Company administration guidelines
- Shareholders of a Hong Kong company must subscribe for at least for one share to start the Hong Kong incorporation process.
- A Hong Kong company can issue the following classes of shares; ordinary shares and preference shares.
- Share premium is allowed in Hong Kong. However, share premium is a subject to capital duty of 0.1%.
- Proper instrument of share transfer is required to register the transfer of shares in a Hong Kong company.
- The minimum number of Shareholders is one and there are no restrictions on foreign individuals or corporate bodies being Shareholders.
- The number of Shareholders of private company is limited to 50.
- Nominee Shareholders are permitted.
- The minimum number of Directors is one.
- There is no restriction for foreign nationals to act as a Director of a Hong Kong company.
- Corporate Directors are permitted in Hong Kong.
- An annual general meeting of Directors can be held outside of Hong Kong.
Restrictions on name & activity:
- All business entities in Hong Kong must have an approved name prior to company registration. This can be done relatively quickly.
- A Hong Kong company name must end with ‘Limited’.
- There are no onerous restrictions on trading other than the inability to undertake banking and insurance activities.
- Every company in Hong Kong is required to have a registered office where a register containing details of any Directors, Shareholders or company Secretary's, as well times of any general and Director meetings were held. Eltoma can provide this service.
- All changes have to be filed with the Registrar of Companies within a month from the date of any change.
- It is compulsary for a Hong Kong company to have a Secretary. A Secretary can be a natural person or a company who is a resident of Hong Kong. Eltoma can provide this service.
- The company Secretary is responsible for keeping and filing corporate documents with the Registrar of Companies.
- Nominees are permitted in order to achieve a high level of confidentiality.
The timescale for the incorporation of a Hong Kong Limited Liability Company is approximately 5 working days.
The Secretary of a Hong Kong registered company receives a notification for the submission of the company’s income tax form about 27 months (2 years + 3 months) from the incorporation date of the company. Once notification is received, the company has 1 month to prepare its bookkeeping; auditation of the accounts and submit the income tax form. It is recommended that all Hong Kong registered companies prepare their audited accounts within 3 months from the end of their financial year on an annual basis.
The submission of a company’s income tax form is a compulsory requirement by HK’s Inland Revenue Authorities and if the audited accounts together with the tax form are not submitted on time, the company is obligated to pay penalties and may receive a court summons.
Fees for the accounting department:
|1. BookKeeping (fixed fee for all companies)||
|2. BookKeeping dormant companies||
|3. BookKeeping active companies||Determined by: number of transactions, amount of sales turnover and time spent|
|4. Audit dormant and/or active companies||Determined by: number of transactions, amount of sales turnover and time spent|
Documents needed from clients for bookkeeping:
Applicable for all jurisdictions for newly incorporated companies:
- A detailed description of the company’s activities.
- Bank statements for the financial year for all accounts that are under the company’s name.
- Any sales invoices issued from the company during the financial year.
- Any invoices received from the suppliers of the company during the financial year.
- Any expense receipts issued under the company’s name.
- Any agreements and contracts signed by the company during the financial year.
Documents needed from companies that were transferred from another agent:
Hong Kong jurisdiction:
- All documents that are mentioned above in part A.
- A set of the submitted financial statement of the previous financial year that were submitted to Hong Kong’s Company House.
- A copy of the submitted Inland Revenue notification: tax form.
The types of companies that may be formed and regulated under the new Companies Ordinance in Hong Kong are public and private companies limited by shares; companies limited by guarantee without a share capital and public and private unlimited companies with a share capital.
Any of the different types of companies as listed above, according to the Ordinance states that they must keep accounting records which must show and explain the company’s transactions and disclose their financial position and performance. Accounting records must contain daily entries of all sums of money received and expended by the company, and the matters of which the receipt and expenditure takes place, as well as an accurate record of the company’s assets and liabilities.
Commencing dormant status
The Ordinance states that a company is dormant if it said to have had no relevant accounting transactions during any given financial year. Accounting transaction can be defined as a transaction that is required to be entered in the company’s accounting records.
This means that a company must pass a special resolution, authorising its directors to make a statutory declaration that the company will become dormant, and deliver a copy of the declaration to the registrar. Special resolution is when the members of the company pass a resolution that is by a majority of at least 75%.
The company shall be deemed a dormant company effective as of the date of delivery. If the declaration specifies a later date for the company to become dormant, it shall be deemed dormant from the date specified.
Every company must appoint an auditor who must be a member of the Hong Kong Institute of Certified Public Accountants and hold a practicing certificate. The annual financial statements for a financial year must give a true and fair view of the financial position of the company as well as an accurate view of the performance of the company for the financial year.
The process of rendering a company as dormant effectively allows an inactive company to be retained at a minimum maintenance cost as a dormant company is exempt from the preparation of audited financial statements and appointments, as well as the removal of Auditors.
Annual general meeting
A company must hold a general meeting as its annual general meeting at the end of each financial year. In the case of a private company or a company limited by guarantee, 9 months after the end of its accounting reference period by reference to which the financial year is to be determined.
The Ordinance also holds that this does not apply to a dormant company, effectively rendering it is exempt from holding general annual meetings, unless the company enters into a financial transaction, it will stop having an effect on and after the date of the accounting transaction.
A private limited company incorporated in Hong Kong under the Ordinance is required to file an Annual Return signed by a Director, Company Secretary, Manager or Authorised Representative with the Companies Registry within 42 days after the company’s return date (excluding the year of incorporation.) This is relevant even if the information contained in the last return remains unchanged, it is still necessary to file an annual return certifying that there has been no change since the date of the last return.
The requirement to deliver an annual return for registration does not apply to a company who currently holds dormant status, however, it is still compulsory for a private company to deliver an annual return for the year in which it declares itself to be dormant if the effective date on which the company becomes dormant falls after the 42nd day of the anniversary of its date of incorporation.
Ending dormant status
A company that holds existing dormant status ceases to a dormant company by definition, if the company passes a special resolution declaring that the company intends to enter into an accounting transaction, and the resolution is delivered to the Registrar for registration; or there is an accounting transaction in relation to the company. The company will no longer be deemed dormant upon the date of said delivery or from the date of the declaration of the first accounting transaction.
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