Simple Guide to Register a Company in Hong Kong

When entrepreneurs plan for an offshore business, they often decide to register a company in Hong Kong. Not only is Hong Kong an easy gateway to enter into China market, offshore profit is not taxable by the Hong Kong authority. However, registering a company in Hong Kong can sometimes be difficult and time-consuming especially you have to conduct a comprehensive research to understand the local regulations and requirement.  In this guide, we’re going to break down the process of creating your business in Hong Kong. We will also highlight some common complications faced by foreign entrepreneurs, and how we can overcome these issues.

First of all, why incorporate in Hong Kong?

Aside from being the best business-friendly city to start a business, I have summarized 10 points about why many foreigners choose to incorporate their companies in Hong Kong.

• Straightforward and easy process for company formation.
• Business outside of Hong Kong is tax-free (Hong Kong Offshore status) – 0% Tax Rate.
• Low and simple tax regime; the tax rate for onshore profit is only at 8.25%.
• No tax on dividends.
• No withholding tax, sales tax or VAT.
• Business Center in Asia.
• Excellent world-class business infrastructure and facilities.
• The easy way to enter the international market.
• 100% ownership by a foreigner is permitted.
• Enjoy an efficient banking system & multi-currency bank accounts.

CHAPTER 1: The Basics and Definition Guide

Before we go further, we’ll need to go over some terminologies and processes that you may encounter when you register a company in Hong Kong as a foreigner.

1. How To Choose Your Company Name

The first step to register a company in Hong Kong is to choose a company name. A Hong Kong limited company can have its name expressed in English or in Chinese, or with names in both languages. If you adopt an English name, then “Limited” shall be the last word of the name. If you adopt a Chinese name, then it shall end with “有限公司”.

Traditional vs Simplified Version

Foreigners shall be reminded that there are two types of written Chinese – Traditional and Simplified version. Hong Kong adopts Traditional Chinese while Mainland China uses Simplified Chinese. If your company has a Chinese name, it must be in Traditional Chinese. The Hong Kong Companies Registry does not recognize simplified Chinese in the application form.

Tips When Choosing a Company Name

Additionally, there are several important points to note when you choose the name of your company. First, the name must not be the same as a name appearing in the Registrar index. You can contact a company formation agent for verification. Name search result can usually be available as fast as 15 minutes. Second, the use of the name must not be offensive or contrary to public interest. For example, wordings which express “revolution, violence, army” may need further approval. Third, some specific phrases such as “levy”, “trust”, “trustee”, “savings”, “chamber of commerce” are usually not allowed. If the Hong Kong Company Registry refuses to accept a name, the application fee is only partially refundable. Hence, foreigners are recommended to conduct a proper name search before submitting the application.

Check the Availability of Your Company Name

You can check the availability of your Company Name in Companies Registry’s 24×7 Cyber Search Centre (http://www.icris.cr.gov.hk/normal.html). Should you find the process complicated, you can follow our guideline “How to conduct a name search”  to check the availability for registration.

2. How To Appoint a Company Secretary & 6 Important Tips

When you register a company in Hong Kong, you need to have a “company secretary” who is either a Hong Kong resident or a Hong Kong company. A company secretary is not an administrative role. It is a role to comply with the registration purpose. There are 6 important tips when choosing a company secretary service provider.

1. Are they licensed?To check whether a company is licensed to provide company formation, company secretary and registered address service, you can input their company name and license number on the Government website. 
2. Compare the pricing and package.The standard market rate is usually between HK$1,000 – HK$1,500 a year, and this is sufficient to comply with the law. Some firms charges HK$3,000 for company secretary service and claim that you can make unlimited changes during the year. Alert: There is no free lunch in this world. “Unlimited” often comes with certain restricted terms and condition and it only covers a very limited range of service. Moreover, from our statistics, 95% of small and medium enterprises make no changes during the year. Hence,  there is no need to pay a couple of thousands for the company secretary service.
3. Compare number of google reviews.Pricing is just one the considerations. Some firms have hidden fees while some are very honest. You should choose a company formation agent with a reliable reputation. The easiest thing to do is to google the brand name and compare the number of reviews. Alternatively, you can google the “best company formation agent in Hong Kong“. Not only will you see that Get Started HK is on the top of the page, you will also see that Get Started HK has thousands more reveiws than any other company formation agents.
4. Real person or Artificial intelligence Chatbot?There are thousands of company formation agents in the market. Some firms have a very good website and they use robots (artificial intelligence technologies) to answer questions. However, it is extremely difficult to look for a real person for instant communication. When you are looking for a professional service, it is often better to look for a traditional accounting firm, a law firm, or a company secretary firm to provide you with a reliable service. Do not just look at the face of the website. Make sure you talk to the staff and see whether they can understand your needs.  There are often emotions and worries when you maintain a company overseas. You will be a real person to support you, but not an Artificial intelligence Chatbot.
5. Is your agent a middleman? Here is a tip on how to spot a middleman.Company formation service or company secretary service involves a lot of physical visits to the HK Government departments. It also requires professional knowledge to the local regulations. In other words, a professional firm often hires a lot of local employees in order to liaise with different government departments. So when you communicate with the company formation agent via email, you should pay attention to the email contact list ( inclulding colleagues they cc in the email loop). If the name list does not have a person who is a Hong Kong Chinese, then you should be aware that the firm may be a middleman. Common Chinese surname are Cheung, Chang, Choi, Chan, Wong, Lee, etc. Don’t get me wrong! Hong Kong is an international city and many expats work in Hong Kong. But if the firm has NO local Chinese employees at all, then you should be cautious. Some firms are based in Russia, the Philippines, Vietnam, and they only act as a middleman in providing the service.
6. Can I appoint my friend or my wife to be the company secretary?Our advice is “NO” unless he or she has a good understanding of the Hong Kong Company Law. Most entrepreneurs who try to save the HK$1,000 secretarial fee end up paying government fine of couple thousands HK dollar. Appointing a professional agency can save you cost in long run. For example, there is an annual return form NAR1 ^[1]. The company has to submit this NAR1 form by the anniversary date of incorporation. No advanced filing is accepted while late filing will incur a fine. If you choose us as your company secretary, we will remind you before the deadline. We will guide you in filling the NAR1 form free of charge and we can even help you tofile at the Companies Registry. You just need to bear the Government fee.

If you need more information about company secretary service, you can visit our company secretary page or contact us at info@getstarted.hk.

3. What are the Requirements for Directors and Shareholders?

Unlike Singapore, foreigners are allowed to have 100% control of their limited company in Hong Kong. In other words, a foreigner can be the sole director and shareholder. There is no need to have a local director or shareholder. While there are no express restrictions in nationality, most licensed agents are not willing to accept applications from UN-sanctioned countries unless the customer can fulfill their KYC and AML checking requirements. As of November 2018, these countries include, but not limited to, Burma, Cote d Ivoire, Cuba, Iran, North Korea, Syria.

The Minimum Requirement for Share Capital

A Hong Kong company needs to issue a minimum one share. While the principle for par value has been abolished in Hong Kong, the norm for the value of each share is usually HK$1. For easy reference, the norm in Hong Kong is to have 10,000 shares with 10,000 share capital. You can increase the share capital and allot new shares to new shareholders in the future Apart from allotting new shares, you can also transfer your shares or ownership to other parties.

4. The Importance of Having A Registered Address

To register a company in Hong Kong, it is fundamental to have an address in Hong Kong as the registered office. There are 18 districts in Hong Kong while most foreigners will choose the Central Business District, and “Central” is the Central Business District (CBD) in Hong Kong. Foreigners only need to have a virtual address. There is no need to rent a physical office in Hong Kong.

The Hong Kong government will send 2 – 4 letters to your virtual address / registered business address per year. All of these letters have a time frame to reply and a late fee will incur if one does not reply before the deadline. Hence, you should ensure your service provider will scan you these important letters upon receipt. For Bank Letters, almost all banks in Hong Kong provide e-statement these days. You can download these statements outside Hong Kong and you can have full control of your bank information remotely.

Mail Scanning & Forwarding Services

Other than fulfilling the regulations to have a business office address / virtual address in Hong Kong, sometimes entreprenuers may require mail scanning and mail forwarding service. We offer a scanning service at HK$30 handling fee per mail. For ease of payment, we usually charge when the service fee reaches HK$600 (i.e. 20-time scanning) so you don’t have to pay for each request. All government letters scanning are free of charge. If you would like the letters to be forwarded to your physical address, we will check the mailing fee with the courier service provider and let you know before forwarding.

Can I change the registered address in the future? 

After the company is registered, company owners can still change the registered address. If you decide to update your registered address, we have three (3) important reminders. If you need more details or a step to step guide, you can check out our blog “How to change your registered address“.

1. You should reserve a minimum 1-month processing time in updating the address. Sometimes there are red tapes in the HK banking system. Most banks require customers to fill up a form. You cannot update the address by writing a letter or email to your account manager.
2. You should inform the Hong Kong Company Registry by submitting Form NR1. It is an offense if the company fails to notify the government in time. Each responsible person of the company can be liable for a late fee of $1000 per day.
3. The company owner should inform the Inland Revenue Department by submitting Form IRC3111A within one month of such change. Advanced notice will not be accepted. Failure to comply may lead to prosecution.

CHAPTER 2: Ways to Register a Company in Hong Kong

There are two (2) ways to register a Company in Hong Kong: paper submission and online submission.

The Timeframe for Paper Submission: In the Hong Kong Company Registry website, the Government states that company incorporation takes 4 business days^[2]. However, many incorporation agents will tell you the shortest time frame in practice is around 5 to 7 business days. You may be curious why is there such an inconsistency. The fact is that processing time usually excludes the filing date. After the Government registers your company in record, certificate of incorporation and business license will only be issued on the fifth day. Hence, you can expect a time frame of 6 – 7 business days for paper submission.

The Timeframe for Online Submission: The government has introduced the e-Registry system in recent years. The term “online submission” has confused many non-locals during the year. In fact, there is a pre-requisite for using the system. Foreigners need to present their passport to the Company Registry in person. Alternatively, they will need a Hong Kong Practicing CPA or Chartered Secretary recognized by the HKICS to certify their passport copy. If non-locals want to make use of the E-registry system, you must hire a TCSP licensed agent. Processing time via e-Registry usually takes 1 business day.

The Main Procedure in Setting up a Company Online

If you use our service at Get Started HK, we can incorporate your company within 1 business day remotely. We only require three (3) things from you.

1. Proposed Company Name,
2. Copy of your passport, and
3. Copy of your residential address proof.

Residential address proof can be a personal bank statement, utility bill or a phone bill which was issued within the past 3 months. You can fill up our application form using this link. After you have successfully placed your order, we will email you draft incorporation documents for review within 3 business hours. After you confirm the documents, we will submit to the government for registration. The certificate of incorporation will then be ready in 1 business day.

CHAPTER 3: The Real Costs for Company Formation

On top of the TCSP licensed agency’s service fees, you also need to pay fees to two (2) Government departments: Companies Registry and Inland Revenue Department. Companies Registry charges a one-off fee of HK$1,720 and the Inland Revenue Department charges a business registration fee of HK$2,150. The total add-up is HK$3,870 which is around US$510.

Alert: Customers should note that some incorporation agents may tell you that the incorporation fee is ZERO and they will even pay the Government fees for you. We all know that there is no free lunch in this world, and these agents also need money to survive. There is a high chance there will be hidden fees and they will charge you extra at a later stage. When you look for a company formation agent, it is important to look a honest service provider who listed out all service fees in writing. Get Started HK service fee can be found from this link.

CHAPTER 4: How To Open a Corporate Bank Account in Hong Kong

After you registered a company in Hong Kong, directors can arrange bank account opening in any countries. Some banks may even support account opening remotely.

One-Stop Bank Contact Details: We have summarized contact details of 18 local Hong Kong banks in this link for your reference. While you can arrange an appointment over the telephone, some banks also provide an online application platform. Once you fill out the application form online, banks will then arrange an appointment with you via email. From our experience, it is usually faster to arrange an appointment via telephone.

FAQ #4: Can I open an account remotely? 

Yes. Almost all NeoBanks can support account opening remotely. There is no need to travel to Hong Kong. If you are interested in opening an account at NeoBanks, you can contact our incorporation agent for a free referral.

FAQ #5: I prefer to meet with banker in person. Do I need to make a booking in advance? 

Yes.  If you choose to fly over to HK and meet with bankers in person,  you need to make an appointment in advance. Most banks require 7 days in advance notice these days. Also, banks are usually very busy before and after public holidays, so I’d recommend non-local residents to book at least 10 days in advance during peak season. No walk-in is allowed. You should also note that corporate banking opens from Monday to Friday only.

FAQ #6: How many days do I have to be in Hong Kong?

If you prefer to meet with banker in person (face to face meeting) instead of remote meeting, bank interview usually takes an hour. If you have a busy schedule, you can fly to Hong Kong in the morning, meet bankers in the afternoon, and fly out in the evening. Once your application is approved, banks can mail you the online banking device and/or ATM card so you can control the account remotely.

FAQ #7: Can I obtain Pre-approval before I visit Hong Kong?

Yes. Get Started HK has solid connections with bankers. Based on the nature of your business and director’s background, we can connect you with a designated bank officer. Bank officers can conduct a pre-screening of your company documents. Once bankers confirm your documents are sufficient, you can then arrange your flight to HK. If you choose our service, we will even accompany you to the bank for account interview so you can enjoy a hassle-free process.

FAQ #8: What is a good business plan? What does the bank expect to read?

Some bankers may ask you for a business plan. We’ve read many business plans over the years and many foreigners will write very detailed breakdowns of the nature of their business, targeted customers, targeted jurisdiction, etc. Unfortunately, this is not what bankers are looking for. Banks are not in a position to judge whether your business will be successful. They are also not interested in your business model. They ask for the business plan because they try to fulfill their Anti-Money Laundering Rules policy. Hence, the secret is to list out the “source of income” in your plan, including, but not limited to initial funds in setting up the company, funds for maintenance and expansion. If you want more tips in company formation or bank opening arrangement, you can read our FAQ page or you can contact our team at info@getstarted.hk.

 

CHAPTER 5: Taxation in Hong Kong

FAQ #9: Do I have to pay tax in Hong Kong?

Hong Kong adopts a territorial source principle of taxation. In other words, offshore profits are not taxable by the Hong Kong local authority. Hence, if your source of income is outside Hong Kong, you can apply for offshore status. Once the Inland Revenue Department grants you the status, the corporate tax rate is 0%.

Conversely, if your source of income is in Hong Kong, you are subject to the Hong Kong profit tax. Hong Kong government recently sends a welcoming message to business starters who are looking for opportunities in HK by mulling huge cuts to profit tax since February 2018. The reduction confirms to be from 16.5% to only 8.25% for the first HK$2 million (US$256,000) in profit.

Foreigners shall also note that Hong Kong does not have a Value Added Tax (VAT). Hong Kong also does not have Capital Gain Tax.

CHAPTER 6: How to Conduct Due Diligence in Spotting Scammers and Middleman

Here are some important points to consider to check the legitimacy of a Hong Kong company formation agent:

1. What is their Jurisdiction? Ask your agent if they are a Hong Kong incorporated company. If your agent’s company is registered outside Hong Kong, they are likely to be a middleman.

2. Ask for a meeting? Sometimes question 1 won’t get you the real answer. It is easy for scammers to create a branch without operation. Hence, you should ask for a meeting and check their reactions. Middleman and scammers will often refuse to meet.

3. Are they licensed? You can confirm this by asking for their license number and checking the database of Companies Registry. Don’t search for the company name. Search for the license number. Scammers can easily replicate a company name.

4. What is their fee? The Companies Registration fee is HK$1970, which is around US$255. If some agents tell you that they can do it for you free of charge, that may be a scam (or there may be hidden charges). There is no free lunch in this world. If an agent is paying US$255 for you, they will definitely charge you something to cover their cost and make a profit in the future. You should choose a service provider with honest practice.

5. Website security. If they have a website, assess its security. It should have an “https://” domain, not http://^[3]. If it’s in http:// only, it isn’t a secured website and I’d be reluctant to fill out their contact forms, especially payment forms.

CHAPTER 7  : How To Choose the Best Company Formation Agent in Hong Kong?

1. Online and Offline Reviews.  While you compare company formation agents, you should compare the number of Google reviews. Some platforms can be full of fake reviews. Google is the most reliable comparison platform, and you can simply google the name of your service provider. You will be able to see their record and comments easily.  Get Started HK has hundreds more reviews than any other firms in Hong Kong.

2. Are there video testimonials? Some agents may buy written reviews. To make sure the reviews are genuine, you can simply check whether the agent has any video testimonials on their website. Video testimonials are often given when the customer is very happy with a particular service. Get Started HK is  the only firm in HK which has video testimonials on the website.

3. Check the Registered Address!  Some agencies use a virtual address in the CBD while their office is actually away from the CBD area. You should ask your agent where is its physical office address and whether they work in that Central office address.

4. Are they a Robot? Some incorporation agents use Robots to answer questions. For those who rely on Robots, you can hardly expect any personalized customer service. If you are based overseas, there will often be emotions and stress in maintaining a company overseas. You should look for firms who are still willing to offer human interactions service.

Conclusion

Register a company in Hong Kong can be easy when you find a trustful and honest licensed agency. The key is to work with the right team who can handle all your paperwork properly and provide you with guidance in understanding business culture and practice in Hong Kong. You can then focus on growing your business further without any hassles.

Updated/ September 24, 2022  

References

[1] e-Registry: Download. (2018, December 13). Retrieved from https://www.eregistry.gov.hk/icris-ext/apps/por01a/download?m=n

[2] Phase II. About Us – Integrated Companies Registry Information System (ICRIS). (2018, December 13). Retrieved from https://www.cr.gov.hk/en/about/icris.htm

[3] Messer, T. HTTP vs. HTTPS: What’s the Difference and Why Should You Care? (2016, September 15). Retrieved from https://www.entrepreneur.com/article/281633