Company formation in Hong Kong is comfortable across all the available categories of businesses and knowing their specific features and similarities is very important before venturing to invest here. Many kinds of corporate forms are commonly incorporated in the Special Administrative Region (SAR). Companies can be limited by way of Memorandum and Articles of Association (M&A). One of the more popularly used corporate forms in Hong Kong, especially local businesses, is the Limited Liability Company (LLC).
Another popular Hong Kong company formation form in Hong Kong is the sole proprietorship or partnership. This one has several advantages over other corporate documents. Being a sole proprietor, you are not obliged to hire employees and incur office costs. You can smoothly run the business on your own and decide when and how you want to hire employees.
In addition to the models as mentioned above of the corporation, other standard formation options are available. A limited liability company (LLC) is one of the most popular corporate formations in Hong Kong. Compared to other forms, an LLC is relatively easy to set up, and it requires just one payment, one filing fee, and one instalment agreement. Furthermore, there is no need for a secretary, accountant, or any other personnel.
Limited liability companies have one significant advantage over other types of formation options – they require meagre investment. Of course, the main reason why most people choose an LLC over other options is because of its simplified process of registration. Once the LLC application has been filed with the relevant authority in Hong Kong, the new company will be listed on the stock exchange. As soon as the company becomes public, there will be a constant stream of visitors to its official website, both clients and potential investors. There is even an application fee for using the official website.
One disadvantage of incorporating Hong Kong using an LLC is that it may limit shares for its directors. Limited liability company formation in Hong Kong allows only three shareholders – two of them are required to be Hong Kong residents. It means that investors can only choose among companies offering stocks in which they hold shares. If an investor wants to invest in another company, he will have to change his mind and shift his claims to that company.
However, even with limited liability company formation matters, foreign investors should keep in mind that Hong Kong’s laws are different from mainland China. Hence, foreigners need to make sure that their business structures are not contravened. Besides, there are some requirements that foreign business people need to comply with before being allowed to open a business in Hong Kong. These are the rules on using the word ‘company’ in the name, and the company’s registration with the Office of Fair Trading.
To avoid being registered as an EBC or a foreign investor, a company must first receive the Office of Fair Trading’s approval. The company must then apply for registration of its name to the office. Once approved, the company must pay a registration fee to the Secretary of State.
The company must then hire a registered agent to serve as its secretary. The registered agent must be a person who holds a legal or business license. After paying all the registrations and company formation fees, the company owner must submit his annual return to the Secretary of State’s Office. The registered agent is the person who will handle all the affairs of the company, including answering EBC’s and overseas investors’ calls and faxing document requests. A company can now operate and establish itself in Hong Kong by following these simple procedures for incorporating.