Everything You Need to Know About Setting Up a Company in Hong Kong in 2019
According to the World Bank’s Ease of Doing Business Index, Hong Kong is the fourth easiest place to do business in the world. This alone reflects the economic freedom in the country – the countless incentives, minimal taxes, splendid government support system, world-class infrastructures, etc. Additionally, Hong Kong is a gateway to China and a significant trading hub. So, you also have the vast market reach of the country. Hence, setting up a company in Hong Kong is beneficial not only from the standpoint of how great the environment is but also the possibilities the place provides you.
Today, we discuss how you can set up a company in Hong Kong from scratch in 2019.
Entry for Investment
The first thing you need to do if you are a foreigner is to get into Hong Kong. For this, you will need to fill out an application for the Entry for Investment (Entrepreneur Visa). You can visit a nearby Chinese Embassy or download the registration forms online.
Here are the requirements for you to gain the visa:
- You need a Hong Kong sponsor. This doesn’t mean a business partner or such, only someone whom you know well in the state. The person should be at least 18 years old.
- You must present a two-year business plan. Remember that during this time, the authorities will also check if you have enough finances to fund whatever you are planning to do. Don’t forget – you need to verify that your business idea can make a considerable contribution to the Hong Kong economy. This includes creating jobs, bringing in a lot of revenue, developing innovations, using local products, etc.
- Having a clean police record is necessary. Well, getting a driving ticket doesn’t count. But it will be hard for you to get an entrepreneur visa to Hong Kong if you have indulged in criminal activities of larger degrees.
- As one of the requirements, you need to be at least 18 years old. Going to college is not an absolute must, but having at least an undergraduate degree will be of huge help. Anyway, you should prove that you have a lot of knowledge in the sector you want to invest in. This means you need experience if you don’t have a college certificate.
The visa processing, on average, takes about two to five months. You can also contact 3E Accounting if you want help with your visa; we will make your application for you, including drafting an adequate business plan.
Types of Companies in Hong Kong
Now, the next step is to understand the types of companies in Hong Kong. You will need to choose any one of these business entities while setting up a company in Hong Kong:
The first one is the sole proprietorship. This is a one-person business. It doesn’t stand as a separate legal entity but is a possession of the owner. The owner is responsible for all the loss or debts but has rights to every profit.
Multiple partners run a partnership. It is similar to Sole Proprietorship, as it doesn’t stand as a separate legal entity and has unlimited liability. However, there are two types of partnership: a general partnership and a limited partnership.
General Partnership: In a general partnership, every partner makes an equal contribution (investment) and thus, has rights to all the critical business decisions.
Limited Partnership: Some partners don’t make as much contribution as others. Thus, they have limited rights.
Limited Liability Company (Private Limited Company)
A limited liability company is the most popular type among those who want to set up a company in Hong Kong. It stands a separate legal entity and is mostly limited by shares. Instead of owners, there are directors and shareholders, making it a proper corporate body.
Here are the requirements for opening a limited liability company in Hong Kong:
- You need at least one director. The person can be from anywhere in the world and doesn’t necessarily need to stay in Hong Kong during the business. Moreover, they should be at least 18 years of age and should have a clean police record.
- There needs to be at least one shareholder. The maximum number is 50. 100% foreign ownership is available in Hong Kong.
- There is no minimum share capital requirement. But as said before, your funds will be assessed to make sure that you have enough to run your company.
- You need to hire a secretary for your firm. This could be either a person or a corporate secretarial service provider. Don’t forget, no matter who you choose, they should be primarily staying in Hong Kong for at least as long as the business exists.
- A residential address is necessary as the official location of your company. Take note that it must be a physical address and not a P.O. Box Number.
- As you need to organize an Annual General Meeting (AGM) every year and file annual returns, hiring a bookkeeper will be very beneficial.
Joint Stock Companies
They are public limited companies. You can list them in the public stock market. Mostly, private limited companies convert to Joint Stock Companies when they become a huge success. Otherwise, we don’t really need to discuss them in this article.
If you aren’t very sure if setting up a company in Hong Kong is the right choice, opening a representative office can be of help. They are offices of foreign companies in Hong Kong, which can’t do business, but rather are for studying the market before making the full investment.
FAQ: Can Foreigners Open a Sole Trader or Partnership in Hong Kong?
This is a popular inquiry among those who want to set up a company in Hong Kong. Even if by law, there is nothing prohibiting foreigners from registering a sole trader or a partnership in the country, practically, it is hard to do so. Because as we said before, you need to prove that your business can make a substantial contribution to the Hong Kong economy. You need to create jobs, use a lot of local products, etc. These things are hard to verify with a sole proprietorship or a partnership.
The Process for Setting Up a Company in Hong Kong
For your information, you need to work with a corporate service provider to register a company in Hong Kong. Well good for you, 3E Accounting offers that. Believe us, registering your company by yourself means putting yourself in a lot of stress and wasting a lot of your time and money. We will do it for you at the lowest price.
Anyway, here is the entire process in brief:
- If you are a foreigner, gain your entry for investment.
- Craft a company name. It should be original and can’t be vulgar.
- Choose the type of company.
- Register your company. You do it in the Hong Kong Registrar of Companies. The documents you need depend on specific cases, but here are the most general ones:
- the Memorandum and Articles of Association
- Identification papers and personal information about shareholders and directors. For example, passport, residential address, etc.
- The prescribed application form;
- a letter from the bank for foreign shareholders and directors.
- Open a corporate bank account.
- Register with the Inland Revenue Department. This is for taxes.
- Gain the necessary licenses. This is one of the most important reasons you should work with us while setting up a company in Hong Kong. We will ensure you gain all the permits, so you don’t have any problems with the law.
FAQ: Does a Foreigner Need to Be Physically Present While Setting Up a Company in Hong Kong?
Nope, as long as you have a representative in Hong Kong registering your business for you. It can be us.
Remember that you still need to be in the state while opening a corporate bank account. But don’t worry, it won’t take more than a day. Paying for plane tickets doesn’t feel so good; we understand that, but it is the rule.
How Long Does It Take to Set Up Company in Hong Kong?
In most cases, it can be done between a day and a week. For some people, the time might even extend to two weeks to two months, that is if they have something missing on their documents.