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The guide of incorporation, tax, employment, and dispute resolution
in Hong Kong for Expats.
The brief guide of relocation and doing business in Hong Kong for
expatriate entrepreneur. It has all the essential information you
need to know to launch a startup in Hong Kong.
Further comprehensive guide covering Hong Kong business
registration, incorporation, taxation, accounting, immigration,
business licensing and employment, please feel free to take a look
at our Guide to Hong Kong.
BACKGROUND OF HONG KONG
Fact at a glance
- Population: 7.2 million
- Official Languages: English and Traditional Chinese
- Dialect: English, Cantonese and Mandarin
- Time zone: GMT+8
- Currency: Hong Kong dollar
- Climate: Subtropical weather with long, usually humid and hot
summers (May to September) and mild cold winters
Since 1 July 1997, the Hong Kong Special Administrative Region (HKSAR) was established. On the same day, the People’s Republic of China (PRC) resumed its sovereignty over Hong Kong after a hundred year of
British colonial era.
Prescribed on The Basic Law, the constitution of Hong Kong, HKSAR retains its political,
social, commercial and legal systems for 50 years after sovereignty
handover to PRC, and will enjoy a high degree of autonomy, free
market and trade system (capitalist economy) that supports Hong
Kong to be a renowned international financial hub, free port and
city of doing business.
Reference: History of Legislature
English common law and rules of equity are the backbone of HKSAR
legal system, they are strictly adherence to the principles of the rule of law and independence of the judiciary. With a very few exceptions, the legal system are maintained after
handover to PRC.
Reference: Legal System in Hong Kong
Hong Kong adopts capitalist economic system and retains its operation of a free enterprise and free trade
market as prescribed in The Basic Law, it can be illustrated by
minimal government interference in all the sectors, and small
number of duties and tariffs on import and exporting of goods and
For freedom of enterprise, no exchange control is imposed so companies and individuals are allowed to import or
export at their own discretion, and flow of capital is free as
dividends and profits derived from business in Hong Kong are
allowed for free conversion and remittance to foreign currency and
territories. Moreover, no taxation is imposed on dividends.
Reference: Hong Kong Economic Trends
The freedom of doing business in Hong Kong is made by its generally
lack of restrictions on investment and time-to-time stimulus
program to encourage investment.
The simple and low taxation regime, effective and clean government
and workforce in HKSAR provides a pro-investment climate for both
local and oversea investors to venture their business in the city.
Reference: Doing Business in Hong Kong
Finance and banking
Since 1983, Hong Kong dollar has been pegged to US dollar at a rate of HK$7.8 to US$1 and trading in average between HK$7.75
and HK$7.85 to US$1 nowadays.
This linked exchange rate is backed by the Exchange Fund holding
foreign assets valued at HK$2700 billion in January 2015 for
stabilization. The fund is managed by Hong Kong Monetary Authority (HKMA), the de-facto central government bank of Hong Kong. Since the
absence of a official central bank, there are 3 banknote issuing
banks in Hong Hong – HSBC, Standard Chartered Bank and Bank of
The stock exchange in Hong Kong has been developed to serve the not
only local but also international market. The Hong Kong Stock Exchange (HKEx) is Asia’s 2nd largest stock exchange in terms of market
capitalization, and the 6th largest worldwide.
Hong Kong monetary and banking stability – key functions of Hong
Kong Monetary Authority (HKMA)
Operator of Hong Kong stocks exchange market – Hong Kong Exchanges
and Clearing Limited (HKEx)
As prescribed in the Basic Law, Hong Kong possesses high degree of autonomy especially in conducting its external commercial relations:
conclude and implement bilateral or multilateral trade agreements
with foreign territories and international organizations. For
example: Hong Kong is a founding member of the World Trade Organization (WTO) and is also a member of the Asia-Pacific Economic Co-operation (APEC) forum.
HKSAR is a member of WTO
HKSAR is a member of APEC
The unique historical background of Hong Kong as a trade port
between businesses in Mainland China and the worldwide and its
adjacency to Mainland China make the unique relationship with the
PRC – agateway of businesses between PRC and the world. A huge part of the PRC’s inbound investment takes the route via
Hong Kong, while PRC is one of HKSAR’s largest trading partners.
The deep and close business co-operation and integration between
Hong Kong and the PRC offer huge business opportunities to the
businesses in Hong Kong as well as overseas entrepreneur. The
signing ofthe Closer Economic Partnership Arrangement (CEPA) was the first and major free trade agreement between PRC and Hong
Kong which opened up huge opportunities for Hong Kong businesses by
allowing Hong Kong goods and services to gain greater access to the
PRC market. Meanwhile, CEPA can also be beneficial to PRC since
Hong Kong serves as a benchmark of global standard to show PRC
businesses to enter global market, a important step to promote PRC
integration with the global economy. For oversea entrepreneur,
establishment of businesses in Hong Kong is the best business
vehicle to utilize the CEPA benefits and stepping stone to access
the vast opportunities that the PRC market offers.
The market of offshore renminbi (RMB) businesses is growing rapidly, Hong Kong possesses the world-class financial
infrastructure to make it an international financial hub as well as
the pioneer in this field – the first offshore RMB market to launch
RMB related financial services since 2004. A growing variety of
offshore RMB products and services have been launched in Hong Kong
since the demands of local and overseas entrepreneur and financial
institutions. Both investors in Hong Kong and Mainland China are
beneficial to positive development of offshore RMB trade and more
Launched on 17 November 2014, Shanghai – Hong Kong Stock Connect is first and ever cross-boundary investment channel that connects
the Shanghai Stock Exchange and the Hong Kong Stock Exchange (HKEx). Under the program, investors in each market are able to trade
shares on the other market using their local brokers and clearing
Introduction of Mainland and Hong Kong Closer Economic Partnership
Renminbi (RMB) Business in Hong Kong as International Financial
Shanghai – Hong Kong Stock Connect
HONG KONG BUSINESS VEHICLES (FOR EXPAT)
Companies Ordinance (CO) is a laws to rule companies in Hong Kong.
The old Companies Ordinance (Old CO) underwent a rewriting exercise
commencing from 2006. As a result of the rewriting exercise, the
new Companies Ordinance (new CO) became effective on 3 March 2014.
The new CO aims to achieve four main objectives, to enhance
corporate governance, ensure better regulations, facilitate
business and modernize the law. Various major initiatives have been
introduced under the CO for achieving the four main objectives such
as abolition of par value for shares, abolition of memorandum of
association, allowing companies to dispense with annual general
meetings and making the keeping and using of a common seal optional
Feel free to contact us for the updates on CO.
Reference: New Companies Ordinance of Hong Kong
Types of Business Vehicle
For oversea entrepreneur to carry on business in Hong Kong, the
most commonly considered carriers are as follows:
- “Private Company Limited by Shares” incorporated in HKSAR
- “Non-Hong Kong company” incorporated in HKSAR representing a foreign company as “branch in
- “Representative Office” (or liaison office) of a foreign company (Important: this is an
For reference, sole proprietorship, partnership (including limited
partnership) are unincorporated bodythus they are but very rare for carrying business from oversea. We
have an article to tell the details of all above “carriers”.
A frequently asked question by our customer: “Can I setup a branch
office in Hong Kong?” Technically, a foreign company is impossible
to setup a “branch” since “branch” is a legal entity as an
extension of present and brand name of an existing local business. We have a comparison between Hong Kong company and representative office as
well as “branch”.
Reference: Company Registry – Authority of Hong Kong and non-Hong Kong
companies registration and regulation
By the law (Company Registration Ordinance), any person (including
companies and individuals) who are the principle operator of a
business must obtain a Business Registration Certificate from
Inland Revenue Department (IRD) within one month of commencing
business for its principle office address in Hong Kong as well as
its intended business nature.
Business Registration Certification (BRC) does not serve as a
license to run the owner’s intended business in Hong Kong, the
owner must obtain specific license in some restricted industries
after the obtaining BRC.
For oversea entrepreneur, they are not required to be a Hong Kong
resident, nor be a Chinese national to complete this business
registration. They should age 18 or above. However, they should
obtain the suitable VISA / Entry Permit that allow them to commence
business in Hong Kong, the Visit VISA holder (i.e. non-Hong Kong
resident as a visitor to Hong Kong) are not allowed to establish or
join in any business in Hong Kong and thus the holders cannot
complete the Business Registration. The solution is to utilize the
business vehicles that have separate legal entity – Private company
limited by shares incorporated in HKSAR or non-Hong Kong Company
(i.e. representative office)
It is because the One-stop Company and Business Registration
Service, jointly launched by the IRD and Companies Registry (CR),
serves any person who applies for incorporation of a Hong Kong
company and/or non-Hong Kong company at CR is deemed to be made an
application for business registration simultaneously. Since the
incorporation process does not require the physical presence of the
applicant in Hong Kong, nor the applicant must be a Hong Kong
resident and Chinese nationals. The successful incorporation means
the successful business registration at the same moment, before the
Inland Revenue Department – Authority of Business Registration in
Hong Kong and Everything of Taxation
Business Registration Office in Inland Revenue Department of HKSAR
Sample of Business Registration Certification
One-stop Company and Business Registration and One-stop
Notification of Change of Company Particulars
“Business” Required to be Registered and Application for Business
Registration in Hong Kong
General Business Related Activities allowed for Hong Kong Visit
Certain businesses may require a specific license of other consent
of the authority to before their commencement in Hong Kong. Some of
these businesses include the following:
- Financial Institutions
- Broadcasting radio and television
- Catering and restaurants
- Travel agencies
- Employment agencies
- Real Estate agencies
INCORPORATION IN HONG KONG
It is the most popular business vehicles in Hong Kong, almost 1.2
million of local companies and nearly 10 thousands of non-Hong Kong companies that have remained registered in CR until February 2014. Local
companies can be classified as the following:
- Public company (most of them are listed on The Stock Exchange of
Hong Kong Limited – HKEx – subjected to additional compliance, a
discussion of which is beyond the scope of this guide).
- Private company limited by shares
- Private company limited by guarantee (usually set up by non-profit
Over 98% of local companies are incorporated in a form of Private Company Limited by Shares, which is characterized in the following form:
- The liability of each shareholder is limited to the amount (if any)
unpaid on the shares held by that shareholder.
- The rights of shares transfer is restricted by its constitution.
- Number of shareholders are capped at 50 persons (both individual
and corporate shareholders inclusive).
- Any invitation to the public to subscribe for any shares or
debentures of the company is prohibited.
PRIVATE COMPANY LIMITED BY SHARES
Companies Registry (CR) is the only government authority to process the companies
registration and their compliance in Hong Kong. Every application
is submitted to this body with the required document as follows:
- A copy of the new company The Articles of Association (it serves as the new company’s regulatory constitution between
shareholders and the company)
- A completed CR’s incorporation form bearing information about
particular of principle directors, company secretary (must be
either a local individual or company) and founder members (i.e.
shareholders), arrangement of share capital, and a Hong Kong
address as registered office
- A completed form of Notice to Business Registration Office (#)
- Government fee and levy
Remark #: In February 2011, the launch of Inland Revenue Department
One-stoop company and business registration help to speed up
process of incorporation. When the application is submitted to CR,
a simultaneous application for Business Registration (handled by
IRD) is deemed to be made, so the Notice must be submitted
The incorporation process does not required the present of any
directors or shareholders to be physically present in Hong Kong.
Submission through local agent is allowed. However, company
secretary and registered office address by be present in Hong Kong.
The application processing usually takes 1 week. Upon the approval
of an incorporation by CR, the Certificate of Incorporation
certifying the company name and date of incorporation of the
company is issued by CR, while the Business Registration
Certificate certifying the company’s registration of doing business
in Hong Kong and its expiry date is issued by IRD. Collection of
both document can also be done via local agent.
To further speed up the incorporation process, the application can
be submitted electronically via CR e-Registry service which is a
24-hour web portal, the approval can be done as fast as 2 hours,
and the Certificate of Incorporation and Business Registration
Certificate are delivered electronically as well.
Online Hong Kong companies registration (provided by Companies
Registry) is now available here.
Frequently Asked Questions of Incorporation in Hong Kong – CR
Incorporation of a Hong Kong (local) Limited Company – CR
The first rule of naming your company is that no two company names
in the companies registrar are identical, free company name search on CR’s website to check if the proposed names are already in use is a must. There
are also regulation on the use of certain restricted words that are
related to government authorities and public interests. CR does not
offer company name reservation in advance. A company may register
either a English Name, a Traditional Chinese Name, or both, no
other language is allowed. The word “Limited”/”Ltd” or “Company
Limited”/”Co Ltd” must be shown on the suffix.
Reference: Companies Registry Companies Name Search by Cyber Search Centre
No restriction on the maximum and minimum amount of share capital
for any type of Hong Kong companies is prescribed in Hong Kong
companies law. All of the share capital must be classified intodifferent classes of shares with special rights attached to each of them. The class of shares
and their attached rights must be prescribed on the company’s
Articles of Association which is submitted to to CR during
incorporation. The common classes of shares are Ordinary Shares,
Preference Shares of Deferred Shares.
Shareholders (Founder members)
The maximum number of shareholder is 50 persons (individuals or
corporates) regardless of their nationality or place of incorporation. However, one of the shareholders named as principle shareholder
must submit whose particular to the CR and exposed to the public
Although either individuals (must aged at least 18) or corporates
can act as director of a company, at least one of the directors
must be natural person. No restriction on nationality, place of
incorporation, domicile and residence of directors, except that no
corporate director is allowed when a private company which is a
member of a group of companies of which a listed company is a
The latest particular of directors must be submitted to CR and
exposed to the public record, the record must be kept updated in
case of any change.
The directors are responsible to attend annual general meeting, CO
poses no restriction on where and when the meetings be held,
oversea entrepreneur prefers meetings by telephone as well as video
conference technology to save time and cost in traveling. A written
resolution which is provided by the companies’ constitution signed
by all directors is as valid as if the resolution had been passed
at a meeting.
Every company incorporated in Hong Kong must have and maintain at
least one statutory Company Secretary (Note: this position is not
the same as the administrative assistance to management staff)
which is either an Hong Kong resident who aged 18 or above or
another Hong Kong company. For oversea startup which usually
utilize a Hong Kong company with sole director, please be reminded
that the sole director of a Hong Kong company is not allowed to
take up the position of company secretary of this company at the
same time. The particular of the company secretary are exposed to
public like that of the director.
The company secretary’s statutory duties are to maintain the
company’s statutory records including the registers of directors
and shareholders, arrangement of and minutes of directors’ and
shareholders’ meetings and the certificate books, and to prepare
the documents which have to be filed on public record in CR.
Since the position of companies secretary requires knowledge in
Hong Kong companies law, it is often that the oversea entrepreneur
hire local firm to handle those secretarial works.
Every company incorporated in Hong Kong must have and maintain a
registered office address in Hong Kong which act as the legal
communication address and to be exposed to the public. This address
can be the same as or different from the company’s address for
doing business. For privacy protection, entrepreneur often rent
this address from business center.
Accounts and Annual Auditing
Except for those companies entitled to audit and accounts reporting
exemption, Hong Kong companies must prepare for and keep “proper”
books of accounts and financial statements to provide a true and
fair view of the companies’ financial position and performance to
the interested party.
Companies’ accounts must be audited and signed by Hong Kong Certified Public Accountant (CPA) per every accounting year and submit the audited accounts to Hong
Kong Inland Revenue Department in prior to the prescribed deadline
on notice of tax return to the companies.
The submitted accounts of a private company are not published or
filed on any public record.
Reference: Profit Tax Returns for Corporate – Inland Revenue Department
Annual Filing Requirements
In addition to obligation of maintaining the updated records of
companies particular in CR (i.e. updates CR for any of changes such
as alternation of Articles of Association, company name, registered
office address, etc), Hong Kong companies are also required to file
an Annual Return to CR which shows the most updated particulars of
the companies. In other word, the fill in incorporation form again
with the latest information and pay the incorporation renewal fee
and levy accordingly.
Reference: Annual Returns Requirement of Hong Kong Limited Companies
Business Registration and Renewal
The initial Business Registration is deemed to be made when
incorporation applicants submit their incorporation documents to
CR. For renewal, the applicants need to deal with IRD separately
before the prescribed deadline shown on IRD demand note.
Reference: Renewal of Business Registration – Inland Revenue Department
NON- HONG KONG COMPANY
De-facto branch of oversea corporates in Hong Kong
Overseas corporations (i.e. the body corporate incorporated outside
Hong Kong) are allowed to establish “a place of business” in Hong
Kong to perform business activities and thus profit-making. These
oversea corporates are required to register such offices as
“Non-Hong Kong companies” in CR withing one month after the “place
of business” is established.
The most important differentiation between non-Hong Kong companies
and local companies by Hong Kong law is that an non-Hong Kong company is not a separate legal entity from its
oversea owner, this entity is deemed as an “oversea brand office in Hong Kong” of its owing oversea company to carry on business in “a place of business” in Hong Kong physical address, this branch must use the same
business name of its oversea owner who also bears full control and
liability of this branch when it is carry on business in Hong Kong.
In general, local companies (companies incorporated in Hong Kong)
and non-Hong Kong companies are subjected to the same statutory
filing requirement and taxation consequences in the matter of Hong
Reference: Registration of a Non-Hong Kong Company in Hong Kong- CR
Registration, Accounts, Annual Filing
Companies Registry is the authority to handle the registration,
while Business Registration Office under Inland Revenue Department
is the authority to handle the business registration of Non-Hong
The oversea corporations are required to authorize at least one local representative of a non-Hong Kong company who must be either a local residential
individual or a Hong Kong company. The statutory duties of this
representative is similar to that of Company Secretary in a local
In addition to application form of formation and business
registration, Hong Kong authorities requires document of the
oversea company includes the certified copy of Articles of
Association (or its equivalent), a certified copy of Certificate of
Incorporation (or its equivalent), and a certified copy of the latest audited accounts prepared under accounting requirement in the oversea jurisdiction
Except certain incorporation laws or laws of stock exchange in some
jurisdictions, oversea companies are required to file a copy of its
latest published accounts on public record of CR on registration as well as the annual renewal of the Non-Hong Kong
Companies. This filing basis is also applied to the incorporation
particular of the oversea companies.
Alike local companies, any updates on the oversea companies
particular related to its incorporation have to be filed to CR
REPRESENTATIVE OFFICE / LIAISON OFFICE
In the matter of Hong Kong laws, oversea corporations who do not have the need to handle any profit-making activities and
capital raising transaction in Hong Kong are allow to engage in certain business-related activities in Hong
Kong. In such a case, a business entity named Representative Office(sometimes it is known as Liaison Office) in Hong Kong representing this oversea corporations is
Representative Office is not an incorporated body – the fundamental
difference between local companies and non-Hong Kong companies.
Technically, Representative Office must not transact any business in Hong Kong which creates any legal obligations (unable to make any transaction that generate profit
within the taxation regime in Hong Kong). It is allowed to engage in activities such as entering into usual
arrangements with utility companies; with landlords (in respect of
the lease of its office premises); and with its employees. As a
result, its functions is limited to acting as a liaison office between the corporation and the corporation’s offices elsewhere
and introducing Hong Kong customers to those offices.
Reference: “Business Registration Certification” is needed to run
Registration of representative office is not handled by Companies
Registry, its registration requirement is to obtain a Business
Registration Certification handled by Business Registration Office
of Inland Revenue Department (IRD).
The business name of the Representative Office must be the same of
its oversea corporations. An ongoing local office address and the
particular of a local residing individuals act as “manager” of this
office must be submitted for registration.
Since Representative Office must not generate profit within the
scope of Hong Kong taxation, the officeMAY apply to the IRD for exemption from filing Profit Tax Returns on
the ground that the office does not carry on business in Hong Kong.
In practice, the office can fill the return on a “NIL Profit Tax Return” basis for less workload but the same effect.