[Hong Kong] Hong Kong Company Formation & Maintenance

Type of Hong Kong Companies

Sole Proprietorship

– Small-scale business for one-man only

– Merits: Simple to set up, Profits entitlement & Lower profits tax rate

– Demerits: Sources of finance, Heavy workload & Unlimited personal liability

Partnership

– Business structure allows two or more people

– Merits: Division of labour, Sharing business risk & Lower profits tax rate

– Demerits: No separate legal existence & Bound by the decisions of others

Private Company Limited

Company Limited by Shares:

– Most common type incorporated under H.K. Companies Ordinance

– Liability of the shareholders of “Company Limited by Shares”

Set Up Procedure: No need to visit H.K.

– Tailor-Made Company

  • E-registration(Online Submission)
  • Traditional Way(Paper Submission)

– Ready-Made Company

  • If no preference company name, find from Shelf Company List

Company Limited by Guarantee:

-Unable to authorize the payment of a dividend or to distribute profits to its members either a provision Article of Association or passed resolution

– Liability Filing Annual Return with Audit Financial Statement

 

Set-Up Procedure: without share capital as following purposes:

– Relief of poverty;

– Advancement of education/training (like association or society);

– Advancement of religion;

– Environmental protection;

– Trust and foundation, and

– Betterment for the community.

Public Company Limited

– Offer its shares and debentures to the public;

– More than 50 shareholders and on maximum restriction

– No restrict right to transfer its shares

 

Merits: Easier to raise capital & Good Prospectus

– If it goes listing, more generic strategies for raising capital on the stock market.

Demerits: Increase Rules and Regulations oversight & Higher levels of transparency required

– It is mandatory to disclose accounts information every year

Company Formation - Private Limited Company by Shares

* Preferences Name which suggests any connection to the Central People’s Government or the Government of HKSAR or which are offensive or otherwise contrary to the public interest or whose use would constitute a criminal offense are generally prohibited

**SCR : Register of Significant Controllers majority directly or indirectly, more than 25% issued shares or voting rights of company or has a right to exercise, or actually exercises, significant influence or control over the company

*** TCSP : Trust or Company Service Provider License

P.S. The first set of statutory audited financial statements of a newly incorporated company to be within 18 months of incorporation (from incorporation date)

General Statutory Filing Requirement

Annual Return – Form NAR1 (Companies Registry)

  • When – Within 42 days from the Anniversary date of every year
  • Government Charges – Within 42 days – HKD 105
    (waived fee from 1 Oct 2020 to 30 Sep 2022, the fee waiver will not apply to late delivery of annual returns
  • Notice – Penalties for not reporting on time
  • Notice – Subsequent summons to court for further reporting
  • Notice – Fines up to HKD 50,000

Business Registration Certificate (Inland Revenues Department)

  • When – Every year start from incorporation date
  • Subject to Government (From HK$250 to HK$2,650)
  • HK$300 for late penalty
  • Penalties for not reporting on time
  • Subsequent summons to court for further reporting

Profit Tax Return (Inland Revenues Department)

  • When – 1st PTR – Within 18 months after incorporation date Reported annually after the financial year ended
  • Tax rate – Initial HKD 2 million – 8.25%, and 16.5% for remaining
  • DOC Required – Financial statements and supporting documents for the year CPA Audit Report

Employer Return (Inland Revenues Department)

  • When – From 1st day of April every year Return report within 1 month
  • Tax rate – No government Tax
  • DOC Required – B.I.R 56A / I.R.56B

Significant Controllers Register (SCR)

New Updated on 1 March 2018 from Companies (Amendment) Ordinance

-Required Hong Kong companies to keep a SCR for inspection by law enforcement officers upon demand

Obligation of the company

-Identifying significant controllers

-Allowing inspection by law enforcement officer

-Giving notices to significant controller & others

-Updating information in the register

-Entering particulars in the register

Nature of Significant Controller

a)The person holds, directly or indirectly, more than 25% of the issued shares in the company or, if the company does not have a share capital, the person holds, directly or indirectly, a right to share in more than 25% of the capital or profits of the company.

b)The person holds, directly or indirectly, more than 25% of the voting rights of the company.

c)The person holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the company;

d)The person has the right to exercise, or actually exercises, significant influence or control over the company.

e)The person has the right to exercise, or actually exercises, significant influence or control over the activities
of a trust or a firm that is not a legal person, but whose trustees or members satisfy any of the first four conditions in relation to the company.

Content of SCR

-Must keep its in English or Chinese language

-The required particular, date of becoming a significant controller and nature of control over the company of every significant controller of the company

  • Individual: Correspondence address, identify document number
  • Corporate: legal form, registration number, place of incorporation and address of registered office 

 

-The particular of any registrable change with respect to each significant controller of the company

-The name and contact details of at least one designated representative to provide assistance relating to
the company’s SCR to a law enforcement officer

Annual General Meeting

New Incorporation

Company limited by Guarantee/ Private Company (not subsidiary of a public company)

– 9 months after the first anniversary of the company’s incorporation; or

– 3 months after the end of that accounting reference period, whichever is the later; and s

On-going Company

Company limited by Guarantee/ Private Company (not subsidiary of a public company)

– 9 months after the end of its accounting reference period

  For example:
 
Year Ended as at 31 March 2018
  For year 2018, the date of AGM not later than 31 December 2018

  Year Ended as at 31 December 2018
  For year 2018, the date of AGM not later than 30 Sep 2019

Notice Period

– At least 21 clear days for notice with all members about the AGM schedule

– If notice shorter than 21 clear days, must agree by all the members entitled to attend and vote at the meeting.

Exemption

1.Under section 612(1), a company is not required to hold an AGM if everything that is required to be done at the meeting is done by a written resolution and copies of the documents required to be laid or produced at the meeting are provided to each member of the company on or before the circulation date of the written resolution.

2.Section 612(2)(a) provides that a single member company is not required to hold an AGM. 

3.Section 613 allows a company to dispense with the holding of AGMs by a written resolution or a resolution at a general meeting passed by all members.

4.Section 611 exempts a dormant company from the requirement to hold AGMs.

General Statutory Filing Requirement >>

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