Setting up a private limited liability company (LLC) in Hong Kong

Are you preparing to do business and expand the international market? Hong Kong is a country with a favorable business environment and preferential tax policies, attracting foreign investors to set up companies here.

In particular, foreign investors almost always choose the Private Limited Company type to establish a company in Hong Kong. Join GLA to learn more about the Private Limited Company type to discover the appeal of this type of business as well as the detailed process for establishing a Hong Kong company with the Private Limited Company type.

1. Why is the private limited liability company type the most chosen?

Private Limited Company in Hong Kong is the most chosen type because of the following attractive benefits and incentives:

2. Requirements for establishing a private limited company in Hong Kong

You need to comply with the following requirements when setting up a private limited company in Hong Kong:

• Company Name - The company name must be approved before proceeding with the incorporation of a company in Hong Kong.
• Directors - There must be at least one director and there is no limit to the maximum number of directors. Directors can be of any nationality and do not need to be resident in Hong Kong, must be at least 18 years old, and must not have been bankrupt or convicted of any wrongdoing. There is no requirement that directors also be shareholders. Nominee directors can also be appointed in addition to the company directors. Board meetings can be held anywhere in the world.
• Shareholders - A private limited company in Hong Kong has a minimum of 1 and a maximum of 50 shareholders. There is no residency requirement for shareholders. Directors and shareholders can be the same or different persons. Shareholders must be at least 18 years old and can be of any nationality. Shareholders can be individuals or companies. 100% local or foreign-owned companies are permitted. Appointment of nominee shareholders is permitted. Shareholders' meetings can be held anywhere in the world.
• Company Secretary - Appointing a company secretary is mandatory. For the secretary, if an individual, he/she must be a resident in Hong Kong; or if a company, he/she must have a registered office or a place of business in Hong Kong. However, please note that, where the director/shareholder is the same person, that individual cannot be the company secretary. The company secretary is responsible for maintaining the books, records and articles of association of the company in accordance with statutory requirements. Appointment of a nominee secretary is permitted.
• Share capital - Although there is no minimum share capital requirement, as a rule, companies incorporated in Hong Kong must have at least one shareholder, one ordinary share issued. Share capital can be expressed in any currency and does not have to be in Hong Kong Dollars (HKD). Shares are freely transferable and are subject to a stamp duty. Bearer shares are not transferable.
• Registered Address - To register a Hong Kong company, the business needs to provide a local address in Hong Kong. The registered address must be a physical address and a postal address is not allowed.
• General Information- Information about company officers, directors, shareholders and secretaries is public information under Hong Kong law. It is mandatory to file the personal details of the officers with the Hong Kong Companies Registry. If an individual wishes to maintain confidentiality, he or she may appoint a company shareholder and nominee director by using the services of a professional consultancy firm.
• Taxation - Corporate tax, (also known as profits tax) is 16,5% on the profits of companies incorporated in Hong Kong. Hong Kong applies a territorial basis of taxation, meaning that only profits arising in or derived from Hong Kong are subject to tax in Hong Kong. Hong Kong does not impose capital gains tax, withholding tax, dividend tax, or goods and services tax and value added tax (GST/VAT) in Hong Kong.
• Compliance procedures - It is mandatory for companies to prepare and maintain accounts. Accounts must be audited annually by Certified Public Accountants in Hong Kong. The audited accounts together with the tax return must be filed annually with the Inland Revenue Department. Every company is required to file its annual returns with the Companies Registry and pay an annual registration fee. The business registration certificate must be renewed one month before its expiry on an annual or triennial basis. An Annual General Meeting (AGM) should be held annually in accordance with the calendar year. A General Meeting must be held within 18 months of the date of incorporation of the company, and no more than 15 months between one AGM and the next. A written resolution in lieu of an Annual General Meeting is permitted.

Normally, it takes about 5-7 working days to complete the incorporation of a company in Hong Kong.    

3. Documents to prepare when establishing a private limited liability company in Hong Kong

To set up a limited liability company in Hong Kong, the following documents will typically be required:

• Copy of the company's Articles of Incorporation: This document will usually be provided by professional service firms that assist with company formation.
• A complete and fully filled out document of company formation includes the following:
  • Company name
  • Registered address
  • Summary of business activities
  • Specific information of shareholders, directors and company secretary
  • Responsibilities of members
  • Registered share capital
  • Number of shares submitted by the subscriber
• For shareholders and directors not residing in Hong Kong: Copy of passport, overseas residential address, bank reference letter
• For shareholders and directors who are residents in Hong Kong:
  • Copy of Hong Kong Identity Card
  • Copy of proof of residence
• For shareholders and directors who are other companies: a copy of the parent company's registration documents such as the Certificate of Incorporation and Articles of Association.

4. Notes for foreigners when establishing a private limited liability company

If you are a foreigner setting up a private limited liability company in Hong Kong, here are some things you should not ignore:

• Foreigners can absolutely become directors and sole shareholders of the company. There is no requirement for the presence of local residents.
• Foreigners wishing to set up a company in Hong Kong are not required to be physically present in Hong Kong to set up the company. However, the individual is required to be physically present to open a bank account (depending on the banks chosen).
• Foreigners who do not plan to relocate to Hong Kong are free to operate their business from overseas. They can enter Hong Kong on a visitor visa if necessary or required.

5. Procedures for establishing a private limited company in Hong Kong

Note:

This is your first time opening a company in Hong Kong, and you do not have a team of legal and financial experts who understand the Hong Kong market, so you should hire a professional consulting firm to help you set up a company in Hong Kong. Hiring a professional consulting firm to provide company formation services is extremely necessary. The consulting firm will support: 

1. Collect the appropriate, and necessary, details.
2. Pre-register the chosen company name and prepare the necessary documents for company formation (including the Articles of Incorporation).
3. Submit company incorporation documents to the Companies Registrar and receive a Certificate of Incorporation.
4. Obtain a business registration certificate from the Hong Kong Inland Revenue Department.
5. Assist customers with opening bank accounts.
6. Preparation: seal, stock certificate and registration papers, regular statutory books
7. Assist with application for travel visas, business licenses, and filing of appropriate annual reports as required

6. Things to do after opening a Hong Kong company

After completing the establishment of a company in Hong Kong, individuals/companies need to pay attention to the following procedures:

6.1 Open a bank account

After registering a Private Limited Company with the Companies Registrar in Hong Kong, the next step is to open a bank account. You can open a traditional bank account or a digital bank account in Hong Kong or Singapore, the US, Offshore, etc. depending on the needs and purposes of the company.  

For traditional bank accounts: Hong Kong companies can open traditional bank accounts in Hong Kong, Singapore, etc. Depending on each bank, an in-person or online interview will be required. However, opening a traditional bank account will require complex business profile review, longer opening time than a digital bank account, with minimum balance requirements, transfer fees, and higher maintenance fees than a digital bank account. You should choose a service company or financial expert to provide consulting support to help you choose and quickly open a bank account for your Hong Kong company.

For digital bank accounts: Digital bank accounts have quick opening times, simple application review requirements, and many banks do not require a minimum balance, transfer fees, and account maintenance fees are lower than traditional bank accounts. Therefore, foreign investors and companies often choose to open digital bank accounts because of its convenient advantages. 

You should choose a consulting firm that provides the selected company formation service that will give you specific guidance on how to choose a suitable bank depending on your requirements, and will also provide you with the necessary information.

Investment tips

• Hong Kong companies should choose to open 2 bank accounts: traditional bank and digital bank so as not to affect payment transactions, company cash flow and use according to the company's purpose and needs.
• The time to open a traditional bank account is long and complicated, from 1-2 months. While waiting to open a traditional bank account, you can quickly open a digital bank account to transact and pay for financial activities of Hong Kong companies without interruption.

6.2 Register and declare with the Internal Revenue Service.

Hong Kong requires all Hong Kong private limited companies to register and file with the Inland Revenue Department's business registration office and obtain a business registration certificate. Business registration with the Inland Revenue Department must be done within one month of the company's incorporation with the Companies Registrar, regardless of whether the Hong Kong company has actually commenced business or not. The business registration number appearing on the Business Registration Certificate is also the company's corresponding tax identification number. 

Upon receipt of the application, the Business Registration Certificate will be issued on the next working day and must be collected in person. The Business Registration Certificate must always appear on the office premises. 

Highlights

• Private Limited Company in Hong Kong is the most popular form of business for foreign companies because of its attractive advantages: limited liability for company assets, tax incentives.
• Hong Kong companies are required to incorporate with the Companies Registrar and register their business with the Inland Revenue Department in Hong Kong.
• Hong Kong companies should open two types of accounts: traditional bank accounts and digital bank accounts to ensure security and convenience in quick financial transactions regardless of the time it takes to open a bank account.