A Comparison of Subsidiary Company and Branch Office and Representative Office in Hong Kong

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A Comparison of Subsidiary Company and Branch Office and Representative Office in Hong Kong

Entity Subsidiary Company Foreign Company Branch Office Representative Office
Entity Name Need not be the same as parent company Must be the same as parent company Must be the same as parent company
Business Activities Allowed Can conduct all business activities Must be the same business activities as the parent company Can only conduct market research or coordinating activities
Suitable For For local or Foreign Companies who wish to expand their operations in Hong Kong For Foreign Companies who wish to expand their operations in Hong Kong For Foreign Companies who wish to set up temporary vehicle in Hong Kong to conduct research and act as liaison office
Disadvantages Continuing Compliance Obligations E.g. Financial Reports, Audit, AGMS, Annual Filings, etc. Continuing Compliance Obligations E.g. Financial Reports, Audit, Annual Filings, etc. It is a temporary vehicle and cannot generate revenue
Ownership Can be 100% foreign or locally owned Just an extension of its parent company Just a temporary administrative arrangement
Separate Legal Entity Yes No No
Cap on Number of Members Yes, max 50 Not Applicable Not Applicable
Minimum Setting up Requirement One shareholder, which can be foreign or local individual or corporate shareholder AND must have at least one individual director Must have One Hong Kong Resident Agents Must appoint a Chief Representative who will relocate from parent company
Limited Liability Yes No No
Audit Accounts Yes Yes No
Filing of Accounts with CR and IRD Yes Yes No
Annual Filing Must file audited report of the Hong Kong subsidiary with IRD Must file branch officer’s management accounts with IRD Not Applicable
Taxation Taxed as Hong Kong resident entity Taxed as non-resident entity Not Applicable
Cessation of Business upon Death of a Member / Partner No. Equity shares go on in perpetuity No Not Applicable
Validity Period Perpetually until deregistered Perpetually until deregistered This is a temporary Setup. It is intended not to last more than 3 years
Usual Registration Time Actual registration with CR can be less than 8 hours. Preparation of incorporation documents will require about 1 day. Actual registration with CR can be less than 8 hours. Preparation of incorporation documents will require about 1 day. 3-5 days
Appointment of Officers Must appoint at least one individual director Must appoint one resident agent Must appoint a Chief Representative who will relocate from headquarters
Governing Body CR & IRD CR & IRD IRD
Bank Account Can open bank account in Hong Kong Can open bank account in Hong Kong Can open bank account in Hong Kong to run the operations. Must be funded by the parent company.

 

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