Company Registration in Hong Kong
Hong Kong is an Asian Country that has developed radically within the continent's competitive market. Also, it packs immense capacity for businesses as it is one of the foremost locations preferred by businesses for its lucrative markets. However, companies based in and out of Hong Kong do exceptionally well there.
So, if you are a business owner who is looking to set up a company in Hong Kong must choose the company name first, and type such as LLP, OPC, partnership, etc. Any company can be registered online in Hong Kong, connect with Registrationwala, and we will get you Hong Kong's Company Incorporation certificate in no time.
Benefits of Company Registration in Hong Kong
Before jumping right into the registration process, we wish to detail the benefits of registering your business idea as a Company in Hong Kong. Following are some of the benefits of company registration in Hong Kong:
Access to the Chinese Market
Registering your Company in Hong Kong gives you access to the market of Mainland China. The Pearl River Delta is the largest and most productive manufacturing hub of the Hong Kong region, connected with Hong Kong. The Delta enables trading routes between Hong Kong and Mainland China.
No Double Taxation for Hong Kong and China
Both countries entered into a Comprehensive Double Tax Agreement in 2007 which allowed Hong Kong enterprises investing in China to get preferential treatment, such as reduced withholding tax on the following:
- Dividends
- Royalties
- Capital Interest
- Exemptions on certain capital gains
Hong Kong is an APECee
Hong Kong is a member of the Asia Pacific Economic Cooperation (APEC). This enables several benefits for trade agreements. A registered company in Hong Kong pays lower tariffs on certain goods and services among the APEC member states.
Hong Kong follows the Western Regulatory System for Corporate Entities
Despite being geographically located inside China, Hong Kong continues with its colonial regulatory system. It is a similar system to western nations, making it easier for Western State companies to invest and register their subsidiaries in Kong city. Furthermore, Hong Kong is a signatory of the CEPA (Comprehensive Economic Partnership Agreement), which allows Hong Kong companies to establish cooperation in trade and investment with the Chinese market.
In Hong Kong, Tax rates are low
Every registered Company in Hong Kong pays a Corporate Income Tax of 16.5%. This rate is one of the lowest corporate income taxes among the world nations. Furthermore, Income tax in Hong Kong is also one of the lowest, ranging from 2% - 17%. This makes Hong Kong a popular destination for trained professionals from other countries to settle in Hong Kong.
Lastly, Hong Kong's Government does not levy indirect taxes, unlike India, with VAT and GST. The Government furthers a conducive environment for companies to flourish in Hong Kong, providing extra support for small and medium businesses.
No Forex Regulations in Hong Kong
Hong Kong is the world's major global financial centre, with millions of transactions occurring in different currencies. Also, Hong Kong Regulatory System employs no foreign exchange regulations in the city, allowing unhindered money exchange. They also permit using foreign currencies for multiple official purposes; for instance, the Company can pay for its share capital in currencies other than Hong Kong Dollar.
Hong Kong is a major Banking Payment Hub
The pride of Hong Kong is being one of the world's major International Financial Services centres. They offer an array of financial services and solutions. You can employ a simple procedure to set up multiple currency business accounts to save currency conversion costs.
Types of Company Registrations in Hong Kong
To establish your presence in the Hong Kong market by setting up a company, you have the choice of going either private or public in its shareholding capacity. As per Hong Kong's Companies Ordinance, the following are the major Company types that can be established in Hong Kong:
- Private Limited Company (Limited by Shares)
- Private Unlimited Company with a share capital
- Public Limited Company (Limited by Shares)
- Public Unlimited Company with a share capital
- Companies limited by guarantee without a share capital
Let us look at them one by one:
Private Limited Company
A Private Limited Company (PLC) in Hong Kong can divide its share capital into a number of shares. Each share has a certain value. Company issues these shares to its shareholders. The liability of the Company's shareholders extends only to unpaid share subscription prices. These PLCs are most suited for profit-making businesses.
We have enlisted the features of a registered Private Limited Company in Hong Kong in the following points:
- PLC restricts the shareholders' ability to transfer shares within the Company
- A PLC can have a maximum of 50 shareholders in it at one time
- PLCs in Hong Kong cannot interest the public to subscribe to its shares and debentures of the Company
These PLCs account for almost all of the registered companies in Hong Kong. Majorly, small to medium-sized businesses adopt such kind of a business model. The reason for the popularity of the Private Limited Company business model is many, such as:
- Liability limited to the shares
- Easy Incorporation Procedure
- Separate Entity from the Members
- Ease in ownership transfer
- Good image among Bankers and Investors
Public Limited Company
A Public Limited Company in Hong Kong offers its shares and debentures to the general public. Public Limited Model is the default business model in Hong Kong. If a business is an LLC but not a Private Limited Company or a Company limited by guarantee, then it is a public company. However, the regulatory restrictions on a Public Limited Company are more than a private limited company because it raises capital from the public.
The Public Limited Model is famous among big businesses because they want to raise capital from the public. Also, after a point, medium to large businesses opt for conversion of the private limited to public limited company model as and when they witness substantial growth in their revenue and size. Almost all of the registered Public Limited Companies in Hong Kong are listed on the city's stock exchange.
Unlimited Private and Public Companies
Such a Company hold, despite its shareholders contributing to their share capital, its shareholders are unlimitedly liable for its debts and obligations. In an Unlimited Company, each member is jointly and personally liable for the Company's losses. Foreign investors generally avoid these kinds of public/private companies.
Company limited by guarantee
If a company is limited by guarantee and does not have a share capital, its member's liability extends to the assets they contribute to the Company. NPOs have adopted legal structures in Hong Kong, such as education, research, etc. These companies are not ideal for profit-making motives.