Today we’d like to inform all about Hong Kong Company Formation & Maintenance.
Please refer to the youtube and the details!
Type of H.K. Company
Sole Proprietorship
This type of business entity is for small-scale one-man type business only; very simple to set up with lower profits tax rate
Partnership
It is established and co-owned by two or more people who join together to carry on the business with a view of sharing profits
Partnerships enable a sharing of responsibility and a business to raise capital
Limited Company
For the limited company, there are 2 types: a company limited by shares or a company limited by guarantee.
Private Company Limited
Company Limited by shares
For the Company Limited by Shares, the liability of the shareholders are limited to the capital originally invested.
Private Limited by guarantee
Under Company limited by guarantee, the liability of its members is limited in its Article of Association to the amount which the members have undertaken to contribute should the company be wound up.
Public Limited Company
Public limited company can offer its shares and debentures to the public and its shares can be freely transferred
Company Formation
In HK, the majority of companies are registered as companies limited by shares.
And it is the most common types of entities used for SME business or trading companies in Hong Kong.
Private Limited Company by Shares
Company name
For the company name, you can design your own name and the company can be incorporated with either an English name, a Chinese name, or both.
Director
Every Private Limited Company must have at least 1 director who is a natural person at least 18 years old. And there is NO nationality requirement and No legal maximum for the number of directors. In addition, the sole shareholder can be appointed as director of the company as well.
Shareholders
The private company limited by share must have at least 1 member and maximum 50 members.
The shareholder can be an individual or a corporate of any nationality, while it is prohibiting any invitation to public to subscribe for any shares or debentures because of private company.
Company Secretary
Every Private Limited Company is required to appoint a company secretary. The Company Secretary must be HK residents or bodies corporate having their registered address in HK.
RO
A local Hong Kong address as the registered address of HK company must be provided to Companies Registry. This address must be a physical address, and must not be a PO Box address.
Company Formation – Bank Account Opening
Basically, the bank will check all of corporate customers on their background about KYC (Know Your Customer) and KYB (Know Your Business).
NAR1
In HK, the majority of companies are registered as companies limited by shares. And, a Hong Kong Company is required to take care the reporting & filing requirement for the company every year under the Companies Ordinance and Inland Revenues Ordinance.
The annual return is used to call the form NAR1. It is a report to notify the CR of updated information and company structure. Whether the company structure has changed or not during the year, it is required to file the Annual Return with the latest company structure within 42 days from the anniversary date. For any late filing, there will be a government penalty imposed on the company.
BR renew
Regarding renewal of the Business Registration Certificate, the Business Registration renewal demand note would be sent to the business address of the company before 1 month of the current one expires, the demand note would display the business address, business name, date of payment and the valid period. The company shall settle the payment with IRD within 30 days from the anniversary date in order to obtain the updated Certificate.
Also, the company should inform IRD of any change of the BR particular, such as change of business address, change of nature of business, commencement of business and etc.
PTR
For tax reporting, the company shall get its first profit tax return within 18 months after the date of incorporation date and each subsequent PTR for the company will cover 12 months and should be filed annually.
For corporations, the profits tax rate for the first 2 million HKD of profits earned is 8.25%. Profits above 2 million HKD earned by a company will be subject to the tax rate of 16.5%.
ER
For the Employer’s return, the company have an obligation to file the Employer’s Return to Inland Revenue Department for all its employees annually no matter the employee rendered service in or outside Hong Kong.
The employer should report all employee’s personal particular, remuneration paid to the employee in the relevant year of assessment.
In general, employer’s return will be delivering to the company by IRD on 1st working day of April every year. And, the company should report the return within 1 month from the issuing date.
Regulation Update: New Inspection Regime
For the implementation of this new regulation, there are total 3 phases:
Phase 1 From 23 August 2021, companies may replace usual residential addresses (“URAs”) of directors with their correspondence addresses, and replace full identification numbers (“IDNs”) of directors and company secretaries with their partial identification numbers on their own registers for public inspection;
Phase 2 From 24 October 2022, Protected Information of the Directors and other individuals will be replaced with correspondence addresses and partial identification numbers for public inspection. Protected Information contained in documents filed after commencement of this phase will not be available for public inspection.
Phase 3 From 27 December 2023, data subjects could apply to the Registry for protecting from public inspection their Protected Information contained in documents filed with the Registry, and replace such information with their correspondence addresses and partial identification numbers. “Specified persons” could apply to the Registry for access to Withheld Information of directors and other persons.
Change in Particulars
The company shall keep the updated particulars with Registry, if there is any change of the particular and the company may deliver the notice in the specific form “Notice of change in particulars of the company secretary and director” within 15 days after the change.
FAQs
Q: What is the tax rate of the HK company?
A: It is depended on the type of the company:- For the private limited company, there is 2 tiered – tax rate. First 2million HKD assessable profit tax, tax rate is 8.25%. if over 2 million HKD assessable profit tax, the tax rate is 16.5%
Q: I’m not the HK resident, can I own my company in HK?
A: Yes, you can 100% own your company in HK and there is no restriction on the nationality to setup the company.
Q: Whether I shall visit HK for company formation? How about bank account opening?
A: For company incorporation, you’re not required to physical visit Hong Kong and it can be done by online. However, the director/ authorized signatory shall visit HK for bank account opening and sometime the shareholder may require to visit too, it is subject to the bank policy.
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