Company formation requirements are a major concern for many non-resident business owners. Entrepreneurs without a Hong Kong ID card often ask:
“Can non-Hong Kong residents establish a company?Is an unlimited company also possible?”
“Requirements for opening limited and unlimited companies with a foreign passport”
This article details the 8 major requirements for establishing a limited company and the 5 major requirements for opening a Hong Kong unlimited company, while providing an in-depth explanation of the difficulties and reasons behind non-Hong Kong residents establishing unlimited companies.
Can Mainland Chinese and overseas individuals open a limited company in Hong Kong?
Yes. Any person aged 18 or above, including individuals from Mainland China or those holding any valid overseas passport, can establish a limited company in Hong Kong. However, when registering the company, you must provide a Hong Kong registered office address and appoint a person holding a Hong Kong ID card or a professional firm with a Trust or Company Service Provider (TCSP) license to serve as the Company Secretary.
Company Formation Requirements for Dual Nationality Holders
Individuals with dual nationality must provide a passport from one of their countries for the company application. If they also hold a Hong Kong ID card, it is recommended to use the Hong Kong ID for the application, as this significantly increases the success rate of opening a business bank account.
Example: Mr. A currently lives in the UK and holds a British passport, but also possesses Hong Kong permanent residency. General Accounting suggests that Mr. A use his Hong Kong resident status to open the company.
8 Major Requirements for Opening a Limited Company
Requirement: Appoint at least one natural person as a company director
According to Section 457(2) of the new Ordinance1, a limited company must appoint at least one natural person as a director to increase corporate transparency.
Further Reading: Opening a Company in Hong Kong
At least one founding member
A founding member refers to the initial person holding shares in the company, commonly understood as a shareholder.
Appoint a Company Secretary
The Company Secretary is a statutory position under the Companies Ordinance (Cap. 622, Section 474)(2). Individuals with foreign status only cannot hold the position of Company Secretary.
More Details: Hong Kong Company Secretary Services
Natural persons must be at least 18 years old
Anyone serving as a founding member, company secretary, or director in their capacity as a natural person must be 18 years of age or older.
Provide a Registered Office Address
The registered address must be a physical location suitable for industrial or commercial use; a P.O. Box is not permitted.
Further Reading: Registered Office Address
Perform Due Diligence (K.Y.C.)
Provide identification documents and proof of residential address for directors, founding members, and the company secretary, along with information regarding the source of funds and business regions.
Appoint a Designated Representative for the Significant Controllers Register (SCR)
Under the Companies (Amendment) Ordinance, all companies opened in Hong Kong must appoint a designated representative to prepare the Significant Controllers Register and assist law enforcement agencies in inspecting the register if necessary.
Provide a Company Name
When registering a limited company, the name must end with “Limited”; however, there is no such suffix requirement for establishing an unlimited company.
5 Major Requirements for Opening an Unlimited Company
Generally, unlimited companies in Hong Kong are categorized into sole proprietorships and partnerships. The requirements for both are similar, with the primary difference being the number of “natural persons.” Below are the 5 major requirements for both:
Generally, unlimited companies in Hong Kong are categorized into sole proprietorships and partnerships. The requirements for both are similar, with the primary difference being the number of “natural persons.” Below are the 5 major requirements for both:
Requirements for a Sole Proprietorship
- One natural person as the sole proprietor
- At least 18 years old
- Provide the proprietor’s Hong Kong identification, proof of address, and the registered office address
- Pay the Business Registration Certificate fee
- Apply within one month of commencing the sole proprietorship business
Requirements for a Partnership
- Two or more natural persons as partners
- At least 18 years old
- Provide the partners’ Hong Kong identification, proof of address, and the registered office address
- Pay the Business Registration Certificate fee
- Apply within one month of commencing the partnership business
More Details: Business Registration Certificate Guide
Can Non-Hong Kong Residents Open an Unlimited Company? Important Considerations for Overseas Individuals
Rejection of Applications for Businesses That Have Not Yet Commenced
“Operators of sole proprietorships or partnerships must apply for business registration within 1 month of the commencement of the business. The Department will not accept any business registration applications for businesses that do not exist or have not yet commenced operation.”
Source: https://www.ird.gov.hk/eng/tax/bre_abr.htm#a2
This means that to apply for an unlimited company’s Business Registration Certificate (BR), you must first start the business and then apply within one month. The Inland Revenue Department does not accept applications for businesses that have not yet begun operations.
Rejection of Applications Unable to Prove Business Operations
“Recently, the Department has received a large number of business registration applications for businesses where the proprietors or partners are non-Hong Kong residents. The Department found that most of these operators were unable to prove that they had actually commenced business in Hong Kong. The Department has rejected such applications.”
The Business Registration Office may require applicants of unlimited companies to provide proof of business operations in Hong Kong. If the information is incomplete or if proof of operation cannot be provided, the application will be rejected, making it impossible to conduct business in Hong Kong.
Requirement for Non-Residents to Provide Business Details
“As persons entering Hong Kong as visitors generally cannot start or participate in any business during their stay, the Department will require businesses with non-resident proprietors or partners to provide business details to verify the information on the application (including the commencement date).”
In short, the Business Registration Office requires non-residents to provide business details and the commencement date. However, non-residents staying in Hong Kong as visitors are not allowed to conduct business unless they can provide a valid Hong Kong business entry visa. Furthermore, the Business Registration Office has indicated that non-residents will face in-depth questioning regarding the opening of an unlimited company. You may refer to the sample questionnaire from the Business Registration Office:
Requirement: Business Information Required for Changes in Partners
“As a related measure, upon receipt of a ‘Notice of Change of Partners’ (Form IRBR64) notifying the addition of a non-resident as a partner, the Department will require the business to provide information for questions 1 and 2 of the sample questionnaire to verify the change.”
Even for changes in partners (adding or removing partners) of an unlimited company, the Business Registration Office will ask for:
- Proof that the partner (non-resident) holds a valid visa and has been approved to open an unlimited company in Hong Kong.
- A partnership agreement specifying the duties and profit-sharing of the non-resident partner, the investment amount, and bank details.
“Please note that under the Business Registration Ordinance, any person who provides false information commits an offense and is liable to a fine of HK$5,000 and imprisonment for 1 year.”
Frequently Asked Questions
Q: Is there a difference in fees for non-Hong Kong residents to establish a company?
A: No, the company formation fees are the same whether you are a Hong Kong resident or hold a foreign passport.
Q: What should I do if I cannot provide a Hong Kong registered office address?
A: You can use General Accounting's Virtual Office Services.
Q: What if I don't have a suitable candidate for the Company Secretary position?
A: You can use General Accounting's Company Secretary Services.
Conclusion
In Hong Kong, non-residents can open companies, provided they meet certain requirements. Establishing a limited company involves specific conditions. Note that while non-residents can also establish unlimited companies, the process is extremely complex, requiring detailed proof of Hong Kong business operations and an application for a Business Registration Certificate within one month of starting operations. Partnerships require two or more natural persons as partners, along with relevant documentation and payment of business registration fees.
General Accounting advises all non-residents looking to start a company in Hong Kong to seek assistance from a professional secretarial firm. This saves time, prevents errors, and ensures you don’t miss the right timing to launch your business.
Further reading:
Sources
1. Restriction on Corporate Bodies as Directors of Private Companies
https://www.cr.gov.hk/en/faq/companies-ordinance/corporate-directorship.htm
2. Outline of the New Companies Ordinance (Cap. 622) – Directors and Company Secretaries
https://www.cr.gov.hk/en/companies_ordinance/docs/NewCO_C622_HL_Part10-e.pdf
3. Business Registration Office Does Not Accept Applications for Businesses Not Yet Commenced
https://www.ird.gov.hk/eng/tax/bre_abr.htm
