FAQs: A Hong Kong Company

What type of company is it?

The companies created are “Private Limited” companies.

Your company name will be followed by “Limited” or “Ltd”.

It is a limited liability company whose number of partners can not exceed 50 people.

What name can I give to my company?

In the case of a ready-made company, we provide you with a list from which you can choose the name you prefer.

In the case of a company created at your request, you can request whatever  name you want with two conditions:

That the name is not already taken. When ordering, you are asked to indicate 2-3 names in order of preference. We will then indicate its availability, which can also be verified on the ICRIS website;

that it does not include a word referring to the banking system or to official connotation (“bank”, “fund”, “municipal”, etc.).

Do not hesitate to contact us to validate the availability of a company name.

Is there a register of Hong Kong companies?

Yes, and it is accessible through the ICRIS website at this address: http://www.icris.cr.gov.hk/. Please note that access to certain information on this site is subject to a fee.

Where can I find the Hong Kong Company Oridance?

The text of the Hong Kong Companies Ordinance is available at this address: https://www.cr.gov.hk/en/companies_ordinance/index.htm.

As of January 1, 2014 for new companies, and until July 1, 2014 for existing companies, the regulation requires that a Hong Kong company must have a t least one director that is a natural person. This is indicated on the page n ° 494, paragraph n ° 457 of the ordinance n ° 28-2012 on companies.

What authority does Merrit have over the company?

Corporate Services providers such as Merritt are not allowed to make decisions on behalf of a company. Neither can they operate the bank account of a company. This is strictly regulated and protected by law.

In which language are the official documents written?

English and Chinese are the two official languages ​​in Hong Kong.

Every document that we send you will be at least in English.

What company activities are allowed?

A company’s Memorandum document indicates the activity of the company.

In accordance with local practices and Hong Kong law, we propose a standard and universal memorandum.

Some activities are subject to authorization (banking license, insurance …) or are prohibited (casinos …).

At the level of the “Certificate of Business Registration”, we indicate as activities: “Trading, Investment and Consulting”.

What is the authorized capital of a company?

The companies we create typically have a maximum authorized capital of HK $ 10,000, in 10,000 shares of HK $ 1 each. However, share capital is not deposited, nor is company shares issued until after the registration of the company.

The number of shares issued depends on the number of partners in the company and what percentage of the capital each one contributes. Basically, if a company has only one owner contributing 100% of the capital then only one share is issued. Two partners contributing 60% and 40% respectively would hold 6 and 4 shares each. If you want to welcome new partners to the company in the future, you can simply issue new shares.

The nominal price of HK$ 1 is called “prime”.

Please note that there is no share capital tax if the level of initial capital is greater than HK $ 10,000. However, we would not recommend doing this because it may cause problems or delays in opening the company bank account.

What is the process time for setting up a company in Hong Kong?

The process times are as follows:

• Preparation of the registration documents for your company following the confirmation of your order: 24h. We will send them to you by email. You will have to print them out, sign them, and send the hard copies back to us by courrier;
• For the registration of the company:
  • “Express” registration (cost-999 included in our package):
    • Ready-made company: transfer of ownership in 24h.
    • 2 business days for registration of the company (your must be present in Hong Kong for the signing of the company registration documents).
  • “Normal” registration: 7 working days for registration of the company from the date of receipt of your letter with the signed original registration documents (we will have sent them to you by email beforehand).

Will I have an office in Hong Kong?

The address of your company will be a registered address. While it is a physical office, it is only available for receiving mail by post or registered courrriers. Unfortunately, you will not be able conduct business or host meetings in this office. [What about their own office space??]

How is the receipt mail received by the company?

Whenever we receive mail for your company, we will notify you by email.

Mail forwarding and scanning on a once a month basis is included in our package. You will need to bear the cost of any more frequent shipments. Please note that we will not open any confidential mail such as bank statements.

How much is the stamp duty?

In the case of a transfer of shares of a registered company in Hong Kong, the authorities will levy a tax (“stamp duty”) of 0.2% of the amount of the transaction in HKD.

In the event of a significant capital gain (calculated in relation to the nominal value of the units), it may be necessary to provide the audited accounts of the company.

Do you offer phone and fax numbers?

Yes. We can offer you a:

– Phone number in Hong Kong.

– Fax number in Hong Kong with forwarding to your e-mail address.

– Telephone answering service with an English and Chinese speaking receptionist

We offer these services in shared numbers included in our package. Custom numbers are also possible (contact us).

Do you have templates for invoices, quotes, and purchase orders?

Yes. Our packages include at not extra charge: a model of a quote, an invoice, and an order form in Microsoft Excel format, both in English and Chinese.

Please note that we now offer the installation of, and training for an online billing and accounting software for our customers (free).

What is a nominee?

A nominee is an individual or a company that represents a beneficiary. Their purpose is to protect the identity of that beneficiary. If a company uses a nominee, the name of the beneficiary will not appear on the public registers in Hong Kong.

Please note that we no longer offer a nominee service (neither for directors nor for associates).

What are the annual maintenance fees of the company?

The annual maintenance fees of a Hong Kong company USD 2,100 per year. The details of our package are indicated on the Rates page.

Do I have to do financial accounting?

Bookkeeping and annual audits are obligatory. Accounting and annual audits are the responsibility of the company director.

We invite you to read this page about bookkeeping and auditing for a company registered in Hong Kong.

How is corporate taxation calculated in Hong Kong?

Taxation in Hong Kong is calculated on a territorial basis. Only the profits incurred within Hong Kong are taxed at the maximum rate of 16.5%. All profits from outside Hong Kong are not subject to taxation.

The distribution of dividends is completely exempt from tax (no withholding tax on dividends distributed).

If you would like to look indepth at the tax regulations you can talk to one of our advisors or consult the Hong Kong Internal Revenue Department (IRD) webpage at:

http://www.ird.gov.hk/eng/paf/bus_pft_tsp.htm

What is the procedure and cost to dissolve a company in Hong Kong?

De-registration is the simplest, fastest and cheapest way to close a company. You must not have any debt and must have paid all the annual taxes due.

Just let us know and we can prepare a letter for you to sign that attests your request to close your company.

If you have multiple partners, the request to close the company must be signed by all parties.

It takes approx. 5 months to dissolve the company. For the bank account, it takes approx. 2 weeks (the closing of the bank account can be done at any time, including before the dissolution of the company). However, if you have a credit card and / or a Time Deposit, it will take 2 months.

The cost of dissolution of a company is USD 1,300.

Attention: If the request for dissolution is transmitted to the Registers less than 6 months before the anniversary date of incorporation of the company, we must add USD 600 for the expenses of filing, return and renewal of a Business Registration Certificate and an Annual Return for the coming year.

If a company does not pay its renewal fees, the Hong Kong authorities reserve the right to sue the debtors in their country of origin and their identity will no longer be protected.

What are the advantages and disadvantages of a ready-made company?

Advantages:

A ready made company is immediately available. As soon as you sign the share transfers, the company is yours. This reduces the processing time by about a week compared to a tailor made company.

You can buy a company with seniority (with an extra cost of USD 400 for each year of seniority for reimbursement of Business Registration).

Disadvantages:

You must choose a company name from our lists (contact us to receive our list of more than 500 companies). You can then rename it but this incurs a fee of USD 650.

The renewal fees of your company are payable on the anniversary date of registration of your company. Therefore if you choose a registered company for example in December 20XX, the next fees will be payable in December 20XX + 1 day whatever the date you acquired your company.

Can you propose jurisdictions other than Hong Kong?

Yes. We can offer jurisdictions other than Hong Kong according to your needs via our group and our partners. We invite you in this case to contact us to assess your needs.

What happens if a beneficiary of a company dies?

Two possibilities:

– If nothing has been planned: in this case, the transfer of shares in the company falls within the estate of the deceased;

– Transfer of shares in advance: it is possible in some cases to prepare a transfer of shares in advance to any buyer(s) or person(s) of your choice. At the bank level, the new shareholder(s) of the company will receive access to the bank account of the company.

We always invite you to give us the name and contact information of a trusted person of your choice in the event that we can no longer reach you to ensure the sustainability of your company.

In accordance with the law and in the event of litigation, we will apply to the letter all instructions that you have communicated to us in writing.

What documents are issued following a transfer of shares of the company?

The following documents are issued:

– Instrument of transfer: identifies the seller and the buyer, and the number of shares transferred (s);

– Sold note: document for the buyer indicating the number of units purchased;

– Bought note: document for the seller indicating the number of units sold.

These documents are stamped by the Hong Kong Registers attesting to their official inclusion.

How to change the director of a company?

If you have not used a nominee partner service, we will issue the following documents:

– Resignation document of the current director of the company;

– Nomination document of the new director of the company

What is the procedure and cost to sell shares of the company?

To sell shares of your Hong Kong company, we invite you to send us by e-mail :

– A scanned copy of the new partner’s passport;

– A scanned copy of a proof of residence of less than 3 months for the new partner;

-the percentage distribution of shares among all partners.

We will then prepare all the documents to be signed by all the parties and will send them to you by email. They must then be printed, signed and returned by mail or courrier(originals are required). Upon receipt at our Hong Kong headquarters, the transfer will be effective within 3 business days.

It is not necessary to come to Hong Kong to transfer the shares of your company (neither the seller, nor buyer).

When must the renewal fees of the company be paid?

We will send you your invoice by email for the annual renewal fee of your company approximately 1 month before the incorporation anniversary date of your company (this date is indicated on your Certificate of Incorporation).

Do you propose other registered addresses for a company registered in Hong Kong?

We can register your company in the following districts of Hong Kong:

– Kowloon (the cost is included in our package);

– Wanchai (+200 USD per year);

– Central (+400 USD per year).

What documents are given to me following the registration of my company?

Following the registration of your company and as soon as we have received all the documents from the Registers, the following documents are sent to you by Fedex at the address of your choice worldwide or delivered to you by hand when you come to Hong Kong (we can also keep them for you):

– Certificate of Incorporation

– License to practice an activity in Hong (“Business Registration Certificate”)

– Articles of Association (“Memorandum & Articles of Association”)

– Form NC1 (official registration form of the company)

– Director Written Resolution for opening a bank account (minutes for the opening of the company bank account indicating the authorized signatory of the bank account)

– 3 stamps: round chop, chop signature, common seal

What are company stamps and how are they used?

It is transmitted to you following the registration of your company 3 stamps of which here a photo:

Typical Uses:

– The “round chop” is usually used to sign receipts.

– The “signature chop” is usually used to sign contracts.

– The “common seal” is usually used to sign official contracts or legal documents (a Power of Attorney for example).

Do I have to justify expenses of the company? Does Misappropriation of Funds exist in Hong Kong?

If your company is tax exempt in Hong Kong, you do not have to justify your expenses. Misappropriation of Funds is therefore not applicable.

In the event of audit by the authorities as to the taxation or not of your company, all your personal expenses are counted as dividend advances.

Is Hong Kong a tax haven?

According to the tax definitions of several countries and in accordance with the 4th OECD Directive, Hong Kong is not an offshore jurisdiction and can not be described as a tax haven such as BVI, Seychelles, Nevis, etc.

Indeed, Hong Kong taxation is territorial (only activities performed outside Hong Kong are exempt) and not related to a legal status of locally registered companies (such as “International Business Companies” in many tax havens).

Finally Hong Kong is classified in the white list (“white list”) of OECD countries.

Do you offer an alternative to Hong Kong?

Depending on your needs, we can offer alternative jurisdictions to than Hong Kong as an alternative or in addition to a company registered in Hong Kong. Like Hong Kong, these jurisdictions do not have the image of a tax haven and also have zero taxation. We invite you to contact us for more details.

Can a shareholder of a Hong Kong company be a legal entity?

Yes, very much so. It will be necessary in this case to send us a copy of the documents of incorporation of this company and to indicate to us its shareholders (procedure of “Know Your Customer”).

I already have a company in Hong Kong. Can I transfer it to you?

A “transfer to us” is to change your Company Secretary and Register Address to indicate ours (Merritt Asia Limited and our domiciliation address for your company).

Usually we do not accept transfers of companies because it is difficult to verify if all the declarations processed by former Company Secretary were done correctly and “in good faith”. This is an issue of liability and professionalism for us. However, we do agree to assess transfer requests on a case-by-case basis and therefore invite you to contact us about this.

What is the minimum age to be a shareholder of a company in Hong Kong?

The minimum age to be a natural person shareholder of a company in Hong Kong is 18 years old.

Is Hong Kong an offshore jurisdiction?

Hong Kong is not an “offshore jurisdiction” as some jurisdictions are classified as, such as The Seychelles, BVI, Panama, Bahamas, Nevis, etc. In fact, the companies registered in Hong Kong are “common law” companies (Private Limited Company) and are therefore subject to Hong Kong tax law. However, that law stipulates grants tax exemption for activities carried out outside of Hong Kong. The favorable tax environment in Hong Kong is provided by the tax law, not the legal status of the company (like the “International Business Companies” of the countries listed below) above. According to the comments of the OECD Guidelines, a territorial taxation (as in Hong Kong) is not a criterion to be defined as a “tax haven”. This is confirmed by the national laws of several countries (France, Belgium, etc.) that do not classify Hong Kong as a privileged tax country.

Are your prices more expensive than other service providers in Hong Kong?

One can always find a cheaper service provider. But at what price?

At first glance, our packages may seem more expensive than other offers you can find on the internet but look carefuly. Because other service providers typically charge separately for each service activity and for consultation. Some will price below cost for setting up your company, but then overcharge for mandatory services later in the year. Once you add it all up, the final annual cost is often more expensive. Additionally, you will have to deal with multiple invoices all year long.

We will issue you a single invoice per year for all services and consultations included in our packages. And note that we can advise you on all the legal and tax issues of your company, throughout the life of your company,

Finally, please note that we are a “Company Secretary” in Hong Kong. Merritt Asia Limited is not a reseller like many sites on the Internet. You are therefore assured of dealing directly with an authorized local agent who has representation in the US, Europe and the Middle East. We are in direct contact with the local authorities (Registries and Tax Administration) which allows us to provide a rapid response to all official requests. Additionally, because Merrit is a Company Secretary, when you use our services, we are bound by “legal priviledge” and legally cannot communicate to third parties any information about your activity. Resellers will not offer you this protection.

I want to hire staff in Hong Kong and abroad.  Is it possible?

This is entirely possible but please note:

– Having an employee in Hong Kong risks subjecting your company to corporate tax because it will be difficult to justify that your activity is not carried out inside Hong Kong. It will also require you to submit annual financial statements and audits for your company. In terms of expenses, only the Mandatory Provident Fund (MPF) is due (5% of the salary paid). We include in our package the annual Employer’s return which is mandatory even if the company has no employee at HK.

– For an employee outside HK, there will be no social charge to pay HK. But usually this employee will have to be declared in the country in which he is physically located which will incur local social charges.

Can I hire an employee in mainland China from my Hong Kong company?

It is not possible for a company registered in Hong Kong to hire an employee in Mainland China. In fact, at the level of immigration and labor law, China and Hong Kong are effectively two different countries.

Ther are 3 options for hiring employees in China:

1. Create a company in China (WOFE);
2. Open a representative office of your Hong Kong company in China (attention: Hong Kong company must be at least 3 years old);
3. Use a payroll company that will hire the employee and invoice your company in Hong Kong for their salary and social charges.

We are competent to assist you with these 3 solutions.

I want to create a trust or have my company owned by another company

Please note that we systematically reject all complex corporate structures that are not economically justified. We are not authorized to draft a deed trust. For structures with several corporate layers, we will refuse them as soon as it is not possible to clearly identify the Ultimate Benificiary Owner (UBO).

What is a Company Secretary?

A “Company Secretary” is an agent authorized to represent your Hong Kong company only with the Hong Kong Authorities. The duties of a Company Secretary are limited by law. They can act on behalf of the company only in administrative procedures pertaining to the Honk Kong Authorities (tax and social statements, administrative procedures related to the transfer of shares, change of name of the company, appointment of a director, etc.). They do not have access to the company’s bank account and is in no way a ‘Director” of the company. Merritt Asia Limited is not a reseller, but is registered Company Secretary authorized by the Hong Kong Authorities to represent our clients.

Will my Hong Kong company have an Intra-Community VAT Number?

Since Hong Kong is located outside the European Union, there is no Intra-Community VAT Number issued following the registration of your company. But it is quite possible to get one depending on your activity and your needs. We invite you to contact us on this subject to discuss the procedure.

I need to get an EORI number.

Following the attacks of 11 September 2001, the European Commission and the Member States decided to put in place a system aimed at securing the trade flows into and out of the European Union. With this objective, the “Safety and Security Amendment” of the Community Customs Code established a database of unique numbers to identify each economic operator that has relations with the customs administrations of the European Union.

The EORI (Economic Operator Registration and Identification) number is used for the identification of economic operators with the customs authorities.

A Hong Kong company can therefore obtain an EORI number from the customs service where they carry out their first transaction.

How to obtain a residence visa in Hong Kong?

Creating and running a company in Hong Kong does not automatically ensure a residence visa in Hong Kong for the partners. Obtaining a residence visa is a separate and independent procedure from the creation and monitoring of your company. We invite you to consult the Hong Kong residence criteria on this site: http://www.immd.gov.hk/ehtml/hkvisas.htm

Do you offer contract law advice?

Yes. We work with lawyers who can offer you:

– Optimization of custom contractual assemblies

– Drafting of contractual commitments (subcontracting contract, service contracts, general conditions of sale, etc.)

– Negotiation and follow-up of contracts

– Legal support to sales teams

– Writing, proofreading, and translation of legal documents

– Assistance with the registration of trademarks, the filing of patents, etc.

How much do I have to pay in social security for an employee located in Hong Kong?

The company has to contribute to the mandatory pension fund (MPF, see http://www.mpfa.org.hk) for their employees who are residents work in Hong Kong. This contribution is not applicable for employees who work entirely outside Hong Kong. The amount of the monthly contribution is 5% of the employee’s monthly salary (capped at 1,000 HKD).

Can I hire staff in Hong Kong?

This is very possible, but please note that having an employee physically located in Hong Kong could lead your company to be taxed in Hong Kong. Contact us to discuss this point.

Can I hire staff outside of Hong Kong?

You can hire staff physically located outside of Hong Kong, but be aware that it is usually necessary to identify yourself as an employer in the country where the employee will be located. Any local employment taxes will apply.

Please note there will be no no employment tax for employees resident in Hong Kong.

What documents do I get with the creation of my company in Hong Kong?

Following the registration of your company, we give you a(sent by Fedex to the address of your choice or delivered by hand when you come to Hong Kong):

– Certificate of Incorporation

– Business Registration Certificate

– Copy of all documents sent to Hong Kong Corporate Records

– Memorandum & Articles

– Share Certificate book

– Statutory Book

– 3 stamps: Common Seal (dry metal stamp), Signature Chop, Round Chop

– Invoice, Quote and Purchase Order Forms / Billing and Accounting Software Access Code

– Email address and a website and preinstalled WordPress template.

What are the penalties for late renewals?

If you are late in renewing your Business Registration Certificate, the following penalties and charges will apply:

– Late by less than 15 days:             USD 200

– Between 16 days and 1 month:     USD 325;

– Between 1 and 3 months:              USD 450;

– More than 3 months:                     USD 450 + USD 150 per month late.

Attention: If the company is not renewed or dissolved within 42 days of the anniversary date of registration of the company:

1. Because we would incur liability as your Company Secretary, we will AUTOMATICALLY resign from all our mandates with your company (ie. Company Secretary, nominee service, address of domiciliation) before these 42 days!
2. We will charge your company USD 650 to be re appointed as the Company Secretary;
3. The company will receive a summons before a Hong Kong judge to explain the delay. The judge will then determine the amount of the fine. Failure to attend will result in prosecution by the Hong Kong Authorities.

How to find suppliers in Hong Kong and China?

There are several online sites that list Chinese suppliers. The Trade Development Council offers a database of suppliers and products made in China (Hong Kong, Mainland China, and Taiwan).

Does a Hong Kong company have to charge Intra-Community VAT?

Hong Kong is located outside the European Union. Therefore, invoices issued by a Hong Kong company should not refer to intra-community VAT because it is a non-taxable entity.

Is it possible to obtain an apostille in Hong Kong?

Since Hong Kong is a signatory to the Hague Convention, it is possible to obtain an apostille certification of any document from a company registered in Hong Kong. Please note that it usually takes about 10 days to obtain and the cost varies depending on both the type of document to be certified and the number of pages.

It is also possible to obtain a simple certification by Notary Public or HKCPA (Hong Kong Public Accountant).

What advice do you include in your packages?

We include advice on the validity and appropriateness of your chosen business structure to ensure that it complies with regulations. We also monitor it throughout the life of your company.

We do not charge for the time spent answering you by email, phone, Skype or meeting in our offices.

Who gives the advice included in your package?

Our team is composed of International Tax lawyers, accountants, and administrative experts. In the rare event that your needs exceed our expertise, we can call on the members of our network of partners.

Why are you the only ones in Hong Kong to offer this type of advice?

We are the only service provider in Hong Kong to offer advice included with our packages because we have our own in-house expertise. We believe that having a company in Hong Kong requires quality coaching to avoid unnecessary risks so that the entrepreneur can devote themselves fully to their professional activity.

Our team is composed of International Tax lawyers, accountants, and administrative experts that are able to find solutions to all your problems. In addition, we can offer this advice in [languages?]. You are not alone in your venture and you can count on us to be your reliable and sustainable team members.

How can we pay your invoice?

We accept payment by:

• bank transfer to our Dubai bank account;
• cash in our Hong Kong or Dubai offices.