For business communities, Hong Kong is considered one of the best regions to start a business due to its strategic location, favourable tax system, business-friendly environment, and world-class infrastructure. According to the World Bank's 2024 Business Ready Report, Hong Kong ranks among the top 10 out of 50 economies worldwide for its business environment.
This recognition highlights Hong Kong's consistent global reputation as a premier destination for entrepreneurs and companies looking to establish or expand their presence in Asia. With its transparent legal system, efficient company registration process, and minimal restrictions on foreign ownership, Hong Kong provides an ideal environment for businesses of all sizes. Moreover, as a global financial hub, it offers access to major banks, capital markets, and diverse funding options, making it an attractive choice for international investors.
In this guide, we will provide a step-by-step overview of establishing a company in Hong Kong. Whether you are a startup founder or an established entrepreneur, understanding these essential elements will help you make informed decisions and build a strong foundation for your business in Hong Kong.
What is Company Formation in Hong Kong?
Hong Kong company formation refers to the process of legally establishing a business entity in Hong Kong, known for its business-friendly environment. This involves registering with the Companies Registry and obtaining a valid business registration certificate from the Business Registration Office.
In Hong Kong, company formation is governed by the Hong Kong Companies Ordinance (Cap. 622). This legislation outlines the general requirements for company registration and ongoing compliance, ensuring that businesses operate transparently and in accordance with laws.
What Are The Requirements to Set Up a Company in Hong Kong?
To initiate company formation in Hong Kong, you must meet specific requirements set by the Companies Registry, including:
- Appointing at least one director.
- Appointing at least one shareholder with a minimum share capital of HKD 1. Certain sectors, such as banking and finance, may have stricter requirements.
- Appointing a company secretary who is a resident of Hong Kong.
- Designating a registered office address in Hong Kong.
Additionally, you must submit incorporation documents, such as the Articles of Association, in compliance with the Companies Ordinance. After incorporation, registration with the Inland Revenue Department for tax purposes is also required. Meeting all these requirements ensures a smooth and efficient company registration process.
Step-by-Step Guide to Company Formation in Hong Kong
The company formation process is straightforward but requires careful attention to detail to ensure compliance with the Companies Ordinance. From choosing a company name to obtaining a valid business registration certificate, each step is crucial for successful company incorporation. You can follow these steps to set up your company efficiently.
1. Choose the Type of the Company
Start the company formation process by selecting a business structure. This decision is crucial because the chosen structure will determine the registration requirements, tax obligations, and legal liabilities of your business.
In Hong Kong, there are three common types of business structures, each with its own tax and liability implications.
Sole Proprietorship
A sole proprietorship is a business structure owned and operated by a single individual, with no separate legal personality from the owner. This means that the business's income is considered the owner's personal income, and they must file an annual tax return under personal income tax. Although a sole proprietorship is a simple business structure, it must still be registered with the Business Registration Office.
Partnership
A partnership is a business entity established by two or more individuals. In this structure, all partners share profits and losses and are personally liable for all partnership debts.
Similar to a sole proprietorship, general partnerships do not need to be registered with the Companies Registry. However, they must still register their business with the Business Registration Office.
Limited Company
A limited company is a separate legal entity incorporated under the Companies Registry. It is owned by shareholders, with each shareholder’s liability limited to the unpaid amount of their shares.
As a separate legal entity, a limited company is subject to Hong Kong profits tax on its generated profits. Unlike sole proprietorships and partnerships, a limited company must complete the incorporation process with the Companies Registry.
2. Choose The Company Name
After selecting a business structure, the next step is to choose a company name. In Hong Kong, this process must comply with specific regulations. The chosen name must not infringe on existing trademarks and must be approved by the Companies Registry. To ensure compliance with the Companies Ordinance, you should conduct an online name availability search through the Companies Registry’s platform before proceeding.
A distinctive name strengthens your brand during company incorporation. Once approved, this name will be linked to your business registration certificate number.
3. Choose a Registered Address
Every company must have a registered office address in Hong Kong for official correspondence and legal notices. This address cannot be a P.O. box and must be accessible for inspections, and it will be listed on your valid business registration certificate.
It plays a key role in company incorporation and compliance with the Companies Ordinance. Many startups use professional service providers to secure a registered office address. This step is vital for company registration.
4. Appoint Secretary
A company secretary is a legal requirement for company formation in Hong Kong, responsible for ensuring compliance with the Companies Ordinance.
The secretary can be an individual or a corporate entity based in Hong Kong but cannot be the sole director of the company. Their duties include maintaining records, filing returns, and liaising with the Companies Registry. Appointing a reliable company secretary is essential for smooth company incorporation, which is why many businesses hire professional firms for this service.
5. Submit Business Certificates
After appointing a secretary, the next step is to apply for a valid Business Registration Certificate through the Business Registration Office of the Inland Revenue Department (IRD). This certificate, which includes a unique Business Registration Number (BRN), is mandatory for legal business operations in Hong Kong .
For Sole Proprietorship and Partnerships
If you want to register a sole proprietorship or partnership business, you must complete the appropriate application form (Form 1(a) for sole proprietorships or Form 1(c) for partnerships) and submit it to the IRD. Additionally, you must provide a copy of your or your partners' identity documents (such as a Hong Kong Identity Card or passport).
This application must be submitted within one month after commencing business operations.
For Limited Company
If you want to register a limited company, you must complete the incorporation form (such as Form NNC1) and submit it along with the Articles of Association and a Notice to the Business Registration Office (IRBR1) to the Companies Registry. The Companies Registry also offers a one-stop service, allowing you to receive the Certificate of Incorporation and the Business Registration Certificate simultaneously.
The process is quick, and often completed within days if all documents are in order.
You can find and download all necessary forms on the Companies Registry's official website, including examples of Articles of Association.
You can submit these documents through the e-Registry portal or in person at the Companies Registry office. However, if you choose to register your company online, you do not need to download the NNC1 or IRBR1 forms. Simply fill in the required information on the website, and the system will automatically generate these forms.
6. Pay Fees
Pay the required fees to the Companies Registry and Business Registration Office to complete company formation. Fees include the incorporation fee and the cost of a valid business registration certificate.
The Companies Ordinance mandates these payments for legal registration. Costs vary based on the company type and services used during company incorporation. Timely payment ensures quick processing of your company registration. Check the latest fee schedule on the Companies Registry website.
7. Collect Certificates
Once approved, collect the Certificate of Incorporation and a valid Business Registration Certificate. These documents, including the Business Registration Certificate number, confirm your company's incorporation and are essential for opening bank accounts and commencing operations. At this stage, you are ready to operate your company in Hong Kong.
It is important to note that the Business Registration Certificate is typically valid for one year and must be renewed annually. However, you have the option to apply for a three-year validity period. Once selected, this choice remains effective until it is revoked in writing.
Ensuring Compliance for Your Company in Hong Kong
After the company formation, companies must meet ongoing regulatory obligations to remain compliant with the Companies Ordinance. This includes filing annual returns with the Companies Registry and registering with the Inland Revenue Department for tax purposes.
Non-compliance can result in penalties or legal issues, affecting your company registration status. Below are key areas to focus on to keep your company in good standing.
Accounting and Auditing Compliance
All Hong Kong companies must maintain accurate financial records and conduct annual audits, as required by the Companies Ordinance. These records are submitted to the Inland Revenue Department and reviewed by a certified auditor. A company secretary can assist in coordinating audits and ensuring compliance with company registration standards.
Proper accounting supports transparency and simplifies tax filings. Non-compliance can lead to fines from the Companies Registry. Regular audits are crucial for successful company incorporation.
Taxation Compliance
Registering with the Inland Revenue Department is mandatory for tax compliance after the company formation. Companies must file profits tax returns annually, leveraging Hong Kong’s low tax rates. The business registration certificate number links your company to tax obligations. A company secretary can help manage filings to avoid penalties. Compliance with the Companies Ordinance ensures smooth operations post-company incorporation. Timely tax submissions maintain your company registration status.
How Aspire Can Help You Grow Your Company
Aspire simplifies the financial management of your company in Hong Kong, complementing the company formation process. With Aspire’s multi-currency accounts and expense management solution, you can streamline your financial operations after company incorporation, allowing you to focus on growing your business rather than worrying about administrative tasks from day one.
Frequently Asked Questions
What Are the Requirements for Company Formation?
Company formation requires at least one director, a company secretary, and a registered office address in Hong Kong. You must submit incorporation documents and obtain a valid business registration certificate from the Business Registration Office.
Compliance with the Companies Ordinance is mandatory, including registration with the Inland Revenue Department. The Companies Registry oversees the process, ensuring all criteria are met. These steps are essential for successful company registration.
How Much Does It Cost to Set Up a Company?
The cost of company formation includes fees for the Companies Registry and Business Registration Office, typically around HKD 2,000–4,000. Additional costs may arise for a company secretary or registered office address services.
The valid business registration certificate fee varies based on a one- or three-year validity. Professional services for company incorporation can increase costs but ensure accuracy. Check the Companies Registry for the latest fee details for the company registration.
How Long Does It Take to Set Up a Company?
The company formation typically takes 1–7 business days, depending on the Companies Registry processing time. Online applications for company incorporation are faster, often completed within 24 hours. Obtaining a valid business registration certificate may add a few days. Proper documentation and compliance with the Companies Ordinance prevent delays. Engaging a company secretary can expedite the company registration.
Frequently Asked Questions
