A step-by-step guide on how to start a private limited company in Hong Kong.
What is a Private Limited Company?
Are you planning to start a private company in Hong Kong? This post has all the details that will help you do just that; read it to the end and let us know if it has been of any help. A Private Limited Company is an individually held entity that is limited to shareholders having shares in the company, and it restricts shareholders from publicly trading shares. As the tenth-largest trading power and the fifth largest financial centre globally, Hong Kong has been known for its favourable business environment for start-up companies. Vast of the majority business entities in Hong Kong are private companies, and they remain a top-notch choice.
Requirements to Start a Private Limited Company
The private limited company, also known as Private Limited Company by Shares as stated in the Hong Kong Companies ordinance, which came to effect on 3rd March 2014, are among five different companies that can be formed. A company limited by shares and limited by guarantee of privacy. Due to its nature of separate liability, and private investors, there is the confidence that their assets are protected and that they will get their money's worth.
Setting up a private limited company is a popular way to start running a business. To help you decide on the best way to go about your business, here is a guideline:
Why Choose to Incorporate in Hong Kong?
The ease of setting up a company. Both the foreigners and the natives in this economic hub have an easy path to setting up their companies. You can do this online in less than 24 hours; foreigners are allowed to take complete ownership of their Hong-Kong based operations.
Open-oriented market. Hong Kong is one of the freest economies as they accept all legal businesses, money transfers, and all currencies are taken; additionally, the government doesn't limit bank transactions to any location.
Business-friendly tax system. Dividend taxes, VAT or sales tax, capital gain tax, and withholding taxes are not applicable. Furthermore, their tax rates regulate from 8.25% to 16.5%. Taxation on Private Limited Companies is favourable.
Geographical advantage. Hong Kong has a significant location advantage as it an accessible getaway to mainland china and Asian countries.
How to set up a Private Limited Company
1. Select the Company's Name. As a sole investor, you should consider the company's needs, size, financial ability, the capital required and location. With that in hand, decide on a company's brand, logo, and name. The Hong Kong Companies Registry (CR) does not give provisional approval or reservation of company name. Under the Companies Ordinance, the CR has the power to change a company name in specified circumstances. The characters are only acceptable in English and traditional Chinese. Business Registration is the first step in, and you should make sure to keep your original business registration certificate.
2. Decide on the company's structure. For a private company in Hong Kong, entrepreneurs must comply with the following: a minimum number of one director should be a human being from 18 years of age and could be a resident and non-resident, the number of directors are not limited. Shareholders should be a minimum of one person and a maximum of 50 people, should be a person, a sole director can act as a shareholder, and this applies for both residents and non-residents. It would help if you had a company's secretary; it is mandatory by law and should be a Hong Kong native.
3. Must have a registered location. It's compulsory to have an office address, and P.O Box addresses are not allowed, a registered office is advised for a company limited.
4. Must have starting capital. Starting as an investor in a limited company, you must have money; the amount, to begin with, is not limited by law. properly document the share capital from shareholders.
5. One shareholder can run the whole business entity. Register all tour assets. in addition to physical address registration, you should register, property assets, liability, a registered office and private property. a company must do all this at the registrar of companies.
Documents Required to Register Such a Company
The following documents are required by the Hong Kong Companies Registry (CR) to set up a company
A Hong Kong application form
A copy of the Articles of Association
A copy of each passport, residential address proof for foreigners
A copy of the Hong Kong ID Card for the country's residents
Copies of all company documents for corporate shareholders
After preparing the papers named above, there are two more steps in the formation of limited companies in Hong Kong. They include filing an application for approval of the proposed company's name by CR, and two, submitting all the required documents to the CR.
If you cannot go through this process by yourself because of unavoidable circumstances like your geographical location, many companies offer setting up company services. All you need to do is provide all your papers, a legal entity, via Email and signatories, and your registration documents should be ready in 24 hours. Their services are high quality and recommended.
You are almost done; the final step is to apply for business licenses and permits. You can operate Most of the businesses in Hong Kong freely. However, the company needs specific permits and licenses offered by corresponding departments of the Hong Kong Government. Registering for these documents is done within one month of setting up a business, and it takes 2-8 weeks after the registration date to be obtained. Some of these permits and licenses include Certificate of Incorporation.
By now, your business is up and running and you should consider opening a corporate bank in the territory. Although it is not mandatory to use the banks in this region, it is advised that you get an active bank account from a notable branch as it will help with clientele and make payments very easy on your part. If you would like to get an account, note a specific bank and get all the papers that the bank requires of you, as they vary from bank to bank.
To prevent unexpected fines from the government, always make sure to file your maintenance annually. Do the researches on the specific returns that are to be filed according to the business you do. Private limited companies thrive in Hong Kong, so they are on the government’s radar most of the time.
Hong Kong has a good business environment; not only do they have attractive tax regimes, but the country's geographical location is favourable. The registration process is straightforward, and it's the most advantageous location to start a private limited Company.