Do you wish to set up a business in Hong Kong like many other foreigners have before you? Find out all that you need to know about procedures in this article.
Hong Kong is a special administrative region that provides many incentives for foreigners looking forward to set up a business there. In fact, Hong Kong is an ideally prosperous destination thanks to its smooth management, bank facilities intended for consumers and investors, as well as low tax rates. Indeed, Hong Kong enjoys a liberal economy.
By investing in Hong Kong, you will therefore benefit from a stable social and political environment, more financial freedom, a lower corporate tax rate compared to other special administrative regions (17.5% on profits), as well as quicker and more effective performance. Moreover, procedures regarding the setting up and closing down of a business are simple, quick and cheaper.
On the other hand, a minimum capital is not required for the setting up of a business in Hong Kong, and a single stakeholder is enough. Finally, the company can be registered online, which is also rather encouraging and time-saving.
Types of companies
To date, seven different types of businesses can be set up in Hong Kong.
The Sole Proprietorship, for instance, consists of a single person who is liable to the company's debts and personal property.
The Company Limited by guarantee generally consists of at least two partners who are liable according to their amount of contribution to the company.
The Unlimited Company requires at least two partners with unlimited and combined liabilities.
The Private Limited Company requires between 1 and 50 partners whose liabilities are limited to their amount of contribution.
The Public Limited Company can have many partners whose liabilities are limited to their amount of contribution.
The General Partnership is authorized to have between 2 and 20 partners whose responsibilities are unlimited regarding the company's debts and bonds.
The Limited Partnership allows as many partners as in the case of the General Partnership. However, at least one partner is entitled to have unlimited liabilities while others' responsibilities are limited to their amount of contribution.
Naming and registering the company
First of all, you are required to choose a name for your company. Note that this step can be performed online. You just have to request for a name from the Companies Registry. Once you have received the approval of the Registry, an incorporation certificate will be issued.
Documents to be produced are the following:
- a copy of the company's statutes
- a copy of the IRBR1 (Notice to Business Registration Office) or a variant according to the type of company to be set up.
When filling the formalities online, you will be able to download the company's incorporation certificate and registration certificate within the same day. Fees of around HKD 4,000 apply.
Registering at the Labor Department and the MPFA
Once registered, all companies who intend to recruit workers are answerable to the Employment Ordinance regarding wages. Therefore, you are required to subscribe to an insurance, both for your part-time and full-time employees. This insurance should provide coverage in case of fatal occupational accidents or related injury, handicap, disease, etc.
Moreover, all 18 to 65 years old employees having been hired for more than 60 days have to be registered with the Mandatory Provident Fund scheme (MPF).
As the founder, you also have to register the company with the Labor Department and the Mandatory Provident Fund Schemes Authority (MPFA). Specialized agencies can provide assistance with these formalities. You can even request for help from banks to register with the MPF scheme.
Finally, you are required to order a company stamp which will be required during administrative formalities. Fees of HKD 215 apply.
Companies Registry www.cr.gov.hk
Companies Registry – Booking the company's name www.icris.cr.gov.hk
Companies Registry – Forms (as from No. 26, depending on the type of company) www.cr.gov.hk/en/forms
Labor Department – Employment ordinance www.labour.gov.hk
Mandatory Provident Fund Schemes Authority – MPFA www.mpfa.org.hk