Foreign companies that wish to establish their presence on the Hong Kong market can choose to open a branch or a subsidiary or a representative office. The most important aspects to consider when deciding to choose between one business structure and another are the company’s plans for the future and long-term goals.
The main characteristics of the branch and the subsidiary are summarized in the video below:
Subsidiaries in Hong Kong
A subsidiary is a company in Hong Kong, usually a private limited liability company that is wholly-owned by the foreign investor. The limited liability company is a separate legal entity from the parent company and will be treated just any other type of company in Hong Kong, in terms of taxation and requirements for incorporation.
The company registration procedure in Hong Kong is simple and our Hong Kong company formation representatives can help you register a subsidiary in the shortest amount of time possible. A subsidiary will need to have a name that has received approval for use, will need a local registered address, a director and a shareholder and share capital but with no minimum requirement.
The biggest advantage of the subsidiary, and the reason why some foreign investors prefer this business form, is that the parent company does not have to be liable for the debts and obligations of the subsidiary. The parent company will own a part of the subsidiary’s share capital and will be limited only to its extent.
Branches in Hong Kong
A branch in Hong Kong is essentially an extension of the parent company abroad and is not a separate legal entity. This means that the company abroad is responsible for all the branches’ debts and liabilities. Like a subsidiary, a branch must also be registered at the Hong Kong’s Companies Registry.
The biggest advantage of a branch in Hong Kong is related to the tax advantages it can have in relation with the parent company and the fact that it can rely on credit from the parent company. Usually, branches require less time to be incorporated and this is also a reason why some foreign investors choose to set up a branch.
The company registration procedure in Hong Kong for branches and subsidiaries is similar to that required when opening any type of company in Hong Kong. If you want to open a Hong Kong company, our company formation agents can give you detailed information about the documents needed and any associated costs.
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