The 3 Don’ts When You Register a Company in Hong Kong
Many foreigners tend to run into all sorts of difficulties when they incorporate a company in Hong Kong especially when they to do everything by themselves because there are just so many rules and regulations to comply with. For example, many people did not know you must first create an e-registry account under the website in order to officially register a company. Another example is people generally have no clue where or how to download the NNC1 (Incorporation form) and Articles of Association of their company after it is successfully incorporated. This article will list out 3 things to absolutely avoid when incorporating a company in Hong Kong.
Appointing a Person without Legal Background as Company Secretary
It is required by the company law that for every company registered in Hong Kong, there must be a company secretary. In order to be a company secretary, one must be either an individual who is a Hong Kong permanent resident or a body corporate with a registered address in Hong Kong. This is a very common misconception for people who are not familiar with the company laws in Hong Kong.
It is understandable that most people would prefer saving costs so they rather appoint themselves as company secretary. However, one is prohibited to be the company’s director and secretary simultaneously. As mentioned above, unless you are a Hong Kong permanent resident with a legal background, it is highly recommended you hire a company formation agency instead and it will act as your company secretary on your behalf. Some people may choose to appoint a friend or a family member without legal backgrounds to be their company secretary but that often result in late filings. A company secretary is not an administrative role, instead one is responsible for compliance matters such as ensuring your company is operating smoothly by complying with the law and filing necessary documents to the government on your behalf. A company secretary is not responsible for the day-to-day operations of your company so anything like ordering stationaries or setting up meetings with your clients are not part of their job.
Using a Residential Address for Company Registration Purposes
Similarly, it is also required by the Hong Kong company law that for every registered company, it must have a registered commercial address in Hong Kong. Some people think it would be more convenient to use their own residential address when registering their companies in order to save costs. In theory, it is not entirely possible to register a company with a residential address but you must check the title deeds of the property beforehand to make sure the address fits the criteria for company or commercial registration purposes.
It is usually quite difficult to use a residential address for company registration because the regulations set by the Hong Kong Building Department are actually quite strict when it comes to that. If you register your company with a residential address and the related government officials find out, they can issue a court summons and one can result in penalty for a hefty cost. Likewise, it is recommended to hire a company formation agency to provide your company a registered office address (usually it’s their own address) to avoid further trouble.
Visiting the Bank without Knowing the Opening Requirements
A lot of foreign entrepreneurs are keen on opening an account with traditional banks like HSBC and Bank of China when they incorporate a company in Hong Kong. These banks reflect an image of trustworthiness to many due to their reputation and sizes. However, in terms of business accounts opening, most traditional banks in Hong Kong will only accept clients with a business experience. Bankers want to see that you have prior business experience from overseas; they want to make sure you are legitimate and genuine in opening a business account for anti-money laundering purposes. If you do not have a business experience in the past, it is unlikely that they will approve your business account opening application.
Therefore, most people will usually opt with an e-wallet account to start with. E-wallets such as Airwallex and Payoneer are fintech companies that offer money remittance and receiving services as well as providing a multi-currency account for you. They do not offer credit cards to their customers but most of them do offer a master debit cards. E-wallets are getting more popular in recent years because they are easy to use, free to register and you can register remotely unlike the traditional banks in Hong Kong where they require a physical interview with the applicant.
We hope this article provides helpful information for those of you who want to incorporate 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!