BusinessHong KongOffshoreUltimate Guide To Hong Kong Offshore Company Formation

December 31, 2021by Tetra Consultants0
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Hong Kong has always been an attractive jurisdiction for business owners seeking to gain access to the lucrative Chinese and Asian market. With a strong pro-business environment, skilled labour force, low Hong Kong offshore company tax and an easy incorporation process, Hong Kong is an ideal place for setting up an offshore company. While registering a company in a new jurisdiction may seem like a daunting task, it is relatively easy to setup offshore company in Hong Kong. Hong Kong offshore company formation can be done remotely with the following steps:

Steps to Hong Kong offshore company formation

Step 1: Choose an optimal business entity

Step 2: Select a company name

Step 3: Register business with the Companies Registry

Step 4: Open corporate bank account

Step 5: Complete tax registration

hong-kong-company-formation-guide

[ps2id id=’step1′ target=”/]#1 Choose an optimal business entity for Hong Kong offshore company formation

  • The first step to setting up a business in Hong Kong is to choose the business entity you wish to incorporate. It is important to consider your company structure, business activity and long-term goals when you decide on your business entity. The business entities you can incorporate in Hong Kong are as follow:

Sole Proprietorship

  • A sole proprietorship is a business entity that is established by a single individual. An individual may choose to start a sole proprietorship business to gain better control over his or her business. An individual in a sole proprietorship will own all the profits and assets in the business and be held personally liable for the debts and liabilities incurred by the business. In Hong Kong, there is no nationality requirement for a sole proprietor. 

Private Limited Company

  • A private limited company is a type of limited liability company and is regarded as a separate legal entity from its shareholders. This means that shareholders and directors of the company will not be held liable for any debts and obligations incurred by the company. They will only be held liable for the number of shares they hold in the company. A private limited company is the most common business entity in Hong Kong. In Hong Kong, at least 1 director and 1 shareholder are needed to set up a private limited company. The shareholder and director of the company can be of any nationality and residence. 

Company Limited by Guarantee

  • A company limited by guarantee is a common business entity for non-profit organizations. Such a company does not have share capital or shareholders. Instead, it will have some members who are guarantors. Such members will be held liable for the amount they contribute to the company. A company limited by guarantee in Hong Kong must have at least one member, one company secretary and two individual directors.

Partnership

  • A partnership is formed when two or more co-owners decide to run a business together. There are 2 types of partnerships in Hong Kong, namely a General Partnership and a Limited Partnership. In a general partnership, all partners will be in charge of running the business and be held personally liable for all the debts and liabilities incurred by the business. However, in a limited partnership, there will be two types of partners: a general partner and a limited partner. A general partner will be in charge of overseeing the business’s daily operations and will be held liable for all the debts and obligations incurred by the business. Meanwhile, a limited partner will not have control over the operations of the business and will only be held liable for the liability incurred by the business by the amount of investment they hold in the partnership. In essence, a general partner has unlimited liability, but a limited partner has limited liability.

Branch Office

  • A branch office is a company registered as an extension of the parent company. Foreign companies that incorporate outside of Hong Kong can choose to set up a branch office in Hong Kong. The branch office will not be regarded as a separate legal entity. This means that the parent company will be held liable for any debt and liability incurred by the branch office. All branch offices in Hong Kong are required to employ a local representative.

Representative Office 

  • Foreign companies incorporated outside of Hong Kong can also choose to set up a representative office in Hong Kong. However, unlike a branch office, a representative office is not allowed to conduct any business activity that generates revenue. Typically, foreign investors will choose to set up a representative office to conduct market research, collect information and promote the parent company’s presence in Hong Kong. Similar to a branch office, a local representative is required to open a representative office in Hong Kong.

[ps2id id=’step2′ target=”/]#2 Select a company name

  • The next step is to decide on your company name which can either be in English or Chinese. After you have decided on the company name, you can proceed to search for the availability of your company name through the Companies Registry. As your company name cannot coincide with the trademark of another company, you should also conduct a search in the Trademark Register maintained by the Intellectual Property Department.

[ps2id id=’step3′ target=”/]#3 Register business with the Companies Registry

  • Once you have verified the availability of your company name, you can start to prepare the documents required for the incorporation of your offshore company in Hong Kong. This includes the application form (Form NNC1 for a company limited by shares and Form NNC1G for a company not limited by shares), a notice to the Office of Business Registration, a copy of the Articles of Association for your business. If you are unclear about how to draft an Articles of Association, you may want to refer to the “Electronic Company Incorporation and Document Submission and e-Reminder Service” of the Hong Kong Companies Registry website.
  • The registration process can be done remotely through the Hong Kong Companies Registry e-Registry service. Upon successful incorporation of your Hong Kong company, you will receive a Certificate of Incorporation and Business Registration Certificate.

[ps2id id=’step4′ target=”/]#4 Open corporate bank account

  • After you have registered your company, you should proceed to open a corporate bank account. Most banks in Hong Kong require a face-to-face interview with the client, so be prepared to travel to Hong Kong to open your corporate bank account.

[ps2id id=’step5′ target=”/]#5 Complete tax registration

  • The last step is to register your company for income tax with the Inland Revenue Department. All resident and non-resident companies in Hong Kong are subjected to an annual corporate tax rate of 16.5%. Since Hong Kong adopts a territorial basis of taxation, only profits derived from business activities within Hong Kong will be taxable. Capital gains are non-taxable in Hong Kong.
  • In addition, all companies incorporated in Hong Kong must have their financial statements and accounting records audited by a certified auditor in Hong Kong.

How we can assist you with Hong Kong offshore company formation

Although it may seem simple to open offshore company in Hong Kong, it may not be easy to draft the Articles of Association without the necessary legal expertise and knowledge. Furthermore, opening a corporate bank account and negotiating the terms and conditions with a Hong Kong bank can be difficult due to the strict compliance measures and requirements. 

Tetra Consultants provides you with a fast and easy way to setup offshore company in Hong Kong through our service package which includes company registration with the Hong Kong Companies Registry; provision of local company secretary and registered address; opening of a corporate bank account; tax registration; and annual accounting and tax services.

Alternatively, you may also wish to consider incorporating a company in Singapore due to its similar business environment. Tetra Consultants will provide you with a Hong Kong vs Singapore offshore company comparison so that you can decide on the most optimal jurisdiction to set up your company in.

Contact us and our team of experts will revert within 24 hours.

Tetra Consultants

Tetra Consultants is the consulting firm that works as your advisor and trusted partner in your business expansion. We tell our clients what they need to know, instead of what they want to hear. Most importantly, we are known for being a one-stop solution for our valued clients. Contact us now at enquiry@tetraconsultants.com for a non-obligatory free consultation. Our team of experts will be in touch with you within the next 24 hours.

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