Updated: May 23
A private limited liability company in Hong Kong is a company that has legal capacity and provides protection for the personal assets of the founders. Its advantages make it an attractive option for those interested in setting up a company in Hong Kong.
Investors who set up a private limited liability company (LLC) in Hong Kong in 2023 usually operate a small to medium-sized business. An important feature of this type of company is that it has a separate legal entity and its shareholders have limited liability: they are only liable for the company's debts based on their contribution to the company's share capital.
Investors looking to open a company in Hong Kong as a limited liability company should know that it must have at least one shareholder, one company director and one secretary. This type of company has a maximum of 50 shareholders and no residency requirements. Company directors can also be shareholders. Shares can only be transferred in accordance with the provisions in the company's articles of association. Shares cannot be traded publicly.
Investors interested in setting up a company in another jurisdiction, such as opening a private limited company in Singapore, we can put you in touch with our experts on Singapore company formation matters
HOW TO SET UP A COMPANY IN HONG KONG
Reserve company name
Choose a name for your future company.
Decide on shareholders and share capital
Shareholders of a Hong Kong company can be individuals or legal entities.
Drafting of Articles of Association
Gather documents and file them with the Companies Registry.
Another advantage of a Hong Kong LLC is that there is no mandatory minimum share capital. In addition, existing funds are easy to raise. The company is not affected by changes in shareholders and continues to operate after the resignation, bankruptcy or death of shareholders or directors.
A limited liability company is the preferred business form for investors interested in establishing a small to medium-sized business. However, it is not the only form of business available. Investors looking for complete advice on company types can contact our Hong Kong company formation team. If you are considering starting a business in a different Asian jurisdiction such as Malaysia, you can contact our Malaysia company formation team.
Characteristics of Hong Kong Limited Liability Company
Investors interested in setting up a limited company in Hong Kong please read the table below for the main characteristics of this type of company:
SMEs and start-ups
Minimum number of shareholders
Limited to the amount of capital invested in the company
Residency requirements for foreign investors
Full foreign ownership allowed (Yes/No)
Company name requirements
It is original and not offensive or contrary to the public interest It can be in English and/or Chinese. Chinese and English combinations are not allowed The name ends with a specific word ("Limited" in English) or Chinese characters
Registered office requirements
Yes. Hong Kong local address, P.O. box not allowed
Main registration documents
Articles of Association containing the complete information of the company
A copy of the identity document of the founder of the company
Must be registered with the Companies Registry
Licenses and permits
Yes. Apply after registration
Corporate tax rate
8.25% on the first taxable HK$2 million profits
16.5% of remaining taxable profits
Other taxes for corporate
Tax concessions for qualifying carried interest, subject to certain conditions.
Limited liability companies enjoy a light tax regime in Hong Kong, which is one of the main features that attract investors. As a business structure, an LLC provides a professional and positive business image compared to a partnership or sole proprietorship. What's more, in contrast to sole proprietorships, companies can last indefinitely (or as otherwise provided in the articles of association) even in the event of shareholder withdrawal or death. Business continuity and credibility are two important characteristics that investors consider when opening a private limited liability company.
How to Form a Limited Company in Hong Kong in 2023
In order to open a limited liability company in Hong Kong, investors must follow a few basic steps. The following documents need to be prepared and submitted:
Company Articles of Association;
Completed company registration form;
Notification to the Companies Registry;
Details about share capital and shareholders;
Official English translations are provided when required.
Business owners must choose a suitable business name that will not infringe any intellectual property rights. The application for company registration is filed with the Companies Registry in Hong Kong. Our Hong Kong company formation experts have listed below some general guidelines regarding company names.
A company name application will be rejected if: the name is identical to another name in the index of company names, the Registrar believes that use of the name would constitute a criminal offense, or the Registrar believes that the chosen company name is offensive or contrary to public interest. Some company names are not rejected immediately, but require approval before being registered for use. These are things that can give the impression that the company has ties to the government (the name is only allowed if the company does have ties to the government). Other situations requiring special approval are when the name contains certain words and expressions (e.g. savings, travel association, trust or trustee, etc.) or is the same as the name for which the registrar has provided instructions to change. Company names may be subject to other relevant laws, such as the Hong Kong Banking Act prohibiting legal persons from using the term "bank" without the approval of the Hong Kong Monetary Authority.
Depending on the area of business in which they operate, LLCs may need to obtain special permits and licenses. These documents can be obtained from the GovHK. In general, business licenses can be distinguished by type: product or service. Examples of the first category include those selling antiques, watches and jewelry, beverages and tobacco, dairy products, bakeries and confectionery, leather and fur products, furniture, pharmaceuticals and medical equipment, food (a larger category that includes several other subcategories according to the type of food), toiletries and cosmetics, etc. The types of services that LLCs require special licensing in Hong Kong include accommodation, construction, education, financial and insurance services, import and export, human health and social work, professional and business services, real estate, transportation, warehousing and courier services, and water supply and waste management services, etc. .
Investors must open a bank account for the company incorporated in Hong Kong. Certificate of incorporation and business registration certificate can be issued in electronic form (for online applications) or in paper form. They all have the same legal capacity. Businesses must also be registered with the tax office. Our experts can provide you with more details about the Hong Kong limited company registration procedure.
Some key questions to consider when opening this business form are as follows:
Set-up Requirements: As mentioned earlier, there are some key steps that investors need to follow to open a company in Hong Kong as a limited liability company; these are mandatory and the process is generally considered more complicated than in the case of a sole proprietorship, for example; but , this form of business has its advantages.
Compliance: LLCs need to comply with ongoing compliance requirements for taxation and reporting, and to notify the authorities of any changes to the structure or details of the company.
Closing: If the business is no longer profitable, or the investor has other reasons to terminate the business, the closing procedure is also a procedure to be carried out in accordance with certain specific steps.
Other: The beneficial owners of the company are subject to disclosure requirements, which means their names will be published with the Companies Registry.
Our team specializing in Hong Kong company formation can provide more detailed information on these and other issues related to forming a limited liability company. If you wish to incorporate such a company in 2023, our team is on hand to assist you with compliance requirements both pre and post registration. If desired, we can start drafting the corporate documents before you arrive in the city, once you have sent us the most important documents required for LLC formation. Once you arrive in Hong Kong, we will guide you to register a limited liability company and obtain the required special permits and licenses. For more details about Hong Kong limited company registration process, our team is always at your service.
Additional Information about Hong Kong Limited Liability Company
Limited companies will be subject to a set of relaxed requirements in Hong Kong when incorporated as a private company, as these legal entities are not required to file annual financial statements with the Registrar. However, Hong Kong SAR public companies do need to file this document and our CPAs in Hong Kong can assist investors in preparing these documents. We also provide bookkeeping solutions and more.
As mentioned earlier, limited liability companies in Hong Kong are subject to annual reporting and filing requirements. These refer to compliance with annual accounting filings and the maintenance of records and documents at the company's registered address (a local address that must be maintained throughout the company's existence). Other mandatory requirements include appointment of an auditor (except in non-mandatory cases), renewal of business registration certificate, annual general meeting, obtaining, maintaining and renewing business licenses as required - e.g. license for financial activities issued by the Securities and Futures Commission. In addition to this, companies should also report any changes to their particulars. These are reported to the Companies Registry, and many include changes in address, the number or names of company shareholders and/or directors, changes in company secretary, and amendments to share capital values. One of our consultants specializing in Hong Kong company formation can provide full details on the requirements for filing these notices.
While Hong Kong is an attractive business center, it is not a place where investors can open offshore companies in the traditional sense. This is because an LLC must provide certain information to the public at all times. In addition to this, the accounts must be audited annually.
Hong Kong limited liability companies are subject to corporate tax. Our company formation consultants in Hong Kong can provide you with detailed information on your company's tax obligations.
For example, an LLC requires more complex setup procedures than a sole sole proprietorship. More importantly, the founders of the company need to comply with the regulations and disclose some information about the company, such as the identity of the directors, the capital of the company and other details, as required by the Registry.
Our consultants can assist you in completing the Hong Kong limited company registration process and provide you with professional consulting services after the company is established. Alternatively, our team can also assist you in purchasing a Hong Kong shell company (registered as a limited liability company).
Hong Kong Limited Liability Company Taxation
One of the main advantages of opening a private limited company in Hong Kong is that companies enjoy the low tax regime applicable in this jurisdiction. Below, our Hong Kong company formation specialist team has listed the Hong Kong corporate income tax rates:
8.25% on the first HK$2 million of assessable profits from the year of assessment 2018/2019;
16.5% on the remaining assessable profits;
7.5% and 15% applicable in the same manner as above, but for unincorporated businesses.
For limited liability companies in Hong Kong in 2023, both employers and employees are required to pay social security contributions, with mandatory periodic contributions worth 5% of the employee's relevant income. The standard rate of real estate tax is 15% of the net assessable property value. Stamp duty is levied on certain documents (such as documents for the lease, sale or transfer of immovable property) and the sale of shares in Hong Kong (in which case their value is 0.2% of the value of the shares transferred).
If you are interested in forming a limited company in Hong Kong, you should know that there is no withholding tax on dividends or interest paid by a Hong Kong company to another resident or non-resident company. Hong Kong has no payroll tax and no capital tax.
The tax year is calculated from April 1 to March 31 of the following year. The tax return filing date is usually one month after it is issued. Provisional profits tax is levied for the current tax year. Hong Kong companies are not entitled to file consolidated returns. The Internal Revenue Department (IRD) is the city's primary taxing authority and is part of the Financial Services and the Treasury Bureau.
Hong Kong has an ever-expanding network of double tax treaties. These are useful for foreign companies looking to establish a business in Hong Kong, you can find out more from our company formation consultants in Hong Kong. LLCs are also eligible for tax deductions.
Statistics on Company Incorporation in Hong Kong
According to a set of statistics published by the Companies Registry, the LLC remains the most popular business form, as follows:
6,310: Number of private companies incorporated in Hong Kong in January 2023.
10,637: Number of private companies incorporated in Hong Kong in February of the same year.
26,099: Number of private companies incorporated in Hong Kong in March 2023.
This compares with four public companies established in January and one in February 2023. According to the same source, the total number of public companies established in March 2023 is 2.
Available data for 2022 shows a total of 104,120 new companies effectively registered with the Companies Registry. Among them, 103,105 are private enterprises (the rest are public companies and guarantee companies). Data collected so far shows that there will also still be more new registrations of private companies than public companies in 2023: In March 2023, 26,099 private companies were incorporated, compared to 2 public companies. Contact our company formation experts to learn more about setting up a limited company in Hong Kong in 2023 or registering a company in other countries like Singapore and Malaysia.
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