You do not need to be a Hong Kong resident to open a company in Hong Kong, but you must appoint a local company secretary and maintain a registered office address in Hong Kong. These requirements ensure that your company complies with local regulations, even if you are based overseas.
Hong Kong is one of the most attractive destinations for entrepreneurs and businesses worldwide, thanks to its strategic location, business-friendly environment, and low tax regime. One of the most common questions asked by foreign entrepreneurs is whether they need to be a Hong Kong resident to open a company in the city. The short answer is no; you do not need to be a Hong Kong resident to open a company in Hong Kong.
However, there are specific requirements and considerations that you need to be aware of before proceeding with company incorporation. In this article, we will explore the key aspects of setting up a company in Hong Kong as a non-resident.
1. Understanding the Basics: Who Can Open a Company in Hong Kong?
Hong Kong's business environment is designed to be inclusive and accessible to both local and international entrepreneurs. The Companies Ordinance, which governs company formation in Hong Kong, does not impose any restrictions on the nationality or residency of company owners. This means that anyone, regardless of where they live, can incorporate a company in Hong Kong.
Key Requirements for Incorporation:
Director(s): Every Hong Kong company must have at least one director. The director can be of any nationality and does not need to be a Hong Kong resident. However, the director must be a natural person (i.e., an individual) and must be at least 18 years old.
Shareholder(s): A Hong Kong company can have between one to 50 shareholders. Shareholders can be individuals or corporate entities, and there are no restrictions on their nationality or residency. A director can also be a shareholder.
Company Secretary: While the director and shareholders do not need to be Hong Kong residents, the company must appoint a company secretary who is a Hong Kong resident or a Hong Kong-incorporated company with a Trust or Company Service Provider (TCSP) license. The company secretary is responsible for ensuring that the company complies with all legal and regulatory requirements.
Registered Address: Every Hong Kong company must have a registered office address in Hong Kong. This address cannot be a post office box and must be a physical location where official documents and notices can be sent. Many non-resident entrepreneurs use the services of a corporate service provider to fulfill this requirement.
Summary:
In summary, you do not need to be a Hong Kong resident to open a company in Hong Kong. However, you will need to appoint a local company secretary and have a registered office address in Hong Kong.
2. The Role of the Company Secretary
As mentioned earlier, the company secretary plays a crucial role in the incorporation and ongoing compliance of a Hong Kong company. The company secretary is responsible for maintaining the company’s statutory books, filing annual returns, and ensuring that the company complies with all legal obligations under the Companies Ordinance.
Who Can Be a Company Secretary?
Individual: The company secretary can be an individual who is a resident of Hong Kong. This person must have the necessary knowledge and experience to fulfill the role effectively.
Corporate Entity: Alternatively, the company secretary can be a corporate entity that is incorporated in Hong Kong and holds a TCSP license. Many non-resident entrepreneurs choose to appoint a corporate service provider as their company secretary to ensure that all compliance requirements are met.
Responsibilities of the Company Secretary:
Statutory Compliance: The company secretary ensures that the company complies with all statutory requirements, including the filing of annual returns, maintaining the Significant Controllers Register (SCR), and updating the company’s records with the Companies Registry.
Board Meetings: The company secretary is responsible for organizing and recording minutes of board meetings and ensuring that the company’s decisions are properly documented.
Communication with Authorities: The company secretary acts as the main point of contact between the company and the Hong Kong authorities, including the Companies Registry and the Inland Revenue Department (IRD).
Summary:
While you do not need to be a Hong Kong resident to open a company, appointing a reliable and knowledgeable company secretary is essential to ensure that your company remains compliant with all legal requirements.
3. Opening a Bank Account in Hong Kong
One of the key steps in setting up a company in Hong Kong is opening a corporate bank account. While you do not need to be a Hong Kong resident to open a company, opening a bank account can be more challenging for non-residents.
Challenges for Non-Residents:
Since 2016, Hong Kong banks have implemented stricter due diligence procedures due to increased regulatory requirements. As a result, opening a bank account as a non-resident can be more complex and time-consuming. Banks may require the following:
Physical Presence: Some banks may require all directors and shareholders to be physically present in Hong Kong to open a bank account. This can be a challenge for non-resident entrepreneurs who are unable to travel to Hong Kong.
Detailed Documentation: Banks may request detailed documentation, including proof of business activities, business plans, and financial statements. Non-residents may also need to provide additional identification documents and proof of address.
Alternative Solutions:
If opening a traditional bank account in Hong Kong proves challenging, there are alternative solutions available:
Virtual Banks: Hong Kong has seen the emergence of virtual banks that offer online banking services without the need for physical presence. These banks may have more flexible requirements for non-residents.
Offshore Banking: Some entrepreneurs choose to open an offshore bank account in another jurisdiction while operating their Hong Kong company. However, it is important to ensure that the offshore bank account meets the company’s operational needs.
Summary:
While opening a bank account in Hong Kong as a non-resident can be challenging, there are alternative solutions available. It is advisable to work with a corporate service provider who can guide you through the process and help you find the best banking solution for your business.
4. Legal and Regulatory Compliance
Once your company is incorporated, it is important to ensure that it remains compliant with all legal and regulatory requirements in Hong Kong. This includes fulfilling annual filing obligations, maintaining proper accounting records, and complying with tax regulations.
Annual Filing Requirements:
Annual Return: Every Hong Kong company is required to file an annual return with the Companies Registry. The annual return provides details of the company’s directors, shareholders, and registered office address. The company secretary is responsible for filing the annual return on time.
Profits Tax Return: The company must file a Profits Tax Return with the Inland Revenue Department (IRD) each year. The return must be accompanied by audited financial statements prepared by a certified public accountant (CPA) in Hong Kong.
Accounting and Auditing:
Accounting Records: The company must maintain proper accounting records that accurately reflect its financial position. These records must be kept for at least seven years.
Audit Requirement: All Hong Kong companies are required to have their financial statements audited by a CPA. The audited financial statements must be submitted to the IRD along with the Profits Tax Return.
Tax Compliance:
Profits Tax: Hong Kong companies are subject to Profits Tax on income derived from Hong Kong. The standard Profits Tax rate is 16.5% for corporations. However, only income sourced in Hong Kong is taxable, and offshore income is generally exempt.
Employer Obligations: If the company has employees, it must comply with employer obligations, including the payment of salaries tax, contributions to the Mandatory Provident Fund (MPF), and filing of employer’s returns.
Summary:
Maintaining legal and regulatory compliance is essential for the ongoing operation of your Hong Kong company. Appointing a reliable company secretary and working with a CPA can help ensure that your company meets all its obligations.
5. Advantages of Incorporating in Hong Kong as a Non-Resident
Incorporating a company in Hong Kong as a non-resident offers several advantages:
Business-Friendly Environment:
Hong Kong is consistently ranked as one of the easiest places to do business in the world. The city’s transparent legal system, efficient regulatory framework, and low tax regime make it an ideal location for entrepreneurs and businesses.
Access to Mainland China:
Hong Kong’s proximity to Mainland China provides businesses with easy access to one of the world’s largest markets. The Closer Economic Partnership Arrangement (CEPA) between Hong Kong and Mainland China offers additional benefits, including preferential access to the Mainland market.
International Financial Hub:
Hong Kong is a leading international financial center, with a well-developed banking system, access to global capital markets, and a stable currency. Incorporating in Hong Kong provides businesses with access to a wide range of financial services and investment opportunities.
No Foreign Exchange Controls:
Hong Kong does not impose any foreign exchange controls, allowing businesses to freely move capital in and out of the city. This flexibility is particularly beneficial for companies with international operations.
Summary:
Incorporating in Hong Kong as a non-resident offers numerous advantages, including a business-friendly environment, access to Mainland China, and a well-developed financial infrastructure.
Conclusion
In conclusion, you do not need to be a Hong Kong resident to open a company in Hong Kong. The city’s inclusive and accessible business environment allows entrepreneurs from around the world to incorporate and operate their businesses with ease.
While there are specific requirements, such as appointing a local company secretary and maintaining a registered office address, these can be easily managed with the help of a corporate service provider. By understanding the legal and regulatory landscape, non-resident entrepreneurs can take full advantage of Hong Kong’s strategic location, low tax regime, and international business opportunities.
Whether you are looking to expand your existing business or start a new venture, Hong Kong offers a wealth of opportunities for growth and success.
