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Types of Companies in Hong Kong: A Comprehensive Guide for Foreign Investors

Foreign investors can establish businesses in Hong Kong using various structures. Understanding these options is crucial for selecting the most suitable business type based on their specific needs and goals.

Business Structures Available in Hong Kong

  • Hong Kong Incorporated Companies

  • Branch Offices of Foreign Corporations

  • Representative Offices

  • Sole Proprietorships

  • Partnerships

Choosing the right structure depends on the specific advantages and disadvantages of each option. Here’s a detailed overview of each type.

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Hong Kong Incorporated Companies

Foreign investors often establish their presence in Hong Kong by forming a Hong Kong-incorporated company. These companies can be either limited or unlimited, and public or private. The main types include:

  • Private Companies Limited by Shares (Private Limited Companies)

  • Public Companies Limited by Shares (Public Limited Companies)

  • Companies Limited by Guarantee without Share Capital

  • Private Unlimited Companies with Share Capital

  • Public Unlimited Companies with Share Capital

Private Limited Companies

Private limited companies are the most common type of company in Hong Kong, accounting for 99% of all companies. They are suitable for profit-making businesses.

Key Features:

  • Limited liability for shareholders

  • Share transfer restrictions

  • Maximum of 50 members

  • No public share offerings

Advantages:

  • Separate legal entity

  • Limited liability

  • Positive image among banks and investors

  • Easy ownership transfer

Setup Requirements:

  • No minimum share capital

  • Setup within one week

  • Requires a company secretary, a director, and up to 50 shareholders

Public Limited Companies

Public limited companies can offer shares and debentures to the public and often get listed on the Stock Exchange of Hong Kong.

Key Features:

  • Stricter regulatory requirements

  • Suitable for medium to large companies aiming for significant growth

Setup Requirements:

  • No minimum share capital

  • Setup within 1-4 days depending on the method

  • Requires a board of directors, a designated representative, a company secretary, and at least one shareholder

Companies Limited by Guarantee (Without Share Capital)

These companies are ideal for non-profit activities.

Key Features:

  • No share capital

  • Member liability based on contributed assets

  • Suitable for non-profit organizations

Setup Requirements:

  • Incorporation fee based on the number of members

  • Setup within 4-6 weeks

  • Requires one member, two directors, and a company secretary

  • Annual audits and public financial statements

Unlimited Companies

Unlimited companies have no limit on the liability of their members, who must continuously invest to prevent financial collapse.

Key Features:

  • Members' liability is unlimited

  • Distinct legal entity

Branch Offices

Branch offices are extensions of their foreign parent companies and share the same legal identity.

Key Features:

  • Full liability of the parent company

  • Same legal and tax requirements as local companies

Setup Requirements:

  • Registration with the Companies Registry

  • Setup within 12-14 days

Representative Offices

Representative offices cannot engage in profit-making activities and are mainly used for promotion, communication, and market research.

Key Features:

  • No distinct legal identity

  • Exempt from profit tax returns

Setup Requirements:

  • Business Registration Certificate from the Inland Revenue Department

  • Setup within 2-3 days

Sole Proprietorships

A sole proprietorship is a simple business structure owned and managed by one person.

Key Features:

  • Full liability of the owner

  • Simplified tax advantages

Setup Requirements:

  • Business Registration Certificate

  • Setup within 1-2 days

Partnerships

Partnerships involve two or more individuals sharing profits and liabilities.

Types:

  • General Partnerships: Full liability for partners

  • Limited Partnerships: Liability limited to the capital contributed by limited partners

Setup Requirements:

  • Business Registration Certificate

  • General Partnership: Setup within 1-2 days

  • Limited Partnership: Setup within 5 days

Restrictions on Foreign Investment

Hong Kong generally welcomes foreign investments but imposes restrictions in specific sectors like broadcasting and telecommunications to protect public interest.

Broadcasting:

  • Foreign ownership requires Broadcasting Authority consent at specific shareholding thresholds

Radio:

  • Foreign ownership capped at 49%

  • Licenses only available to Hong Kong-based firms

By understanding these structures and requirements, foreign investors can make informed decisions about establishing a business presence in Hong Kong. This guide aims to provide clear and concise information to help you navigate the options available for starting a business in Hong Kong.


 

Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.


Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.

 

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Schedule a 30-mins complimentary, no-obligation call to see how Woodburn can help you. Book a call with our Head of Business Advisory - Kristina Koehler-Coluccia.

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