits, Hong Kong also offers a stable legal system, transparent regulations, and a highly skilled workforce with expertise in finance, legal, and intellectual property matters.
Proximity to Mainland China
Hong Kong's strategic location and world-class infrastructure provide easy access to major markets like China, East Asia, and India. As a global financial hub, Hong Kong also has a sophisticated network of service providers offering financial, legal, accounting and manufacturing support for businesses.
Government initiatives to support businesses
The Hong Kong Government supports a wide variety of industries through initiatives, like funding and support. Startmeup.hk is a directory of available grants. In particular, Science and Technology Park and Cyberport aim to attract research and development and technology investment in Hong Kong. Refer to our article on obtaining government funding for more details.
Which business type is suitable?
When incorporating a company in Hong Kong, you’ll need to decide which type of company is appropriate. The most common options are: Limited Company, Representative Office or Branch. We have outlined the features of each of these company types and other options in our article Common Types of Business Registration for Foreign Companies in Hong Kong.
At Shepherd Asia, we can guide you through the process as to which is the most appropriate company type for your business. Reach out to our team for information.
Compliance with Hong Kong regulations
It is best to collect information before starting the administrative process, to remove as much friction as possible, and to keep to your expected timelines.
Your service provider can assist you by telling you what information is required. At Shepherd, we specialize in working with foreign-owned businesses to open Hong Kong subsidiaries or offices.
Working with a Corporate Service Provider
Providers of Corporate Services are licensed in Hong Kong. They are required to understand who their customers are and what they do as a line of defense against Money Laundering and Terrorist Financing.
They can also offer guidance on the types of licenses required for your industry or, more specifically, the type of product or service you'd like to offer.
What type of information is required for compliance?
Below is a brief summary of what you can expect, although this varies for each business, so don’t be surprised if additional information is requested.
Service providers will need to understand the full ownership structure of the group of companies up to the individual level in the business. These include:
Directors
Shareholders
Ultimate Beneficial Owners
Any individual holding, directly or indirectly, 10% or more of the company
Supporting documents. These include:
A certified true copy of the passport
Proof of address
Constitution documents for intermediate holding companies
A business plan or basic information about the company’s nature and planned activities, customers, suppliers, background of management team, etc
For existing companies, proof of the business may be required, such as your website and agreements with (prospective) customers.
How long does the compliance process take?
The compliance process can take less than a week for simple structures, i.e. where there are no more than two owners or directors. Where complex structures or high-risk industries are involved, this process can take two to three weeks.
Company incorporation
In Hong Kong, you will typically be required to register the business with the Companies Registry and to obtain a certificate of incorporation.
Although not complicated, there are essential steps that a corporate services provider can give guidance on.
Once the compliance process is complete, this usually only takes a couple of days.
Bank Accounts
In Hong Kong, you have the option of using a Traditional bank or an online fintech platform (sometimes referred to as an “online bank”), depending on your requirements.
Traditional banking institutions offer a reputable name and a physical location, which may be important for your business operations.
An online fintech platform gives you an account to receive payments and may offer more flexibility and lower foreign exchange transaction rates.
Our article on the Best Business Bank Account in Hong Kong goes through the options to help inform your decision.
Ongoing maintenance
Accounting, audit, and tax filing are required on an ongoing basis. Other requirements vary according to your company type. An Employer's Return is also required for most businesses, so ensure you maintain correct employee records. We’ve compiled an employee onboarding checklist to make keeping track easier.
In Hong Kong, your selected company secretary can assist with keeping to deadlines and seek out any benefits available to you
Choose a partner that will proactively help you to fulfil legal requirements and identify benefits that you might not be aware of. In some cases, they can also help to find cost efficiencies and funding for you.
As you’ve read, there are several important considerations when starting a business in Hong Kong. Contact us to talk through the factors that are relevant to your business, and to incorporate a Limited company in Hong Kong.
