Hong Kong, like any other country, has a number of provisions to allow foreign residents to incorporate companies within its territory. An Indian resident by furnishing the stipulated documents can carry out the incorporation of the company in Hong Kong online.
Hong Kong has been one of the first choices among premier Asian locations for international trade and business. Although countries like Singapore offer stiff competition, Hong Kong has had its reputation among budding entrepreneurs. The World Economic Forum (WEF) has rated Hong Kong to have the top financial system among several superpower countries like the U.S. Further, being a country that has the ‘Freest Economy’ makes it a perfect business hub across the continent. More importantly, Company Registration in Hong Kong has demonstrated a brilliant post-pandemic strategy and also managed to evade extended lockdowns prior to that. The country had successfully managed to be open for business when the entire world was shutting off during the COVID-19 lockdowns. All these factors make it a welcoming ground for international business.
Indian Residents Kickstarting a Business in Hong Kong:
Installing a business in Hong Kong offers a multitude of benefits. Any foreigner gets to own 100% of the business and can act as the sole director or the shareholder. Further, having a stable and prominent tax system encourages a number of Indian entrepreneurs to set their foot in Hong Kong. The most common type of business entity in Hong Kong is a limited company. The tax benefits that are applicable to the business owners in Hong Kong will be applicable to foreign business owners as well when they incorporate a company in Hong Kong. The business owners also get to exploit the free trade agreement with China when they incorporate a business in Hong Kong. Foreign businesses are allowed to incorporate only as limited companies in Hong Kong. However, if the business owner has already established the company elsewhere, the business can be incorporated into an entity of the owner’s choice.
Indian and other foreign entrepreneurs who intend to incorporate their companies in Hong Kong can do it online through the e-Registry. It is mandatory that the business must be registered beforehand. Only those entrepreneurs who are residents of Hong Kong or those that have a valid work visa have the option of incorporating their companies into a sole proprietorship or partnership.
Steps Involved in Incorporating a Company in Hong Kong:
1. Select a Name for the Company:
The Indian business owner has to come up with a unique name for the company. Care has to be taken to check that a company with the same or similar name is not registered in Hong Kong already. Also, the name should not infringe any other existing trademark or be obscene or objectionable in any way
2. Selecting the Right Business Type:
The business owner must choose the right business entity to incorporate the company into. When an entrepreneur from India intends to establish a company in Hong Kong, without being physically present in that country, it must be incorporated as a limited company. Although larger companies can be incorporated as public limited companies, a private limited company has been the most preferred corporate set up by the business owners
3. Registration of the Company:
When an Indian resident or any foreign resident for that matter wishes to incorporate a company in Hong Kong, a resident of Hong Kong must be nominated as a representative of the company. The representative has to duly maintain the ‘Significant Controllers Register’ and must have it ready for the inspection of the law enforcement officers. The process can be carried out online through the e-Registry by submitting the following documents
- Documents pertaining to the company’s incorporation
- Proof of Identity of the directors and shareholders
- Proof of Address of the registered office in Hong Kong.
4. Commencing a Corporate Bank Account:
Just like in any other country, in Hong Kong, a corporate bank account is essential to carry out the financial transactions of the company. Required proofs have to be furnished to the bank to show that the company is legally incorporated. The proof of business, the incorporation certificate, and an application for a corporate account have to be submitted to the bank. Additionally, any document that speaks about the credibility of the company like the financial statements, marketing brochures, proof of online presence, projected earnings, etc can be presented to the bank.
An Indian resident may find these processes quite cumbersome and convoluted, especially in a foreign country. That’s exactly why a company incorporation expert might help to ease the situation. Such experts have a handful of experience in dealing with these formalities. They also have a good rapport with the banks in Hong Kong and this would definitely help the business owners to walk through the process quickly. Hong Kong when compared to other countries has a relatively uncomplicated procedure when it comes to the incorporation of a company. Thus, with the right professionals around, it’s almost like a walk in the part for an Indian resident to set up a successful business in Hong Kong.
Type of Company Registration in Hong Kong
Private Limited Company: This is the most common type of company in Hong Kong. It has a distinct legal identity and offers limited liability to its shareholders.
Public Limited Company: This type of company is allowed to offer its shares to the public. It has more compliance requirements compared to a private limited company.
Branch Office: Foreign companies can establish a branch office in Hong Kong, but it’s not a separate legal entity. The parent company is responsible for its operations and debts.
Representative Office: This type is limited to conducting market research and promotion activities. It doesn’t engage in profit-generating activities.
Sole Proprietorship: A single individual operates this type of business without a separate legal identity.
Partnership: It’s a business structure where two or more individuals or entities manage the company and share profits and losses.
Document Requirement for Company Registration in Hong Kong
The specific documents required for company registration may vary based on the type of company, but generally include:
Company Name: You need to propose a company name that is unique and not similar to existing names.
Registered Address: A physical address in Hong Kong where the company can receive official correspondence.
Company Secretary: Every company must appoint a company secretary who is responsible for ensuring compliance with legal and regulatory requirements.
Directors: Private limited companies must have at least one director, while public limited companies require at least two directors.
Shareholders: Private limited companies can have a minimum of one shareholder, and public limited companies require at least two shareholders.
Capital: There’s no specific minimum capital requirement for Hong Kong companies, and the capital can be denominated in any currency.
Articles of Association: This document outlines the company’s internal rules and regulations.
Incorporation Form (NNC1): This form includes details of the company’s directors, secretary, and registered office.
Business Registration Certificate: This certificate is obtained from the Inland Revenue Department and is essential for tax purposes.
Important Facts to Know for Company Registration in Hong Kong
Taxation: Hong Kong follows a territorial taxation system, which means that income earned within Hong Kong is subject to tax, while income earned outside Hong Kong is not taxed.
Ease of Doing Business: Hong Kong is known for its business-friendly environment, making it relatively easy to register and operate a company.
Legal System: Hong Kong operates under a common law legal system, providing a stable and reliable legal framework for businesses.
Banking: Hong Kong is home to numerous international banks, making it convenient for businesses to access banking services.
Nominee Services: It’s possible to use nominee services for directors and shareholders to maintain privacy and confidentiality.
Annual Compliance: Companies in Hong Kong must meet annual compliance requirements, including filing annual returns and financial statements.
Foreign Ownership: There are no restrictions on foreign ownership of companies in Hong Kong.
Double Taxation Treaties: Hong Kong has an extensive network of double taxation treaties, which can be advantageous for international businesses.
FAQ’s:
What are the benefits of opening a company in Hong Kong for non-residents?
Foreign investors are attracted to Hong Kong due to its business-conducive environment, pro-business stance, highly talented workforce and attractive tax regime.
What are the legal requirements for a non-resident to open a company in Hong Kong?
The legal requirements to incorporate a non-resident to open a company in Hong Kong are as follows * At least one person to act as a director and shareholder, to set up a corporation in Hong Kong
* Approval of company name
* Local address
* Local company secretary
* Auditor
* Share capital
Can a foreigner serve as the director or shareholder of a Hong Kong company?
Foreigners are free to be the sole directors and shareholders of a Hong Kong company. However, citizens of certain nationalities are not eligible for a Hong Kong investment visa. Foreign investors from Afghanistan, Albania, Cambodia, Cuba, Laos, North Korea, Nepal, and Vietnam cannot register their businesses in Hong Kong
Are there restrictions on the types of businesses foreigners can start in Hong Kong?
Hong Kong permits corporations to run almost all types of businesses as long as it is legal.
What are the steps involved in the company incorporation process in Hong Kong?
The company formation process in Hong Kong is fast and simple. Here are the general steps:
* Choose a company name and conduct a name search.
* Prepare the necessary documents, such as the Articles of Association and the Incorporation Form.
* Submit the documents to the Companies
* Registry and pay the registration fee.
* Obtain the Certificate of Incorporation and Business Registration Certificate.
How long does it typically take to incorporate a company in Hong Kong?
It takes less than two weeks to incorporate a company in Hong Kong.
What are the ongoing compliance and reporting requirements for Hong Kong companies?
Hong Kong companies are required to file an annual return and hold an annual general meeting. They must also maintain proper accounting records and prepare financial statements
Is it necessary to have a physical office in Hong Kong to register a company?
No, it is not necessary to have a physical office in Hong Kong to register a company.
What is the role of a company secretary in Hong Kong, and is it mandatory?
A company secretary is the business’s named representative, he has the responsibility of ensuring that the company and its operations are run in accordance with the law.
Are there any tax implications for foreign individuals or businesses opening a company in Hong Kong?
Hong Kong has a favourable tax system, wherein companies do not need to pay taxes on profits that are sourced from outside of Hong Kong.
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