Comparison with unincorporated business

  Sole proprietorship Partnership Corporations
No. of owner(s) 1 Member 2 －20 Members 1 －50 Members
Legal status No legal status, one can only own assets and sign contracts in proprietor’s name No legal status, one can only own assets and sign contracts in partner’s name Have independent legal status.
Debt and liability Unlimited liability, proprietor faces risk of personal liability or even bankruptcy. Unlimited liability, partners face risk of personal liability of even bankruptcy. Liability of shareholders are limited to issued shares.
Company liquidation normally not affect individual shareholders.
Tax issues No statutory audit is required. Private expenses such as Proprietor’ and  spouse’ salaries are not tax deductible. No statutory audit is required.  Private expenses such as Partners and spouses’ salaries are not tax deductible.） Annual statutory audit is required.  Directors’ remuneration are tax deductible.
Others Pay Business registration fee per year, but in some circumstances can be waived upon application. Pay Business registration fee per year, but in some circumstances can be waived upon application. Pay Business registration fee and annual return fee to  Companies registry per year.

Nature and Key conditions of limited company formation in Hong Kong: 

Company name:

    1. Company name must be unique.
    2. Company name must not include certain restricted words.
    3. Company name can be in English or Chinese or both.

Share Capital:

    1. Minimum HK$1 share capital to be issued and paid up.
    2. No restriction on the maximum issued and paid up share capital.
    3. The liability of each shareholder is limited to the issued and paid up share capital.
    4. Issued and paid up share capital is not the minimum required deposit amount in the bank account.

Shareholder and Director

    1. Minimum one Shareholder to a maximum of 50 Shareholders.
    2. Minimum one Individual Director (aged 18 or above).
    3. A company is allowed to act as a Shareholder or Director.
    4. Shareholder and Director can be the same person or the same company.
    5. Shareholder and Director can be individuals of any nationality, domicile and residence.

Significant Controllers Register (“SCR”)

From 1 March 2018, a Hong Kong incorporated company must

    1. take reasonable steps to identify its significant controllers,
    2. give notices and obtain required particulars of significant controllers, 
    3. enter the required particulars of its significant controllers in the SCR and keep them up-to-date,
    4. keep its SCR at the company’s registered office or a place in Hong Kong, and
    5. allowing inspection by the law enforcement officer.

Failure to comply with the SCR obligations or made false statements is a criminal offence. The company and every responsible person of the company are liable to a fine at level 4 (i.e. HK$25,000). Where applicable, there is a further daily fine of HK$700.

The above is an extraction notes which does not constitute legal advice, for details of the SCR compliance, please refer to the External Circular and Publications of the Hong Kong Companies Registry .

Company Secretary

    1. A Company must appoint a Company Secretary (to ensure compliance with ongoing legal returns, accounts, audit and other requirements).
    2. The Company Secretary must be ordinarily resident in Hong Kong, an HK qualified accountant, an HK qualified legal professional or an “HK Trust or Company Service Providers licensee”.
    3. If the Shareholder and the Director are two separate entities, either one of them can be appointed as Company Secretary.
    4. If the Shareholder and the Director are the same, a third party (individual or company) should be appointed as company secretary.

Registered Office Address

    1. A Company must have a Registered Office address in Hong Kong.
    2. The Registered Office address serves as the company’s legal address for notices and proceedings and can be different from the business address.

 

Hong Kong Limited Company Registration Online Online Application Form

Comparison with unincorporated business

Sole proprietorship

No. of owner(s) 1 Member
Legal status No legal status, one can only own assets and sign contracts in proprietor’s name
Debt and liability Unlimited liability, proprietor faces risk of personal liability or even bankruptcy.
Tax issues No statutory audit is required. Private expenses such as Proprietor’ and  spouse’ salaries are not tax deductible.
Others Pay Business registration fee per year, but in some circumstances can be waived upon application.

Partnership

No. of owner(s) 2 －20 Members
Legal status No legal status, one can only own assets and sign contracts in partner’s name
Debt and liability Unlimited liability, partners face risk of personal liability of even bankruptcy.
Tax issues No statutory audit is required.  Private expenses such as Partners and spouses’ salaries are not tax deductible.）
Others Pay Business registration fee per year, but in some circumstances can be waived upon application.

Corporations

No. of owner(s) 1 －50 Members
Legal status Have independent legal status.
Debt and liability Liability of shareholders are limited to issued shares.
Company liquidation normally not affect individual shareholders.
Tax issues Annual statutory audit is required.  Directors’ remuneration are tax deductible.
Others Pay Business registration fee and annual return fee to  Companies registry per year.

Nature and Key conditions of limited company formation in Hong Kong: 

Company name:

  1. Company name must be unique.
  2. Company name must not include certain restricted words.
  3. Company name can be in English or Chinese or both.

Share Capital:

  1. Minimum HK$1 share capital to be issued and paid up.
  2. No restriction on the maximum issued and paid up share capital.
  3. The liability of each shareholder is limited to the issued and paid up share capital.
  4. Issued and paid up share capital is not the required minimum deposit amount in bank account.

Shareholder and Director

  1. Minimum one Shareholder to the maximum of 50 Shareholders.
  2. Minimum one Individual Director (aged 18 or above).
  3. A company is allowed to act as Shareholder or Director.
  4. Shareholder and Director can be the same person or same company.
  5. Shareholder and Director can be individuals of any nationality, domicile and residence.

Significant Controllers Register (“SCR”)

From 1 March 2018, a Hong Kong incorporated company must

  1. take reasonable steps to identify its significant controllers,
  2. give notices and obtain required particulars of significant controllers, 
  3. enter the required particulars of its significant controllers in the SCR and keep them up-to-date,
  4. keep its SCR at the company’s registered office or a place in Hong Kong, and
  5. allowing inspection by law enforcement officer.
  6.  

Failure to comply with the SCR obligations or made false statement is a criminal offence. The company and every responsible person of the company are liable to a fine at level 4 (i.e. HK$25,000). Where applicable, there is a further daily fine of HK$700.

The above is an extraction notes which does not constitute legal advice, for details of the SCR compliance, please refer to the External Circular and Publications of the Hong Kong Companies Registry .

Company Secretary

  1. A Company must appoint a Company Secretary (to ensure compliance with ongoing legal returns, accounts, audit and other requirements).
  2. The Company Secretary must be ordinarily resident in Hong Kong, a HK qualified accounting professional, a HK qualified legal professional or a “HK Trust or Company Service Providers licensee”.
  3. If the Shareholder and the Director are two separate person, then either one of them can be appointed as Company Secretary.
  4. If the Shareholder and the Director is the same person or the same company,then a third party (individual or company) should be appointed as company secretary.
  5.  

Registered Office Address

  1. A Company must have a Registered Office address in Hong Kong.
  2. The Registered Office address serves as the company’s legal address for notices and proceedings and can be different from the business address.

 

Hong Kong Limited Company Registration Online Online Application Form