Hong Kong LTD as a stepping stone
Hong Kong is one of the most important key locations for trade, finance and regional headquarters in Asia. The characteristics and benefits of Hong Kong can be summarised as a reputable, efficient and more importantly, a low tax jurisdiction. With the appropriate structuring most international business can be legally transacted tax-free in Hong Kong.
Foreign companies opt for a Hong Kong Limited as their regional office or headquater, because of the following strong assets:
No restriction of foreign currency or transactions
The capital flows of money between Hong Kong and other countries are without controls or restrictions. All currencies such as US$, EURO, GBP, Japanese yen, etc are remitted freely between Hong Kong and other countries.
Low Tax Rate
Hong Kong has a taxation system which is relatively simple. Corporate profits are taxed at a low rate of 16.5%, while profits gained through offshore trade, where suppliers and clients are located outside the Hong Kong territory, are free from tax. This principle applies to other forms of income like commission income for example.
There are no other taxation systems such as VAT, business tax, capital gains tax, etc.
No capital investment
No capital investment is required. The shareholder is only required to sign the M&A to declare that he will contribute capital to the company, and he doesn’t require paying money to the company.
It is easy to open an offshore bank account with using Hong Kong Company. The investor is required to provide a proof of address, passport copy, Hong Kong company formation documents and a general description of his business. HSBC and Standard Chartered Bank, as in international bankers, can accept the above documents and open an offshore bank account with multi-currencies and internet banking facilities included within a couple of days. A Hong Kong Company is also acceptable from other overseas bankers to open offshore bank accounts.
British common law
The legal system is common law and equity that applied in UK and other Commonwealth countries. The « One Country, Two Systems » allows Hong Kong to have a high level of autonomy from Mainland China and protection of commercial, political and personal freedom.
Trust law is applicable in Hong Kong. If the investor for his personal reasons wants his status to be hidden, he can do so with a trust arrangement that the trustee holds the shares for him (as a beneficiary) and he holds the trust deed which proves him a real owner of the shares. The trust Law is applicable in Hong Kong. Remember trust documents or such laws are not enforceable, ineffective, invalid or void in other countries such as China.
There are two ways of incorporating a Hong Kong Limited Company:
- Set up a new Limited Company (Tailor-made); or
- Purchase a ready-made Limited Company (Ready-made) or shelf company.
If you choose to purchase a "ready made" shelf Company, we shall provide you with a list of ready-made company names. Client may almost use it for business immediately. If you wish to establish a brand new one, the process takes about 7 working days (after receipt of all duly signed documents) for the incorporation procedures.
Some obligations of a Hong Kong Limited Company
1. Directors of a HK LTD
Minimum number of one director is required to incorporate a Hong Kong company registration process, may be same as the shareholder. There is no restriction for foreign nationals to act as a director of a Hong Kong company. An annual general meeting of directors can be held outside of Hong Kong.
2. Shareholders of a HK LTD
There should be at least one shareholder. There are no restrictions for foreign individuals or corporate structure to be a shareholder of a Hong Kong company. The number of shareholders of private company is limited to 50.
3. Company Secretary of a HK LTD
It is obligatory to have a secretary for a Hong Kong company. The secretary could be an individual or a company who is a resident of Hong Kong. The company secretary is responsible for keeping and filing corporate document with the Registrar of Companies. A register of directors, shareholders, secretary and minutes of meetings have to be kept at the registered office of a Hong Kong company in Hong Kong.
4. Registered address of a HK LTD
Every company in Hong Kong has to have a registered office where a register of directors, shareholder, secretary and minutes of general and director meetings are kept. All changes have to be filed with the Registrar of Companies within a month from a date of a change.
5. Accounts of HK LTD
Every company in Hong Kong has to keep accounts. The accounts of the company have to be audited on an annual basis.
6. Annual return
The Annual Return is a document that records the names of directors, share holders, and share capital. The document needs to be prepared and submitted to the government every year, even if the company does not conduct business.
A vibrant and fast changing business environment as China, creates many opportunities. Using a Hong Kong Limited for your Mainland Chinese investement will generate more flexibility and provides an extra layer of protection to lower the risks. Nevertheless, a cautious planning needs to be put in order to execute this structure.
TrustConsult Group can offer you the guidance to optimalize your Chinese investments. TrustConsult Group is an international independent trust company with offices in Luxembourg, Geneva, Brussels, Hong Kong and Shanghai. The fiduciary service firm delivers international corporate structuring, incorporation, management of commercial, financing, holding companies, trusts and foundations, in more than 30 different key jurisdictions.