Setting up a branch office in Hong Kong.

Branch office is one of the entities that foreign companies choose when they are considering to explore a new market in Asia. This guide will teach you more about this structure and its benefits.

What is a branch office of a foreign company?

A branch office is the extension of a foreign parent company, and the parent company is responsible for the liabilities and debts of the branch. The branch is not a separate legal entity but must be registered with the Hong Kong Companies Registry as a non-Hong Kong company. The branch is subjected to pay the same taxes as a company in Hong Kong. However, it cannot benefit from the Hong Kong Double Tax Treaty network.

Can foreigners set up a branch office?

Hong Kong has no restrictions on foreign ownership for any type of business entity, meaning that a company can be fully owned and run by a foreigner, but the Hong Kong regulations require that there must be at least one permanent representative resident in Hong Kong.

Advantages of setting up a branch office in Hong Kong

The branch office has several advantages, which include:

• Access to a new market
• Ease of setting up
• Expanding your business
• Low maintenance costs
• Low set up costs
• Tax advantages

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Requirements for setting up a branch office in Hong Kong

Basic requirements needed for setting up a branch office in Hong Kong include:

Name

The branch name must be matched with the foreign parent company. The company name may be rejected by the Companies Registry if the name is already used in Hong Kong and considered as improper or misleading.

Officers

There must be at least one Hong Kong resident appointed to act as the office representative in order to accept legal notices from legal authorities. The representative can be either an individual or a body corporate.

Place of business

The branch office must have a physical location or place of business in Hong Kong to keep statutory documents.

Constitution and activities

There is no memorandum and articles of association (M&A) as the activities are directed by the foreign parent company.

Registered capital

There is no minimum capital to set up a branch office in Hong Kong.

Documents required

• Form providing details of the branch office:
  • Registered address
  • Local representative
  • Particulars of parent company
• Certified copy of:
  • The parent company’s memorandum and articles of association
  • The parent company’s Certificate of Registration
  • The latest accounts of the foreign parent company
• Identification documents of the local representative branch

Do note that only English and Chinese language documents are accepted. Documents in other languages must be translated through official channels before submission.

Steps of setting up a branch office

You must register within one month of setting up a business place in Hong Kong. To register a branch office in Hong Kong, it is advised to engage the services of a reliable corporate services firm, like Acclime.

Company name

The branch name must be the same as the foreign parent company. The name will be registrable unless:

• The name already exists or is similar to a name in the Companies Registry’s Index of Company Names
• It infringes any trademarks
• It is offensive or misleading

A company name search can be conducted through the Companies Registrar’s Cyber Search Centre or at the Public Search Centre, 13th floor of the Queensway Government Offices.

Once you have submitted the registration documents, you will be informed by the Companies Registry if there are any issues with the registration, including company name.

Registration with the Companies Registry

The office must submit registration documents to the Companies Registry. The Company Registrar will authorise the registration and issue a Certificate of Registration of Non-Hong Kong Company. The presenter will receive a notice through fax when the certification is ready to be collected. The certificates must be collected in-person at the Companies Registry. A written authorisation is required if the presenter sends a representative to collect the certificates on his/her behalf.

Post-registration compliance requirements

Issuance of certificate of business registration

Once the application is approved, the certificate will be issued together with the Certificate of Registration of Non-Hong Kong Company.

Opening a bank account

Once you have completed registration with the Companies Registry and Inland Revenue Department, your next step is to open a corporate bank account. To open an account hassle-free, Acclime provides services that will allow your registration procedure to happen smoothly. When opening a bank account in Hong Kong, you must prepare all the required documents depending on the bank, and an interview with the bank will be held.

Applying for business licenses or permits

Not all businesses in Hong Kong require business licenses. However, if your business nature falls into a category that requires a license, you should make an application to obtain the required licenses. Businesses in Hong Kong that require a license or permit include:

• Education business
• Employment agency
• Event management company
• Financial service company
• Restaurant & food business
• Retail business
• Trading company
• Travel company

Conclusion

Because of its advantages, such as low maintenance requirements and costs, setting up a branch office in Hong Kong has become a popular choice for foreign companies. To assure your registration for a branch office is processed efficiently, we recommend engaging Acclime’s professional corporate services.