Hong Kong laws set out a number of obligations that companies incorporated there must fulfil. In this ultimate guide, you will find out in detail about the requirements for the incorporation of a business in Hong Kong, as well as the ongoing compliance obligations for all Hong Kong companies.
Company setup requirements
A company in Hong Kong must have a company name that complies with the company name guidelines. Names that will not be registrable are names that are the same or very similar to existing companies and names that are improper or misleading.
A company must have a registered office in Hong Kong which all official communications and notices may be directed. The registered office must be a physical location and not a P.O box.
Companies must appoint one secretary, and the secretary must be a Hong Kong resident. A corporate secretary is permitted, provided that the corporation is registered in Hong Kong.
Starting from March 2018, every company must maintain a register with details of the significant controller of the company. The significant control of a company is if he/she holds directly or indirectly:
- More than 25% of the issued shares in that company;
- The right to share in more than 25% of the capital or profits of a company with no share capital;
- More than 25% of the voting rights in that company;
- The right to appoint or remove a majority of the board of directors of that company; or
- Anyone who has the right to exercise, or exercises, significant influence or control over a company is also a significant controller.
Every company must have a designated representative prepare, maintain and keep up-to-date the Register of Significant Controllers in Hong Kong.
Every company in Hong Kong must have one personal director who is at least 18 years of age. The director can be a Hong Kong resident or a non-Hong Kong resident; there are no restrictions on the nationality of a Hong Kong company director.
Hong Kong companies require a minimum of one shareholder. There is a statutory maximum of 50 shareholders for private companies. The shareholders can hold any nationality and can be either a person or a company.
Data protection and data protection officer
According to the Personal Data (Privacy) Ordinance (PDPO), there is no requirement to appoint a Data Protection Officer (DPO) in Hong Kong. Data Protection Principles (DPP) requires a data user to inform the data subject of the rights of access and correction, name or job title, and the address of the individual who will manage any requests from the data subject to the data user.
There is no requirement that this role has to be fulfilled by a Hong Kong resident or citizen, and it may or may not be a full-time job. Although it is recommended that a company appoints a DPO, there will be no penalty for the company if one is not appointed.
Display of company name and liability status
Under the Companies Ordinance, a company is required to display the registered name outside every place where the business is carried on. If the place that has business activities is not open to the public, then it is not required to display the company name.
A company must display its registered name and liability status on any website of the company. Communication documents and transaction instruments, both hard copy and electronic form must also state the registered name and liability status.
Documents that must state the company’s name are referred to as communication documents, which include business letters, notices or other official publications of the company. Transaction instruments that are required to include the company name and liability status are any contract or deed signed by or on behalf of the company, bill of exchange, promissory note, cheque or order for money or goods, invoice, receipt or letter of credit of the company.
Ongoing business compliance requirements
Keeping of company registers and records
Every company in Hong Kong is required to maintain an up-to-date register of shareholders and directors. The registers may be kept at the registered office or any other place.
Annual general meeting
Under the Companies Ordinance, a Hong Kong company must hold an annual general meeting (AGM) every financial year of the company.
A company’s AGM should be held:
- Nine months after the accounting reference period ends for a company limited by guarantee or a private company that is not a subsidiary of a public company; or
- Six months after the accounting reference period ends for other entities.
Filing of annual returns
Local companies need to file annual returns to the Hong Kong Companies Registry.
Annual return with CR
How to file annual returns?
- File an annual return form (NAR1) signed by the director, company secretary, manager or authorised representative
- For entities that are not a private company, a certified true copy of the financial statements is required along with the NAR1 form. Documents submitted must also contain the report of directors and auditors.
- Dormant companies are relieved from filing returns
- Forms can be downloaded at cr.gov.hk
- Submission can be made at Reregistry.gov.hk
- Physical forms and be collected and submitted at Companies Registry, 14th floor, Queensway Government Offices
When to file annual returns?
- Private companies must file the returns within 42 days from the anniversary date of the incorporation.
- Late filings are subject to pay higher registration fees which will depend on how late the filing is.
- If companies fail to obey, they will face prosecution and fines up to HKD 50,000 and a daily fine of HKD 1,000 in the event of continuing non-compliance.
Accounting & tax compliance requirements
Date of financial year-end
The financial year-end for companies in Hong Kong starts on the day of the company’s incorporation and ends on the date chosen by the directors of the company. Companies are free to choose their fiscal year-end date, but most companies choose either 31 December or 31 March – the latter date lines up with the government’s fiscal year.
Safekeeping of proper accounts and records
All companies must maintain proper records for not less than seven years from the transaction date. Keeping records will help you manage financial planning and decision making, makes handling with banks easier and can file accurate tax returns.
Documents to be recorded according to the Inland Revenue Department include:
- Accounting books of receipts and payments
- Accounting books of income and expenditure
- Bank statements
- Day-to-day entries of all sums of money received and paid concerning the business or trade
- Records of assets and liabilities of the person regarding the business or trade
- Records related to sales and purchases
- Statements of trading stock
Appointment of auditor
Based on the Companies Ordinance, all Hong Kong companies, both private and public and regardless of size, must appoint an auditor. The board of directors will appoint the first auditor before the first annual general meeting, and the auditor will fulfil his/her role until the end of the first annual general meeting. Auditors will be re-appointed every year at the AGM, and serve as an auditor until the end of the next AGM.
Profits tax return
All companies must file an annual profits tax return. The deadline for filing the returns are:
- For D Code returns – 15 August if the financial year-end date falls within 1-31 December;
- For M Code returns – 15 November if the financial year-end date falls within 1 January – 31 March; and
- For N Code returns – 2 May if the financial year-end date falls within 1 April – 30 November.
*Must be filed with audited financial statements
Business license requirements
In Hong Kong, not all businesses require a business license. If your business nature falls into a category that needs a license, you must apply for and obtain the required licenses before commencing operations.
Business in Hong Kong that need to have a license include:
- Education businesses that provide formal education for 20 or more individuals on any day, or more than eight individuals at any given time.
- Employment agency
- Financial service company
- Restaurant & food business
- Travel agency
- Estate agent
Employment law requirements
The Employee Ordinance (EO) in Hong Kong outlines the necessary protection to employees, including the payment of wages, statutory holidays, sickness allowance, maternity protection and paid annual leave. The EO applies to employees who are working in Hong Kong regardless of their nationality.
Other laws that apply to employees in Hong Kong include:
- Basic Law and Hong Kong Bill of Rights Ordinance
- Companies (Winding Up and Miscellaneous Provisions) Ordinance (CWUMPO)
- Employees’ Compensation Ordinance (ECO)
- Labour Tribunal Ordinance (LTO)
- Mandatory Provident Fund Schemes Ordinance (MPFSO)
- Minimum Wage Ordinance (MWO)
- Occupational Retirement Schemes Ordinance (ORSO)
- Occupational Safety and Health Ordinance (OSHO)
- Personal Data (Privacy) Ordinance (PDPO)
- Prevention of Bribery Ordinance (POBO)
- Sex Discrimination Ordinance (SDO), Disability Discrimination Ordinance (DDO), Family Status Discrimination Ordinance (FSDO) and Race Discrimination Ordinance (RDO)
It is crucial to meet the requirements for the business compliance for Hong Kong companies as listed above. By engaging with our services, Acclime will ensure your company complies with all of the requirements, allowing you to focus on the commercial aspects of running your business.
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