Where a company incorporated outside Hong Kong establishes a place of business or branch office in Hong Kong as an extension of the investing company, it is referred to as a “Non-Hong Kong Company” (formerly known as “oversea company”) or “Branch Office”. Unlike a subsidiary, a branch can leverage off the credit rating and more of the overseas owner. The key differences between a branch and a representative office are the operating scope and tax treatment.
A foreign company which has a presence in Hong Kong but does not create legal obligations (i.e. a representative office) is not considered as having established a place of business in Hong Kong for the purpose of registration with the Registrar. Advice should therefore be sought as to whether, based on the nature of the business, in a particular case it is necessary to register a “representative office” as a branch.
Foreign companies must register a Hong Kong branch with the Registrar of Companies within one month of “establishing a place of business in Hong Kong”. In practice, it is sufficient if the application for registration is lodged with the Registrar within one month. It is common for foreign companies to complete the registration of a branch before establishing a place of business in Hong Kong.
The obligation to register with the Registrar discussed in this paragraph is separate from the obligation under paragraph 3 to register businesses with the Business Registration Office.
Branch Offices (Non-Hong Kong Company) are generally subject to the same legal and tax consequences as companies incorporated in Hong Kong.
Foreign companies can and usually do register the Hong Kong branch in their own name. However, the Registrar has power to require a foreign company which is carrying on business in Hong Kong under its corporate name to use a different name under certain circumstances. This power must be exercised within six months of the date of registration of a branch or the date of registration of any change in the name of the foreign company.
Foreign companies which register a branch must conspicuously exhibit at every place in Hong Kong where they carry on business, and include on their letterhead, the name of the company and the place of incorporation of the company. Where the liability of the shareholders of the foreign company is limited, this must also be stated. These requirements are generally complied with using the words, “[Name of Company] incorporated in [place] with limited liability”.
The Hong Kong Companies Ordinance requires a foreign company to appoint 1 local representative in Hong Kong to act on behalf of the company. The representative must be ordinarily residents in Hong Kong, i.e. Hong Kong Permanent Resident and Hong Kong residents.
Once registered in Hong Kong, a foreign company has continuing maintenance obligations in relation to the Registrar of the Companies Registry and the Commissioner of Inland Revenue. The obligations in relation to the Registrar of the Companies Registry fall into two categories: the updating on a case by case basis of information filed with the Registrar and the filing of certain documents with the Registrar on an annual basis. The continuing obligations in relation to the Commissioner of Inland Revenue relate to the registration of each of the company’s businesses and the filing of a profits tax return and employer’s return.