Viewpoints

Stamp Duty on Transfer of Shares of a Hong Kong Company The transfer of shares in a Hong Kong company (whether private or publicly quoted) must be stamped. The rate of duty is 0.1% payable by each of the purchaser and seller involved in a transaction, giving an effective rate of 0.2%. Duty is charged on the sales consideration or the fair market value, whichever is the higher. In evaluating the fair market value, the Stamp Duty Office will normally accept the net asset value shown by the company’s audited accounts, subject to an upward adjustment to reflect a higher value for land and buildings than that shown in the accounts, where appropriate. No Stamp Duty is charged in the case of transfers of shares or immovable properties within a group of companies, where both parties are under 90% (or more) common ownership. Capital Duty on Increase of Authorized Capital […]

When you engage Kaizen to register your sole proprietorship business, please follow the procedures described below. 1. You place an order with Kaizen for the registration of sole proprietorship with payment of fees; 2. You provide to Kaizen the following information by email or fax:  Proposed name of the sole proprietorship;  Name, residential address and identity card number of the owner (sole proprietor);  Detailed business address of the proposed sole proprietorship business; 3. Kaizen fill out and deliver the registration application form to you; 4. You sign the application form and return it to Kaizen together with a photocopy of the sole proprietor’s identity card by post; 5. Kaizen arranges to submit the registration application form to the Business Registration Office and at the same time, make the payment of business registration fee; 6. Kaizen collects the Business Registration Certificate and forward it to you. Registration Costs […]

A foreign company may establish a representative office in Hong Kong to undertake promotional and liaison activities on behalf of its parent company. The office, however, directly or on behalf of its parent company, must not be engaged in business, conclude contracts, provide consultancy for a fee, undertake transshipment of goods, or open or negotiate any letters of credit. Foreign companies keen on exploring the viability of doing business in Hong Kong or interested in using Hong Kong as a launching pad into the Asia Pacific, may wish to set up a Representative Office (RO). Registration of a Representative Office should be considered when a foreign company wants to test the business environment in Hong Kong before making investment decisions. However foreign companies should be aware that incorporation of legal corporate entities with the Companies Registry (Registrar of Companies) will be necessary to maintain their operations in Hong Kong in […]

Recruiting Customs and Practices Recruiting The Labour Department offers a range of free recruitment and employment services. Employers who wish to recruit staff should complete and return a vacancy order form by fax or mail. When job seekers are interested in your job, the Job Centre will call you to introduce the job seekers and arrange for interviews. After concluding each interview, you must indicate the result on the introduction letter and return it to the Job Centre. The Centre will continue to refer interested job seekers to you until your vacancy has been filled. Working hours Employees employed under a continuous contract are entitled to not less than one rest day in each period of seven days. Wage There is no legal minimum wage in Hong Kong Legal Responsibilities Employees’ compensation An employer is legally liable to pay compensation in respect of injuries sustained by his employees as a […]

Stable banking system Hong Kong is an International Finance Centre and an offshore jurisdiction. There are numerous branches of major international banks in Hong Kong. Most of these banks are reliable and have a lot of branches all over the world. Hong Kong banks need only a passport copy and the address of the client, and there is a requirement that no Hong Kong banks should disclose their clients’ details to anyone without permission. Trading A lot of virtual trading activities take place in Hong Kong. For this reason, an offshore company with a Hong Kong correspondence address always has an advantage over those without such an address. Confidentiality All banks in Hong Kong conduct their activities under the Hong Kong corporate law. One of the requirements for the banks is not to disclose any customer’s information to anyone without the customer’s prior consent, except if the customer is suspected […]

The principal forms of business organization are the limited-liability company (both public and private), branch, partnership and sole proprietorship. Most foreign investors form limited-liability companies, but in some cases, they opt to form branches. All of these entities are subject to profits tax. A private limited-liability company is one that restricts that right to transfer its shares, limits and number of shareholders to 50 and prohibits any offers to the public of its shares or debentures. Companies that do not have these restrictions are public companies. Limited Liability Company (Limited by Shares) (Unless otherwise stated, Hong Kong company in this website refers to private company limited by shares) A company can be incorporated with limited or unlimited liability, by registration with the Companies Registry under the Companies Ordinance. Most are limited companies. A limited company generally has a share capital, and the shares carry a bundle of rights and obligations […]

Introduction In general, the responsibilities and liabilities of directors derive from various sources, including the constitution of the company, case law and statute law. If a person does not comply with his duties as a director, he may be liable to civil or criminal proceedings and may be disqualified from acting as a director. Although case law sets out and elaborates on most of these significant principles, it tends to be complex and inaccessible. The objective of these guidelines is to outline the general principles for a director in the performance of his functions and exercise of his powers. All directors should read these guidelines which are also readily accessible on the websites of the Companies Registry, the Hong Kong Stock Exchange, the Securities and Futures Commission, the Official Receiver’s Office and the Hong Kong Monetary Authority. Hard copies are also available at their offices. Companies should give a copy […]

1. Maintenance – annual requirements Annual filing obligations Subject to it being exempted from the obligation to do so, every year the foreign company must file the following documents with the Registrar: (1) a return confirming that there has been no alteration, other than those of which the Registrar has already been notified, in the documents and particulars which were filed with the Registrar at the time of registration of the branch (2) certified copies of each of the following documents or certified translations if the original is not in English or Chinese: (a) balance sheet as at the end of the company’s last financial year (b) profit and loss account for the company’s last financial year (c) group accounts, if any, in respect of the company’s last financial year (d) directors report, if any, in respect of the company’s last financial year (e) auditor’s report, if any, on the […]

1. Process and cost of establishing a branch office The procedures for registration of a branch (Non-Hong Kong Company) could be summarized into a two-step process: Step 1 – Submit the undernoted to the Registrar of Companies:  A certified copy of the instrument defining a company’s constitution.  A completed Form F1 which includes particulars of the company’s directors, secretary and company’s authorized representative in Hong Kong, the principal place of business in Hong Kong and in the place of incorporation.  A certified copy of the company’s certificate of incorporation (or its equivalent).  A certified copy of the latest accounts of the company. It the company is substantially a private company and is not required to publish or disclose its accounts to the public, it may apply for exemption form filing the latest accounts by submitting a lawyer’s/auditor’s certificate.  The prescribed fee of HK$1,720 and a […]

Advantages of Non-Hong Kong Company (formerly known as Overseas Company, Branch Offices) Over Local Hong Kong Company Any foreign incorporated company may be registered in Hong Kong (as Non-Hong Kong companies, also known as branch offices) but for those clients who simply wish to create a new Hong Kong entity then our recommendation would be to register a company in one of the offshore jurisdiction, such as British Virgin Islands. The procedure whereby a foreign company is registered in Hong Kong may result in considerable advantages over the equivalent procedure of incorporating a new Hong Kong company. Those advantages may be summarized as follows: – Stamp Duty Advantage Any transfer of shares in a Hong Kong incorporated company is subject to the normal level of Hong Kong stamp duty but most of the offshore jurisdictions do not impose stamp duty on share transfers. Any share transfer which takes place in […]