Company Formation in Hong Kong – Know the Mandatory Requirements


Company formation in Hong Kong is an exciting event for local businesses. Forming a company is an essential step for any business wishing to operate in the Chinese market. There are many benefits of company formation in Hong Kong, especially for those looking to expand their business into the Chinese mainland. Many international companies choose to establish a Hong Kong company, making perfect business sense to do so. The following article will highlight some of the main advantages company formations in Hong Kong can offer.

One of the main benefits of company formation Hong Kong is that it provides a unique opportunity for business owners to increase their wealth. A company can be run by a single director or by a board of directors. A sole director will be limited to managing the company’s affairs and only making decisions based on other directors’ advice. On the other hand, a board of directors will have greater power over its assets and operations. A panel of directors can also exercise the CEO’s control (chief executive officer) and bind the company to follow its corporate goals and strategies.

Another advantage of company formation in Hong Kong is avoiding being trapped by the Chinese government’s numerous restrictions on setting up a business. China has many mini-state corporations and free trade zones that act as legal routes for companies to set up shop. However, many of these routes are tightly controlled by the Chinese government. Company formation in Hong Kong, for example, requires the company to register in the Chinese Commercial Registry and pay the corresponding taxes. It ensures that the company formation process will be costly for foreign companies wishing to open an office in China.

On the other hand, Hong Kong company registration does not involve any such restrictions. Companies can have their own Board of Directors and Management. The company secretary is also a significant controller, while the company secretary’s nominee is the company’s director. Neither the nominee nor the company secretary can be a company director or shareholder. So, both the company secretary and the nominee can act as the company’s directors and control the company.

Besides that, there are no restrictions on the amount of money a company can issue its shareholders. Neither do they have to pay a capital gains tax? Any income or gain can be passed on to the shareholder. So, the company secretary can receive a share of your profit in dividends. As the company secretary is also a significant shareholder, they will also enjoy the benefits of company benefits like unlimited access to its share capital.

Hong Kong also allows its registered office to have its address. Whereas, in registered offices in the UK and US, the shareholder must use the same address as the company secretary. It makes it more difficult for the registered office to move its registered office to another address. Thus, it’s inconvenient to go out for annual general meetings or be physically present at the meetings.

You need to fulfil two other mandatory requirements if you wish to set up a limited liability company in Hong Kong. The first one is the establishment of a ‘Shantung’ office. If you want your company to have a registered office, you must establish the office at the Hong Kong government’s Central Executive Office. Your company must also apply for the issue of a registered office to the Hong Kong customs and trade department. If your company fails to comply with these requirements, the company can be shut down. Thus, it is essential to comply with the stipulated conditions to establish your company in Hong Kong.

Apart from its application and registration, most companies in Hong Kong’s essential requirement is that the company’s shareholders must pay the capital into its account every month. Most Hong Kong companies allow their shareholders to pay the capital by cheque or money order. However, if you choose to pay the funds through bank transfers, the company may charge a transfer fee. So, it’s advisable to apply for an inexpensive payment option for your shareholders to contribute to your company.