Hong Kong Limited Company (Hong Kong Ltd)

There is no "offshore" legislation in Hong Kong. All companies are incorporated under the same legislation – HK Company Ordinance, 1997 version, as amended 2004, whether they are doing business locally or "offshore".

Legal form: To do business in Hong Kong, one can set up a sole proprietorship, a partnership or register one's own company incorporated elsewhere as an overseas company in Hong Kong. However, the most common form of business entity in Hong Kong is the private limited company, which limits the liability of the shareholders to the capital subscribed.

Name of the company: Hong Kong private limited companies must use the suffix Limited or Ltd. to denote limited liability. The following names to be used, require licensing: Bank, Insurance, Assurance, Re-Insurance, Trust, Trustee, Savings, Royal, Asset management, Fund Management, Investment Fund, Building Society, Municipal, Chartered, Chamber of Commerce, Tourist Association, Kaifong, Mass Transit, Underground Railway. Names denoting any connection to local, state or national Governments are generally prohibited.

Memorandum and Articles of Association: A company is incorporated in Hong Kong by application made to the Registrar of Companies. Memorandum and Articles of Association and Declaration of Compliance must be lodged with the Registrar. Memorandum specifies the activities in which the company may engage and Articles of Association specifies the rules governing the internal management of the company. A Notice of Situation of Registered Office is also required to be filed within fourteen days of the date of incorporation. Business registration fee has to be paid to the Inland Revenue Department within 30 days after the date of anniversary of incorporation, and then each year thereafter. Government fee is HK$2,600.

Shareholders: A minimum of one shareholder is required which may be an individual or a corporate body. Details of the shareholders must be filed and appear on the public file, but anonymity can be preserved by the use of nominee shareholders. Shares must be expressed in a fixed amount. "No par value" or "bearer" shares are not permitted. While it is usual for the share capital to be expressed in Hong Kong dollars, it can be expressed in any currency. A multiple currency share capital is also permissible.

The share capital: There is no specific minimum capital requirement. The standard authorized share capital is HK$ 10,000. The minimum issued capital is two shares of par value.

Directors of the company: Hong Kong limited company requires a minimum of one director and corporate directors are permitted. Details of the directors appear on the public file, but anonymity can be preserved by the use of nominee directors. There is no requirement to have resident directors.

Registered office and secretary: Every company, registered in Hong Kong is required to have a registered office and address there, which should be notified to the Registrar. Hong Kong registered companies must also have secretary, who can be corporate body or individual resident in Hong Kong.

Taxation: Hong Kong is one of the few countries in the world that tax on a territorial basis. Many countries levy tax on a different basis and they tax the worldwide profits of a business, including profits derived from an offshore source. Hong Kong profits tax is only charged on profits derived from a trade, profession or business carried on in Hong Kong. Consequently, this means that a company, which carries on a business in Hong Kong, but derives profits from another place, is not required to pay tax in Hong Kong on those profits. Hong Kong sourced income is currently subject to a rate of taxation of 17,5 percent.

Audit and financial returns: A Hong Kong company must keep accounting records, which may be kept at the registered office address or elsewhere at the discretion of the directors. Every company must appoint an auditor who must be a member of the Hong Kong Society of Accountants and hold a practicing certificate. Although there is no requirement to file accounts with the Registrar, there is a requirement to file accounts with the tax authorities. Annual return is required to be filed to the Companies Registry within 42 days after the date of anniversary of incorporation, and then each year thereafter. Government filing fee is HK$105.

Meetings: Company meetings need not be held in Hong Kong. An annual general meeting (AGM) must be held once in every calendar year and not more than 15 months after the last preceding AGM. However, a company need not hold its first AGM until 18 months of its incorporation. A company can dispense with the holding of AGM if everything that is required or intended to be done at the meeting is done by resolutions.

Time needed for Hong Kong company formation: Usually it is up to 10 working days.