Any person carrying on business in Hong Kong is required to obtain a Business Registration Certificate from the Hong Kong tax authority (“IRD”) within one month from commencement of business. This is the primary source of information to the IRD in respect of new businesses. In Hong Kong, the principal forms of business are:
Sole Proprietorship
It is open for any individual to engage in business in his own right. Apart from the need to satisfy certain qualification requirements in certain professions the main legal matter is the need to register the business name and obtain a Business Registration Certificate.
Partnership
Partnerships are governed by the Partnership Ordinance and the Limited Partnership Ordinance, both of which are based upon the equivalent English Acts. If a Limited Partnership is formed the liability of some partners can be limited as long as they do not take part in the active management of the partnership.
Limited Liability Company
It is normal for a business based in Hong Kong to be carried on by a company incorporated in Hong Kong.
A Hong Kong company requires a minimum of one director (with at least one director being natural person), one shareholder, a company secretary and a registered office. The director(s) and shareholder(s) can be a corporation or an individual of any nationality while the company secretary must be resident (for individual) or incorporated (for corporation) in Hong Kong and the registered office must be in Hong Kong.
Directors' Responsibilities - Company directors are responsible for ensuring that the company maintains proper books of account and for preparing financial statements which give a true and fair view, and have been prepared in compliance with the Hong Kong Companies Ordinance. The company’s books of account and other relevant records and related information are all important documents required by auditors for examination during the course of audit work.
Statutory Audit - Every company incorporated in Hong Kong must have its financial accounts audited by auditors registered under the Professional Accountants Ordinance (PAO) annually. For private companies, the audited accounts should be laid before shareholders at the annual general meeting (AGM), or should be sent to the shareholders (in case that the company is not required to hold AGM), within 9 months (6 months for other companies) after its financial year-end. There is no mandatory year-end date for Hong Kong companies, but 31 March and 31 December are the more common ones.
Branch or Representative Office of a Foreign Corporation
Under the Companies Ordinance, where a non-Hong Kong company has established a place of business in Hong Kong, it must register with the Companies Registry within one month. A branch of a foreign company is not a separate legal entity from the parent. A representative office of a foreign company cannot engage in profit-making activities.
