The 5 Don’ts When You Register a Company in Hong Kong
For those of you who plan to incorporate a company in Hong Kong, you must know that the incorporation process can be quite complicated if you decide to do it all by yourself rather than hiring a professional TCSP licensee. This article will list out 5 major categories that you should avoid when registering a company in Hong Kong so you can prevent yourself from making mistakes and to also help ensuring yourself to have a smooth and efficient incorporation process.
Using a Company Name That’s Already Been Registered
You must first come up with a company name before registration. It is understandable that you would want to use a name of your liking for your company. However, keep in mind that there are tens of thousands of registered companies in Hong Kong and it is not surprising to see companies with similar names. Therefore, it is recommended you look up for the availability of your proposed company name before submitting for registration.
If you see the name has already been taken or if it’s even slightly similar to the already registered companies. It is highly recommended that you use a different name to avoid possible legal disputes in the future.
Personal Documents Not Up to Par
One of the main requirements for incorporating a company in Hong Kong is to present a copy of your personal document (can either be a passport or HKID) and valid proof of address. You will be asked to show these two items especially when you hire a TCSP licensed service provider for company formation as it is an important step for the KYC (know-your-customer) procedure.
In order for your service provider to ensure you have a clean record before registering a company for you, you must provide a copy of your passport (must not be expired) and address proof (must be issued within the past three months); they will then go through a background check for due diligence purposes.
You may also use your ID card or drivers license as address proof as long as it shows your permanent residential address but you cannot just use it as both address proof and personal identification (must be a passport). So, please make sure your passport and address proof are valid before submitting to your service provider.
Having Someone Else Incorporate on Behalf of You
It is highly frown upon to incorporate a company in Hong Kong on behalf of someone else unless you are an agent certified to help people incorporate companies. For example, if you want to incorporate a company in Hong Kong and you are the ultimate beneficial owner (UBO), you must declare yourself as the founding member (shareholder) when you register for your company.
For instance, using the example above, you do not have a valid passport or address proof but your best friend does. You ask your friend to be both the sole director and shareholder of your company while you pay for the incorporation fee. Please keep in mind that if you decide to have someone else incorporate a company on behalf of you, you must also provide personal identification documents of yourself to your service provider. The identity of the UBO of a company must match with the person who pays for the incorporation fee.
Basic Knowledge in Hong Kong Company Law
It is important to have some basic knowledge in Hong Kong company law such as when to file for an annual return (NAR1), when to renew for a business license, the threshold for claiming zero percent offshore status etc.
The annual return form is a declaration of the basic information a company like company name, director and shareholder’s personal information etc. You are required by law to file for NAR1 for your company every year, failure to do so can lead to a late penalty and possibly court summons. The filing date for NAR1 is on the anniversary of your company’s incorporation. You are also required to renew your company’s business license (business registration certificate) unless you have paid for three year registration when you first incorporate your company. Failure to do so will also result in late penalties and possibly court summons.
Using a Residential Address for Company Registration Purposes
Every registered company is required by Hong Kong company law to maintain a registered commercial location in Hong Kong. Some individuals believe it would be more practical to register their businesses using their home address in order to save money. Although it is theoretically possible to register a business with a home address, you must first confirm that the address satisfies the requirements for company or commercial registration by looking up the property’s title records.
Because of the relatively stringent requirements enforced by the Hong Kong Building Department, it is typically quite challenging to register a company using a home address.If the relevant government bodies discover that you registered your business using a residential address, they have the right to issue a court summons and impose a steep fine. To prevent additional hassle, it is also advised that you engage a company formation firm to provide your business a registered office address, which is typically their own address.
We hope this article provides sufficient information to you in terms of things to avoid when incorporating a company in Hong Kong. If you have any further questions or concerns, feel free to message us on WhatsApp at +852 5404 0902 or send us an inquiry at info@cheapincorp.com!