I. ABOUT THE COUNTRY
Hong Kong consists of a peninsula and a group of islands. The total area is approximately 400 square miles. It is 100 miles southeast of Guangzhou in the South China Sea. Before 1997, Hong Kong was a British colony. It has now reverted back to the People’s Republic of China as a special administration region (SAR). The official languages are English and Chinese. English is widely used in the commercial and political sectors while Cantonese (the regional Chinese dialect) is used in domestic trade and industry. Hong Kong is one of the most densely populated areas in the world and the population is approximately 7 million, most of which are of Chinese origin. A local government will continue and it will have full autonomy with regard to executive, legislative and judicial matters, The legal, social and economic systems will remain in force. All forms of property, including inheritance and ownership by non-Hong Kong citizens, will be respected.
II. THE ADVANTAGES
Hong Kong is one of the major business and financial centers in Asia with an established international banking system and infrastructure. It offers an excellent range of professional services. The local currency is the Hong Kong Dollar which is freely interchangeable but has a pegged exchange rate against the US Dollar. There are no exchange controls.
Foreign income is exempted from tax. It is not based on residence but only on income source generated within the region. No taxation is levied on income earned outside Hong Kong even when remitted to Hong Kong. The rate of taxation for companies is 17% on Hong Kong source income only. In practice this means that, with careful structuring, as long as a Hong Kong company is not actually doing business in Hong Kong it would normally be possible to arrange the affairs of the company so that no tax would be payable. For example, if a Hong Kong company’s business or trading activities are based outside Hong Kong no taxes will be imposed. Estate duty was completely abolished in 2006 February.
You may create a Hong Kong registered corporate entity in the following ways:
(1) By incorporating a new Hong Kong company.
(2) By registering an existing foreign company in Hong Kong under Part XI of the Hong Kong Companies Ordinance.
III. CHARACTERISTICS OF THE HONG KONG INCORPORATED COMPANY
The minimum number of shareholder is one and for a private company the maximum number of shareholders is 50. The shareholders may be individuals or corporations of any nationality. Details of shareholders have to be filed in the Companies Registry. Corporate shareholders are permitted and anonymity can be achieved by the use of nominee shareholders.
There must be not less than one director, who can be individuals or corporations. Individuals may be of any nationality but the Companies Registry requires full details of them have to be filed. Meetings of both directors and shareholders can take place anywhere, unless limitations are stated in the Articles of Association. The first meeting must be within 18 months of the date of incorporation and then no more than 15 months apart.
A local secretary must be appointed. Either individuals or a local formed corporations as it was required that the secretary to be from time to time receiving and taking care of the company affairs with the governmental authorities.
Every company must appoint an auditor listed in the Hong Kong Society of Accountants who holds a practicing certificate. The company must keep accounting records and these records may be kept at the registered office address or elsewhere at the discretion of the directors. There is no requirement to file accounts with the registrar but they must be filed with the Tax Authorities. Hong Kong companies are required to file an annual return which gives details of the current directors and of the shareholders who have held shares in the company at any time during the year.
The company must have a registered office address in Hong Kong which must be a physical address but not a post office box. The address has to be notified within 14 days after the incorporation, to the Registrar of Companies. A register of directors, secretaries, shareholders and meetings must be maintained at the registered office address at all times. Also, the names and addresses of the Directors, Shareholders and Company Secretary have to be lodged with the Registrar of Companies for public access.
REGISTRATION OF FOREIGN COMPANIES IN HONG KONG
A foreign incorporated company may be registered in Hong Kong. The principles of England form the basis of the legal system of Hong Kong, but they have been extended and modified by the application to Hong Kong.
For more information, please visit http://www.gov.hk/