Company Incoporation

You have to setup a company by applying a business registration certificate to do business in Hong Kong.

Companies can be formed under the Company Ordinance Cap 622 as:

• a public company limited by shares;
• a private limited company limited by shares;
• a company limited by guarantee without share capital;
• a public unlimited company with share capital; or
• a private unlimited company with share capital.

Below are some of the key requirements:

• Either with or without limited liability, to be formed by one or more persons.
• The founder member(s) will be required to complete and sign his name to a Articles of Association (AA) and comply with the other requirements of the Company Ordinance  in respect of registration (s.69).
• Under s.68of the Company Ordinance, an incorporation form must contain :
  • Name of the company;
  • Intended registered office address;
  • statement as to whether the company is to be limited by shares, limited by guarantee or unlimited;
  • if limited by shares or guarantee, a statement as to whether it is to be a private company;
  • for company limited by shares or unlimited, a statement of capital and initial shareholding including the different classes of shares: total No. and total amount of shares, amounts to be subscribed by each of the founder member,  (s.8 of schedule 2);
  • If limited by guarantee, the amount that each person who is to be a member undertakes to contribute to its assets if it is wound up;
  • name and address of each founder member;
  • Regarding the persons acting the director and secretary of the company on incorporation, stating the name, residential address, No. of ID or No. and issuing country of passport, 
  • A Statement of compliance with the CO regarding registration;
  • Statements signed by each of the director stating that he or she has consented to be a director of the company and that he or she has attained the age of 18 years.
  • Statement that the company’s AA have been signed in accordance with s.67
• The incorporation form must be signed by any one of the founder member and delivered to the Registrar together with copies of the AA.(ss.69, 67)
• The AA or statement of content of the AA must be signed by each founder member (s.69, s.7 of Schedule 2).
• When the incorporation form together with its enclosed AA are registered, the company is incorporated, the Registrar will issue a certificate of incorporation certifying that the company is incorporated and if the members have limited liability, that the company is limited (s.71).
• The AA must state, as mandatory provisions,
  • s.83, whether the liabilities of members is limited by shares, limited by guarantee, or unlimited.
  • s.80, Name of the company;
  • s.84, extend of liabilities of members; and
  • s.85, Statement of capital and initial shareholdings;

Change of Company Name

Changing the name of a company is a simple 3 steps process:

• Choose a new name
  The company should check whether the proposed name is available for registration.
• Pass a special resolution
  The company is required to pass a special resolution to change the company name at the general meeting.
• Get approval from the Companies Registry
  The company has to deliver to the Company Registry a notice of change of its name in a specific form for registration within 15 days after the date of passing of resolution.

Closing a Private Limited Company

To close a private limited company in Hong Kong, there are several steps to ensure all legal and financial obligations are fulfilled. The overall process will take about 6-9 months to complete. A company can be closed either by “De-registration” or “Winding Up“.

To deregister a company, following conditions need to be met:

• All the members of the company agreed for deregistration of the company;
• The company has never commenced business or operation, or has ceased to carry on business or operation for more than 3 months immediately before the application;
• The company has no outstanding liabilities;
• The company is not a party to any legal proceedings;
• The company has no immovable property situate in Hong Kong; and
• If the company is a holding company, none of its subsidiary's assets consist of any immovable property situate in Hong Kong.

Appointment of Company Secretary

All Hong Kong limited companies must appoint a company secretary according to the Companies Ordinance (Chapter 622).

Company secretary can be an individual or a Hong Kong limited company. If the company secretary is an individual, he/she is required to usually reside in Hong Kong.

Sole director of a company shall not concurrently serve as the company secretary of the company.

Duties and responsibilities of Company Secretary include:

• Manage and keep the company's statutory book (register of shareholders / directors / secretaries / significant controllers)
• Organise and witness the required meeting of directors and shareholders alongside prepareof meeting minutes
• Prepare and file annual returns with the Companies Registry
• Change of director or company secretary
• Transfer of share and share allotment
• Change of company name
• Change of registered address
• Ensure that company complies with relevant laws and regulations

Directors of a Limited Company

Every company must have at least one director. In a listed company, at least 3 independent non-executive directors and 2 executive directors must be appointed.

All directors must comply with the legal requirements under the Companies Ordinance (Chapter 622), the general principles of duties of directors are:

• Act in good faith for the benefit of the company as a whole
• User powers for a proper purpose for the benefit of members as a whole
• Not to delegate power except with proper authorization and duty to exercise independent judgement
• Exercise care, skill and diligence
• Avoid conflicts between personal interests and interests of the company
• Not to enter into transactions in which the directors have an interest except in compliance with the requirements of the law
• Not to gain advantage from use of position as a director
• Not to make unauthorized use of company’s property or information
• Not to accept personal benefit from third parties conferred because of position as a director
• Observe the company’s articles of association and resolutions
• Keep proper books of account

Significant Controller

Companies (Amendment) Ordinance 2018 requires a company incorporated in HK to identify persons who have significant control over the company; and maintain a significant controllers register (‘SCR’).

Significant Controller includes natural person; and a legal entity which is a shareholder of the company who

• holds, directly or indirectly, more than 25% of the issued shares in the company, or of the right to sharer of the capital or profits of the company, or voting rights of the company;
• holds, directly or indirectly, the right to appoint or remove a majority of the Board of directors of the company
• has the right to exercise, or actually exercises, significant influence or control over the company;
• has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or a firm that is not a legal person, but whose trustees or members satisfy any of the aforesaid conditions.

Shareholders of a Limited Company

There can be between minimum 1 and maximum 50 shareholders in a Hong Kong private limited company. A shareholder can be a director at the same time and there is no residency requirement for shareholders. The shareholder must be a person at least 18 years of age or a company. Nominee shareholders are also allowed.

Transfer of Shares

Every shareholder of a limited company have right to transfer his/her ownership to anyone they like unless the company's articles of association contains any restrictions on the actions.

Transfer of share from one party to another is required to pay stamp duty to the Inland Revenue Department.

Restrictions on transfer of shares

• The restriction on transfer is usually in the form as Art 3 of Model AA that the directors have an absolute discretion to refuse to register any transfer of the company’s shares, and they do not have to give their reasons for refusal;
• Pre-emption clause prohibits the transfer of shares to a non-member so long as a member can be found to purchase the shares in that any member attempts to sell their shares shall first offer to the existing shareholders at the offering price before he is entitled to sell his shares to 3rd party at the price not less than the original offering price.
• Prohibition on inviting the public to subscribe shares or debentures

Allotment of Shares

A company can increase its share capital to attract more investments from new or existing shareholders.

The company needs to obtain consent and get approval from the existing shareholders of the company through a general meeting. Shareholder must have their name registered in the register of members of the company within 2 months of allotment of shares. The company is also required to file the Return of Allotment to the Companies Registry showing i) number of shares issued to the allottee, ii) name and address of the allottee, iii) amount paid by the allottee, iv) updated Statement of Company’s Capital, v) total shares issued, vi) total paid up capital, and vii) total issued capital of the company.

Annual General Meeting

A company must hold an Annual General Meeting (AGM) in respect of each financial year of the company to discuss the company’s financial report, business performance or strategy.

AGM must be held unless i) if everything that is required to be done at the meeting is done by a written resolution and copies of the documents required to be laid or produced at the meeting are provided to each member of the company; ii) the company is a single member company; iii) written resolution or a resolution at a general meeting passed by all members; or iv) the company is dormant.

A company's first AGM should be held within 18 months after its incorporation and thereafter at least once in every calendar year and each of the AGM must not exceed 15 months and within 6 or 9 months after its accounting reference period end.