For the greater part of three decades, Hong Kong has been one of the world’s most liberal markets. Its enviable position as a gateway between the West and Mainland China, and its straightforward and low tax regime increases the appeal of the city as an ideal location for business.
Hong Kong’s business environment and access to opportunities in Mainland China has also enabled business districts within Hong Kong such as Kowloon and especially Hong Kong Island, to thrive as business and finance hubs in their own right. This allowed the region to establish one of the world’s most competitive economic systems.
In 2021, the International Institute for Management Development’s (IMD) World Competitive Yearbook ranked Hong Kong’s as the seventh among 64 economic systems. The ranking reflects Hong Kong’s consistent progress toward establishing a prosperous business economy.
Its economic stability and strategic geographical location in Asia made Hong Kong an extremely appealing area to start a business.
Hong Kong’s image as a refuge for entrepreneurs keeps it at the top of the list as a desired spot for those who are planning to enter the Asian market. The prospect of establishing a business in Hong Kong does undoubtedly appeal to a large number of entrepreneurs—both home-grown Hongkongers and foreigners.
But for this article we want to answer the question; can a foreigner open a company in Hong Kong?
The requirements for establishing a business in Hong Kong are fairly straightforward. There are no restrictions on the type of business one may start, with the limitations being only the creativity of the entrepreneur.
Are you planning to build your start-up business in Hong Kong? Here are some things you need to know:
Starting up a business in Hong Kong as a foreigner
Hong Kong welcomes foreigners to set up businesses in the region as encouraged by its robust and entrepreneur friendly economic policies.
Foreigners are allowed to:
- own 100% of a business in Hong Kong. They can also be a sole director or shareholder since they are not required to have local citizenship to do so.
- register their company without physical presence in Hong Kong although they still need to go there for the creation of a HK bank account in most cases
- operate Hong Kong offshore company from outside of the territory
How much will it cost to form a company in Hong Kong?
To start a business in Hong Kong, application fees are needed to be paid. Some example fees are as follows (although this is not exhaustive):
- HK$1,720 for the registration of the company; if the process is unsuccessful, you may be entitled to a refund of HK$1,425
- There are two types of business registration certificates in Hong Kong—a one-year and a three-year certificate. Thus, the fee for the business registration certificates varies. A one year business registration certificate costs HK$2,000. Meanwhile, three year business registration costs HK$5,200.
- Taxes for the security of earnings in a bankruptcy fund are HK$250 for businesses with a one-year certificate and HK$750 for those with a three-year certificate)
In estimation, foreigners who are planning to start a business in Hong Kong must prepare at least $4000 HKD —however your own research is necessary as there are many variables to this.
Basic documents required for registration
There’s little to no difference on the documents required for registration whether you’re a foreigner or a local. Foreigners must prepare the same paperwork as the locals. These documents are required to have the company’s name, copy of Hong Kong smart identity card for foreigners, registered address along with proof of residence, parent company registration documentation, employee’s liability—to name a few. These documents will undergo verification before being accepted. One verified, the proprietor may proceed with the following steps.
How will you set up a business in Hong Kong?
1. Choose a Company Name and Business Type
The company’s name should not be too similar to the names of any other existing businesses in Hong Kong or else, the application may be subject for rejection by the Registrar of Companies. The rejection notice will specify how much time you must wait before re-submitting your application under a different company name.
The first step is to give your business a name and decide on your business type.
You must first determine whether the business name is already registered with the Central Registration of Business Names (CRBN) database. Because no two businesses can have the same business name, this is a critical step. Additionally, you must ensure that the business name contains no objectionable phrases or allusions to royalty or government.
The following step will be to submit the application letter along with other required papers and forms in order to reserve a company name. After submitting these documents, the name reservation process must be completed within three days.
In Hong Kong, you can choose from five different types of local business entity: sole proprietorship, partnership, limited liability partnership (LLP), private companies limited by shares, or unlimited companies. Each type has different advantages and disadvantages. In this guide we will focus on private limited companies. This is because they are the most popular type of entity among foreign investors who come to Hong Kong to set up their own business.
As a foreigner wishing to start a business in Hong Kong, your market research should include an assessment of the most suitable type of company for you based on your future plans and personal circumstances.
2. Incorporate A Company in Hong Kong
The process of incorporating your company will be done simultaneously with the application for business registration. You can choose how you can pass your application: via 24-hours portal e-Registry, via CR eFiling application, or via traditional way of delivering the documents to the office of Commision on Registry.
To incorporate your company, you must fulfill the following requirements:
- Incorporation Form (Form NNC1 for company limited by shares) or Form NNC1G (for company not limited by shares);
- A copy of the company’s Articles of Association
- A Notice to Business Registration Office (IRBR1)
The processing time varies according to the mode of application that you use. Normally, online applications are processed within an hour while hard copies typically take four working days before Certificate of Incorporation and Business Registration Certificate will be released.
3. Register a Company in HK
To be eligible for business registration as a foreign entrepreneur, you must appoint a Hong Kong resident to act as your company’s representative, as required by the Companies Amendment Ordinance of 2019. This representative is expected to maintain an up-to-date ‘Significant Controllers Register,’ which is subject to inspection at any time by law enforcement agents.
You can next register your business online with the e-Registry, which allows you to complete this step entirely online. Additionally, you will require the following:
- Your company’s incorporation forms
- Copies of identification for directors and shareholders
- Proof of company’s Hong Kong office address.
However, for convenience and complete assurance, you will almost certainly want to engage a reputable incorporation service to handle the registration process on your behalf. Typically, this stage of the process takes about two weeks.
4. Open a Hong Kong Corporate Bank Account
Generally, establishing a corporate account for your business in Hong Kong is similar to opening one in any other country. You’ll want to ensure that the company is operationally ready and that its business strategy is profitable. Demonstrate to the bank that you are qualified, reputable, and a wise investment.
Outsource your Company Formation to Sun Secretarial
For those of you that would prefer to speed up the process and have the experts take of all these steps, allow our Company Formation team to take care of this for you. Contact us today for a free consultation.
As long as you’re able to, there are a number of benefits that can come from registering a company in Hong Kong. The competitive tax rates and ease of incorporation found in HK make it an excellent place to start a new business. Just make sure that you thoroughly plan out your decision before moving forward and keep the above tips in mind.
If you need to know more, you may contact me at firstname.lastname@example.org, call us on +852 3529 2328 or visit our website www.pinetree.hk to find out more about Sun Secretarials Company Formation services.