How to Set Up a Limited Company in Hong Kong

 

By Vlad Cuc, specialist in company formation matters 

 

The private limited liability company in Hong Kong is a type of company that has legal capacity and offers the protection of the personal assets belonging to the founders. Its advantages make it an attractive options for those interested in setting up a company in Hong Kong.

 

Investors who set up a private limited liability company in Hong Kong (LLC) in 2023 typically run small and medium-sized businesses. One important characteristic for this type of company is that it has a separate legal entity and its shareholders have limited liability: they are only liable for the debts of the company according to the amount of investment in the company’s share capital.

 

Investors who wish to open a company in Hong Kong in the form of an LLC should know that it must have at least one shareholder, a company director, and a secretary. The maximum number of shareholders for this type of company is 50 and there are no requirements regarding their residency. The company director can also be a shareholder. The shares are transferable only according to the specifications contained in the company’s Articles of Association. The shares cannot be traded publicly.

 

Investors who are interested in setting up a company in another jurisdiction, such as opening a private limited company in Singapore, we can put you in touch with our partners.

 

 

Another advantage of the limited liability company in Hong Kong is that there is no mandatory minimum share capital. Moreover, the existing capital is easy to raise. The company does not depend on changes in shareholders and continues its activities after the resignation, insolvency or death of a shareholder or director.

 

The LLC is a preferred business form by investors who are interested in setting up a small or medium-sized business. However, it is not the only available business form. Investors who wish to receive complete counsel on the types of companies can reach out to our team of Hong Kong company formation agents. In case you are thinking of starting a business in a different Asian jurisdiction, such as Vietnam, we can put you in contact with our partners - CompanyIncorporationVietnam.com.

 

Hong Kong LLC characteristics 

Investors who want to set up a limited company in Hong Kong are invited to read the main traits of this type of company in the table below:
 

 

 

Our Hong Kong incorporation representatives invite you to watch a short video about the LLC in Hong Kong:

 

 

 

 

 

In order to open a LLC in Hong Kong, the investor must follow a few basic steps. The following documents need to be prepared and submitted:
 

 

The business owner must choose a suitable company name that will not infringe any intellectual property rights. The applications for company incorporation are submitted to the Companies Registry in Hong Kong. Some general guidelines on company names are listed below by our Hong Kong company formation agents.

 

A company name application will be refused if: the name is identical to another one in the Index of Company Names, the Registrar considers that the use of the name would be a criminal offence or of the Registrar believes that the chosen company name is offensive or contrary to public interest. Some company names are not immediately subject to rejection, however they do need to be approved before they can be registered for use. These are the ones that can create the impression that the company is connected with the Government (the name will be allowed only when the company does have a connection to the government). Other situations in which special approval is needed is when the name contains certain words and expressions (such as savings, tourist association, trust or trustee, etc.) or when it is the same mane for which an indication for change was offered by the Registrar. Company names can be limited by other related laws, such as the banking law in Hong Kong which prohibits legal entities from using the word “bank” when the said company has not obtained the approval of the Hong Kong Monetary Authority.

 

Depending on the business field in which they operate, LLCs may need to obtain special permits and licenses. These documents can be obtained from the Trade and Industry Department. In general, business licenses can be distinguished by their type: for products or for services. Examples in the first category include those for selling antiques, watched and jewelry, beverages and tobacco, dairy, bakery and confectionary, leather and fir products, furniture, medicines and medical equipment, food products (a ;larger category that includes several other sub-categories according to the food type), toiletries and cosmetics, among many others. The types of services that require special licensing for LLC in Hong Kong are those for accommodation, construction, education, financial and insurance services, import and export, human health and social work, professional and business services, real estate, transport, storage and courier services as well as water supply and waste management services, among others.

 

The investor must open a bank account for the company incorporated in Hong Kong. The Certificate of Incorporation and the Business Registration Certificate can be issued either in electronic form (for online applications) or in hard copy. They both have the same legal capacity. Some businesses will also have to register with the Inland Revenue Department.  Our experts can give you more details on the Hong Kong limited company registration procedure.

 

1. Set-up requirements: as previously mentioned, investors who open a company in Hong Kong in the form of an LLC need to follow a number of key steps; these are mandatory and the process is generally considered more complex than in the case of the sole trader, for example; however, this business form has its advantages.
2. Compliance: the LLC will need to observe the ongoing compliance requirements for taxation and reporting and inform the authorities on any changes within the company structure or details.
3. Closure: if the business is no longer profitable, or investors have other reasons to terminate it, the winding-up procedure is also one that is performed according to certain particular steps.
4. Others: the beneficial owners of the company are subject to disclosure requirements, meaning that their names will be publicly available with the Companies Registry. 

 

The limited company will be subject to a set of light requirements in Hong Kong when set up as a private company, as these legal entities are not required to file annual financial statements with the Registry. Public HKSAR companies do, however, need to make this submission and our CPA in Hong Kong can assist investors in preparing these. We also provide bookkeeping solutions, among others.

 

As previously stated, limited liability companies in Hong Kong need to observe the annual reporting and filing requirements. These refer to complying with the annual accounting filing as well as maintaining the records and documents at the company’s registered address (a local address that must be maintained throughout the company’s existence). Other mandatory requirements include appointing an auditor, except for the cases when this is not mandatory, renew the business registration certificate, hold an Annual General Meeting, obtain, maintain and renew the business licenses, as needed – for example, the license for financial activities issued by the Securities and Futures Commission. In addition to these, the company shall report any changes to its particulars. These are reported to the Companies Registry and many include a change of address, the number or names of the company shareholders and/or directors, changing the company secretary as well as modifying the value of the share capital. One of our agents who specialize in company formation in Hong Kong can provide complete details on the requirements for submitting these notifications. 

 

Although it is an attractive business center, Hong Kong is not a location where investors can open offshore companies in the traditional sense. This is because the LLC is subject to making certain information available to the public at all times. In addition to this, the accounts must be audited on an annual basis.

 

Limited liability companies in Hong Kong are subject to a corporate tax. Our company formation consultants in Hong Kong can give you detailed information about the tax obligations for companies.

 

 

LLC taxation in Hong Kong

• - 8.25% on the first 2 million HKD of assessable profits as from the year of assessment 2018/2019;
• - 16.5%: on the remainder of the assessable profits;
• - 7.5% and 15%: the rates applicable in the same manner as above but in the case of unincorporated businesses.

 

Please contact our company formation specialists for more information related to the set up of a  limited company in Hong Kong in 2023 or company registration in other countries such as Serbia and Luxembourg.