Hong Kong is particularly a popular choice among foreign investors keen on Asian markets. Its low tax regime, pro-business environment, preferential access to the mainland market and more importantly the fact that Hong Kong is open to 100% foreign ownership are the key tractions for foreign enterprises, investors and entrepreneurs. There are three different types of entities available in the Companies Ordinance for foreign companies to set up and commence their business operations in Hong Kong SAR, namely Subsidiary Company, Branch Office and Representative Office. That being said, a Wholly-Owned Subsidiary remains a popular choice among foreign investors. The following is a guide to the steps on how to incorporate a subsidiary company in Hong Kong.
A subsidiary company is generally a private limited company incorporated in Hong Kong with a local or foreign company as its shareholder. A Hong Kong-incorporated subsidiary company, even if it is wholly-owned by a foreign entity, is treated as a local company for the purpose of taxation and is entitled to the tax benefits available to local companies. The subsidiary company has a separate legal entity, and the parent company’s liabilities are limited to the share capital that it has subscribed to.
Subsidiary Company Incorporation Process in Hong Kong
1. Choose Company Name
The first and foremost step is to choose an appropriate name for the company that is in line with the guidelines issued by the Registrar. No provisional approval or reservations are allowed in Hong Kong. The Registrar is empowered to direct a company to change its name if needed. A proposed name could be decline if it is same as or similar to a name that appears in the ‘Index of Company Names’, or a name of another company that is already incorporated or registered under an Ordinance, or if it infringes on trademarks, or is deemed to offend public sentiments or conflict public interest. In case of names that contain specific terms such as ‘Council’, ‘Department’, ‘Bureau’, ‘Commission’, ‘Government’ etc. additional approval must be obtained. To avoid undue delay and rejections, it is generally advised to check for name availability with the Registrar online via Companies Registry’s CyberSearch Centre or Company Search Mobile Service.
Nevertheless, an applicant will not know if the proposed name is registrable or otherwise until the Registrar processes the application. If the proposed name/names are not registrable the application will be rejected and fee will not be refunded. Seeking help from professional service providers early in the process to incorporate a company in Hong Kongwill save time and effort.
It should be noted that a company name can be in English (must end with "Limited"), or in traditional Chinese (must end with "有限公司"), or an English name and a Chinese name. The combination of English and Chinese characters in a name is generally rejected.
Read more on how you will be able to incorporate a subsidiary company in Hong Kong at this Hong Kong Company Registration blog.
