How to Set up a Hong Kong Company

A Hot Tip about Foreign Direct Investment in Hong Kong SAR

Posted on: 22 Apr 2010

Hong Kong provides entrepreneurs a number of options as to what kind of company to set up in Hong Kong. Liberal government laws in Hong Kong make it the offshore destination of choice when it comes to company registration. Most entrepreneurs prefer to set up a Hong Kong company as a Limited company for the following reasons.


Limited companies


Limited companies are companies that shoulder limited liabilities from a legal standpoint. The liabilities of the shareholders and proprietors are limited to the value of the shares they hold. This means during a legal tussle, the proprietor or shareholders can only stand to lose the nominal value of their shareholdings. The director or shareholders do not bare any personal liability to the debts of the company whatsoever.


In non limited companies the liabilities of the investors is not limited to their investment in the company. The shareholders are directly responsible for the creditors’ losses and are required to repay the debt their company has caused to its creditors.


Conditions to register a limited company


Hong Kong law allows for a company to be set up by one or more persons; furthermore one single legal or natural entity can act as a shareholder, a director, a proprietor, an investor and also a company secretary simultaneously. There are no restrictions to the nationality of the secretary involved; however it is required that he or she must reside in Hong Kong. There are no restrictions on the domicile or nationality of the other members involved.


A company's executive body is made up of its board of directors who are responsible for the daily functions, supervision of documentation and audits, and deciding and implementing the future course of action for the company in the AGM – Annual General Meeting. As per Hong Kong law an AGM must be held at least once a year; there is also a regulation that there cannot be a gap of more than 18 months between consequent AGM's.


An alternate route to set up a Hong Kong company


If you, as an investor, wish to set up a Hong Kong company in a hurry and cannot afford to wait to complete the normal start-up procedure, there is the option of acquiring a readymade shelf company. Shelf companies are companies that have not commenced any sort or form of business and have no economic presence in the market; such companies have no liabilities or debts at the time of purchase. Shelf companies are set up as per Hong Kong laws and are registered with The Registrar of Companies and have already attained a Certificate of Incorporation. The cost to purchase a shelf company is almost comparable with that of the cost to start up and register your own company in Hong Kong. The company must then obtain a permit from the Business Registration Office to engage in commercial activities.


It is more expensive to set up a Hong Kong company of a limited nature as compared to non-limited companies, however the benefits of a limited company make it the obvious choice for an offshore business.


Posted: 22 April 2010

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