2017年3月 8日 水曜日

HK Company Law Topics 1: Setting up a company in HK

Date: 08/03/2017
Christy Li

Hong Kong is one of the popular jurisdictions where international investors would elect for establishing trading and investment companies for cross border transactions. The governance of Hong Kong incorporated companies, including but not limited to the company incorporation, directors and shareholders, are mainly set out in the Companies' Ordinance (Cap.622) (the "Companies Ordinance"). This note provides an outline of matters relating to the incorporation of a Hong Kong company.

Why Hong Kong?
As an introduction of the Hong Kong market, below are some of the benefits of setting up a Hong Kong company:

1. English legal system.  Hong Kong's constitution, or the Basic Law, protects the fundamental rights of individuals and the capitalist system inherited from British colonial rule. Although Hong Kong is part of the People's Republic of China ("PRC"), Hong Kong enjoys a high degree of autonomy from the PRC under the "One Country, Two Systems" policy including the right of final adjudication by the Hong Kong Court of Final Appeal. Hong Kong maintains the common law system and the Companies Ordinance follows the principles set out in the UK company laws, affording stable legal system.

2. Financial Centre.   Being a preeminent financial and banking centre, Hong Kong has attracted major players in the financial and legal practitioners. In 2017 and for the 23rd consecutive year, the Heritage Foundation and Wall Street Journal's Index of Economic Freedom rated Hong Kong with the highest economic freedom score out of 171 countries around the world. The Index of Economic Freedom placed particular emphasis on Hong Kong's efficient legal and tax systems, competitive trade regime and overall business freedom. Most importantly, there is no restriction on capital transfer in or out of Hong Kong.

3. Easy to set up.  Setting up a Hong Kong company is well regulated and very quick and simple.  With all required documents, it normally takes 7-10 days to set up a Hong Kong company.  The minimum issued share capital is only HK$1. It requires only one shareholder and one director and can be 100% foreign owned.

4. Favourable Tax Regime.  Hong Kong has a simple and efficient tax system that taxes income on a territorial basis. This means that income is only subject to tax in Hong Kong if it has, or is deemed to have, a source from within the territory. The current profits tax rate in Hong Kong is 16.5% for companies with profits derived from a Hong Kong source. There are no taxes in Hong Kong on dividends, interest or capital gains and distributions made outside of the territory are free of withholding tax. There is also no value added tax and estate duty. 

5. Tax Treaty Status.  Hong Kong has concluded various double tax agreements (the "DTA") with foreign countries where Japan is one of them. On 9 November 2010, the government of Japan and Hong Kong has entered into the first income tax treaty which clarifies the scope of income that can be taxed in Japan and Hong Kong and stipulates provisions on negotiation between tax authorities including mediation procedures to resolve tax-related problems arising between Japan and Hong Kong. This treaty generally reduces withholding tax rates on investment income (dividends, interest and royalties) and the potential avoidance of double taxation by permitting a resident of one jurisdiction to claim a credit for taxed paid income derived in the other jurisdiction.

Under the Companies Ordinance of Hong Kong, a private company in Hong Kong is defined as a company which by its articles:
1. restricts the shareholders' right to transfer shares;
2. limits the number of its shareholders to 50 (which does not include (a) persons who employed by the company and (b) former employees of the company who were members of the company while they were employed); and
3. prohibits the making of any invitation to the public to subscribe for any shares or debentures of the company.

In addition, a private company must not be a company limited by guarantee.
The incorporation of a limited liability private company in Hong Kong could be done online at the 24-hour portal e-Registry or deliver the documents in hard copy form to the Companies Registry with fees:
1. Incorporation Form (Form NNC1 for company limited by shares)
2. A copy of the company's Articles of Association
3. A Notice to Business Registration Office (IRBR1)

Under the Business Registration Ordinance (Cap.310), at the time an incorporation application is made, the applicant must pay to the Commissioner the prescribed business registration fee and levy and deliver a notice in a form specified by the Commissioner (Form IRBR1) together with the other incorporation documents to the Company Registry. On the incorporation of the company, the company is deemed to have made a business registration application. A business registration certificate will then be issued together with the certificate of incorporation on the incorporation of the company. The business registration certificate must be displayed by the company. A business registration certificate can be obtained for one year or three years.

Share Capital
The Companies Ordinance provides that shares in a Hong Kong company have no nominal value. The Companies Ordinance has not prescribed any requirement for the number of shares to be issued. The articles of association of a Hong Kong company with a share capital can state the maximum number of shares that the company may issue.

Company Name
For limited liability companies incorporated in Hong Kong, the company name must not be the same as a name appearing in the index of company names kept by the Companies Registry. You may conduct a company name search free of charge through the Companies Registry's Cyber Search Centre or the Company Search Mobile Service.

Company Structure
Under the Companies Ordinance, Hong Kong companies must have at least one member (i.e. shareholder) and that one member may be a nominee of the beneficial owner. The member need not be resident in Hong Kong and can be an individual or a corporation. The sole shareholder can be a director of the company.

A private limited liability company in Hong Kong requires at least one director who is a natural person and one company secretary. If the company has one director only, the sole director cannot be the company secretary of the company at the same time. A non-Hong Kong resident can be appointed as a director. If the company secretary is a natural person, he/she should ordinarily reside in Hong Kong. If the company secretary is a body corporate, its registered office or place of business should be in Hong Kong.

Pursuant to the Professional Accountants Ordinance (Cap.50), the company must appoint an auditor who is either an accountant or firm of accountants registered in Hong Kong and having recognised qualifications.

The company must have a registered office in Hong Kong to which any legal documents, notices or communications can be served on the company. Such notices or communications are properly served if left at or sent by post to that office. Various statutory registers and documents of a company are required to be kept at its registered office. These include registers of debenture holders, shareholders, charges, directors and company secretaries, copies of every instrument creating a charge, copies of permitted indemnity provisions or written memoranda setting out the terms of such provisions, copies of management contracts or written memoranda setting out the terms of such contracts, copies of shareholders' resolutions, minutes of proceedings of general meetings and written records of decisions of a sole member and a register of particulars referred to in section 384 of the Companies Ordinance.

The intended address of the company's registered office is required to be stated in the incorporation form registered. Any change in the registered office address after the date of incorporation must be notified to the Registrar. A notice of the change in the specified form (Form NR1) must be sent to the Registrar within fifteen days after the date of the change.

The fees for incorporating a company limited by shares are:
1. company registration fee - HK$1,720 (If unsuccessful, an application for a refund of HK$1,425 may be made)
2. business registration fee - HK$2,000 for a one-year certificate; HK$5,200 for a three-year certificate
3. levy to the Protection of Wages on Insolvency Fund - HK$250 for a one-year certificate; HK$750 for a three-year certificate

Processing Time
Online applications for company incorporation and business registration can normally be processed within one hour. If you deliver your application in hard copy form, the Certificate of Incorporation and Business Registration Certificate will normally be issued within four working days.

投稿者 Kuribayashi Sogo Law Office



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