Hong Kong’s easiest business entity

Private Company Limited by Shares

When doing business in other countries, set up a local limited company (i.e. incorporation) is always one of the choice. In Hong Kong, Private Company Limited by Shares (i.e. Limited Company) is straight-forward to register.

Logo of Companies Registry (CR) and Inland Revenue Department (IRD) - Incorporation in Hong Kong.

Logo of Companies Registry (CR) and Inland Revenue Department (IRD) – Incorporation in Hong Kong.

All type of Limited Company have separated legal entity from its owners.

Although incorporation needs comparatively extra effort and expense in setup and maintenance, its owners can always find its unmatched benefits comparing to other business entities in Hong Kong. Incorporation is regulated by a Hong Kong government authority namely Companies Registry (CR), and its commencing of business requires the registration of  business in Business Registration Office (BRO), a division in Inland Revenue Department (IRD).

The launch of “One-stop Company and Business Registration” facilitate the incorporation of local companies, applicant can submit the incorporation document to CR and IRD will be noticed to process the Business Registration at the same time.

Successful application of incorporation will be issued 2 document – Certificate of Incorporation by CR and Business Registration Certificate by IRD.

For reference, two major types of company to choose and its official definition are as follows:

  • Company Limited by Shares – the liability of members is limited by articles of association to the amount unpaid on the shares respectively held by them. It can be classified into Private Company Limited by Shares and Public Limited Company by Shares. Over 90% of incorporated bodies are Company Limited by Shares
  • Company Limited by Guarantee – no share capital and the liability of members is limited by the articles of association to the amount that the members respectively undertake to contribute to the assets of the company in the event of its being wound up. Non-profit-making organisations are usually registered as companies limited by guarantee.

You are welcome to know more about various business entities in Hong Kong.

Who is eligible to incorporate a Limited Company?

If you are above 18 years old with valid passport (for non-Hong Kong resident) or Hong Kong ID card (for Hong Kong resident) regardless of your nationality, you can begin the incorporation process.

If you are an owner of a non-Hong Kong incorporated company looking for a business entity in Hong Kong but do not require separate liability, we suggest “Representative Office (“Non-Hong Kong Company”).

What is the composition of a Private Company Limited by Shares?

Shareholders, Directors, and Company Secretary are the three required positions of a Limited Company, they are also named Founder Members, First Directors and First Company Secretary during the incorporation process.

Overview of composition of a Private Company Limited by Shares

composition of Private Company Limited by Shares
  • Directors. A minimum of one director and unlimited maximum number of directors are allowed. The director could be an individual or a company (body corporate). The individual director can be of any nationality and need not be resident in Hong Kong, while corporate director can be incorporated in any place. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractices. There is no requirement for the directors to also be shareholders. Nominee directors can also be appointed.

At least one of the director must be nature person.

  • Founder member(s). A kind of shareholders that initiate the the incorporation process of a company. The Company must have at least one shareholder and but could not have more than 50 shareholders (members). Alike Director, the individual shareholder must be at least 18 years of age, either an individual or a company (body corporate) could be. Neither residency and nationality (place of incorporation for body corporate shareholder) requirement for shareholders are imposed. Meanwhile, a director and shareholder can be the same or different person.  100% local or foreign shareholding is allowed. Appointment of nominee shareholders is possible.

A company can only be shareholding or directed by an individual or a body corporate.

  • Company Secretary. Each company must appoint at least a company secretary. The secretary, if an individual, must ordinarily reside in Hong Kong; or if a body corporate, must have its registered office address (a place of business) in Hong Kong. It has to be noted that in case of a sole director/shareholder, the same person cannot act as the company secretary. The company secretary is responsible for maintaining the statutory books and records of the company and must also ensure the company’s compliance with all statutory requirements. It is widely accepted that the founder members to employ a professional company secretary firm in Hong Kong to act as company secretary.
  • Registered Office Address. A local Hong Kong address as the registered address of the company must be provided to Company Registries,  this address must be a physical address, and must not be a PO Box because the government letters will be sent to there for communication with the company. The intended purpose of this address is not limited, so that it can be a commercial, industrial, or residential address. The address must be able to be reached by local postal service because Annual Return and annual Tax Return are sent to this address via local postal service. It is commonly accepted that the company can hire local company secretary firm to provide a local address as well as mail handling services for a Hong Kong company.
  • Share Capital. There are two types of share capital – Authorized capital and Issued share capital. There is no minimum share capital requirement, the general practice in Hong Kong is to have an authorized capital of HK$ 10,000 represented by 10,000 ordinary shares (other type of shares are allowed according to the designated right of its holder) of HK$ 1.00 each. The authorized capital can be increased anytime after incorporation. The minimum issued share capital is usually 1 share of HK$ 1.00. There is no limit or restriction on the maximum amount of share capital for both types. Share capital can be expressed currencies other than Hong Kong Dollar. Shares can be freely transferred.
  • Articles of Association (M&A). Certain documents must be prepared which will form the constitution of every company. The M&A  must be registered with the Companies Registry, we have extra details. It is always recommended to seek professional advice to create the M&A of you company to fulfill your specific demand on the shareholding structure.

Memorandum of Association is no longer required since the Articles of Association covers the information of previously included in Memorandum of Association

What document and information should I ready for incorporation?

  • Company Name in Hong Kong. After you came up with a name for your company, you can perform the Company Name Search via Cyber Search Centre in CR website to check if this name has any conflict to any existing record. The Name Search service is free of charge, and do not have any limitation on the number of search. It’s important to name your company name properly in order to prevent your company from violation to the Company Ordinance or infringement of Trademark of others.

Basic Requirement for a valid Company Name:

  • A Hong Kong company may either have a English Name, a Traditional Chinese Name, or both. Combining English and Chinese Characters is not allowed.
  • The word “Limited” and the characters “有限公司” must be the last word in the English and Chinese (if have) Company Name of a Limited company.
  • The word “Limited” may be dispensed after CR approval. Usually, the limited company is incorporated for non-profit purpose such as religion, art, charity and science can apply for a license from CR to use company name without the word “Limited”. This license requires lodgment fee and license fee, so it is optional.

Tips of compositing a Company Name:

  • It commonly to find lots of company names which have its statue marked as “Dissolved” during a company name search, the dissolved company is legally ended, its name is available for use.
  • You are advised to input English and Traditional Chinese company name for searching.
  • To protect the public interest, CR will disapprove a company name that may constitute a criminal offense, or offensive to the public interest.
  • CR will require special approval to the proposed company name before registration when the name is likely connected to the Hong Kong government and any of its authorities.
  • The use of specific words and expression in company names is regulated by other laws, using them is prohibited unless certain approval, e.g. “Bank”, “Stock Exchange”, “Certified Public Accountant”/“CPA”, “trust”, “chamber of commerce”.
  • Some of the common words are widely considered as “the same as”, here are some of the well-known examples:
    • The definite article, e.g. The Chris Smith Consulting Limited is the same as Chris Smith Consulting Limited.
    • The short form, e.g. “Hong Kong”, “Hongkong” and “HK” are the same.
    • The symbol, e.g, “&” and “and” are the same.
    • The combination by “-”, e.g. combine 2 words with or without “-” are the same, so “Multi-trade”, “Multitrade” and “Multi Trade” are the same.
  • Sometimes, CR will reject a proposed name because the name is “too like” of an existing live record.
  • Regarding to the protection of intellectual property, you are advised to search your proposed name in the Hong Kong Trademark Register after the company name search to reduce the risk of infringement of trademarks.
  • Registered Office Address in Hong Kong. This address must be a valid postal address located in Hong Kong. This address will be record in CR for postal communication between the Limited Company and Government

Basic requirement for a valid Office Address:

  • The intended purpose of this address is not limited, so that it can be a commercial, industrial, or residential address. The address must be able to be reached by local postal service because government’s communication e.g Annual Return and annual Tax Return are sent to this address.
  • Company Secretary in Hong Kong. It is a legally required member to each private company limited by shares to have at least one Company Secretary to perform the regulatory duties of this company to ensure the company’s ongoing compliance to its statutory requirement. It includes management of company’s statutory material (e.g. Register of Shareholders and Directors), holding statutory meetings of directors and shareholders, handling the change of register related to the company’s statute such as change of directors, registered address, and preparing and completing the filing of Annual Return. You may refer to [renewal] for more details of Company Secretary duties.

CS is NOT a position of personal assistance to the company’s director.

Basic Requirement:

Each company must have at least one Company Secretary. Either a natural person who is a Hong Kong resident or a corporate body which is incorporated in Hong Kong. However, it the company has only one director (so it much be a natural person) then this person cannot take the position of company secretary at the same time.

Document required:

  • For Natural person company secretary, Hong Kong I.D. card and residential proof of the Hong Kong residential natural person.
  • For Corporate Body company secretary, Hong Kong Certificate of Incorporation of Hong Kong company and its registered address.
  • Director. The position of Directors in a Limited Company is a management staff employed by this company. Although it is not the owner of the company, it is hired to be the “captain” of this business vehicle to control of its daily courses. Guidelines to the duties and responsibilities of directors in a company may vary from company to company. Generally, these derive from a company‘s constitution and different regulatory authorities from business to business. Since no business is totally the same, general principles of directors’ duties is written for reference, they are not the exhaustive statements of respective law, they are guideline to business owners to assess the behavior of a director’s behavior. The outline of directors’ duties can be found and download here 

Basic Requirement:

At least one director of a company must be a natural person, nationality of this person is not restricted for a Private Company; Either a company incorporated in Hong Kong or outside Hong Kong can act as corporate director of a company.

Document required:

  • For corporate director, Certificate of Incorporation in Hong Kong or outside Hong Kong, and its registered address proof
  • For natural person director, Hong Kong ID card or Passport copy (for non-Hong Kong resident), and his residential address proof

Directors (both natural person or body corporate) have to sign to consent to act as director of the company. They can either sign to consent during incorporation or no later than 15 days after incorporation. If a founder member is also a director, then he must sign it on incorporation.

Initial Shareholdings and its share capital

Every company which is limited by shares must state its share capital and initial shareholding structure among its initial shareholders (we call the initial shareholders as Founder Members). To describe the structure of shareholdings, the founders has to “create” the total number of shares and the value of each share that are owned by a company initially, and “transfer” the specific portion of total shares to each founder member according to specific member’s degree of ownership. The shares are “created” and “transferred” because none of the real money transaction is involved. In other words, these action are done on the paper.

In nutshell, the “created” Share Capital on paper is “Authorized Shares Capital” while the “transfered” Share Capital on paper is “Issued Capital”.

Information Required

To fulfill the requirement on incorporation in Hong Kong, the founder members must correctly state the following:

  • Class of Shares (eg. Ordinary, Preference, etc)
  • Total number of shares proposed to be issued
  • Currency
  • Total amount of share capital to be subscribed by all of the founder members
  • Total amount to be Paid Up or to be Regarded as Paid Up on the Shares Proposed to be Issued
  • Total amount to Remain Unpaid or to be Regarded as Unpaid on the Shares Proposed to be Issued

The company can issued extra shares after its incorporation for changing of shareholding structure, so it is not necessary to hold extra authorized share during capital incorporation.

If the company issues more than one class of shares on incorporation, the rights of each class MUST be clearly stated on Particulars of Rights Attached to Shares, including whether shares are redeemable, voting rights, rights to receive dividends, rights to receive capital, etc.

Articles of Association for Private Companies Limited by Shares

Memorandum of Association (abbreviation: MA) is no longer required for incorporation. Previously, the companies were required to prepare a Memorandum & Articles of Association (abbreviation: M&AA), right now only a copy Articles of Association is required.

A company’s Articles of Association (abbreviation: AA) is a document which form the company’s constitution. It states the company’s initial shareholdings structure among founder members (initial shareholders), and defines the responsibilities of the directors and controlling of shareholders to directors . It must state that the liability of its members is limited.

The AA is not a specified form. To facilitate the incorporation process, Companies Registry has provided samples of  AA.

Do I need to visit Hong Kong to complete the incorporation process?

No, you can complete the incorporation via portal website of Hong Kong government or postal hard copies to Hong Kong government of completed application forms and the required documents. The service charge can be settled electronically.

Where can I get the Application Form?

The application form can be downloaded as follows:

  • From Companies Registry, NNC1 Incorporation Form (Company Limited by Shares), sample is available.
  • From Business Registration Office, IRBR1 Notice to Business Registration Office (Notice specified by the Commissioner of Inland Revenue).

Alternatively, you can go through the submission of above document via CR’s service portal at e-Registration services website.

 

How much is government’s incorporation fee?

Government charges(HK$)Remark(s)
Fee payable on application of C.I.1,720-If unsuccessful, an application for a refund of HK$1,425 may be made
Fee and Levy on application of B.R. Cert.1-year certificate: 2,250-
OR
3-year certificate: 5,950-
“3-year certificate” is the longest valid period of a certificate.

For annual renewal of C.I. of Private Company Limited by Shares, please refer to here.

How long is the processing lead time?

  • Submission in electronic form. Electronic Certificates for companies limited by shares will normally be issued within 1 hour after delivery of documents at the e-Registry. An email notification for download of the Certificates will be sent to the message box and registered email address of the registered user who submits the application.
  • Submission in hard copy form Companies limited by shares will normally be incorporated within 4 working days. A fax notification will be faxed to the presenter who has provided his name, address, Hong Kong telephone number, Hong Kong fax number and email address in NNC1, when the Certificates are ready for collection. The Certificates have to be collected in person at the Companies Registry. A written authorisation will be required if the presenter sends a representative to collect the Certificates.