Updates to Hong Kong Companies Ordinance
A private company (limited by shares) is the most common form of Hong Kong companies for trading and doing business.
Companies incorporated and registered in Hong Kong are governed by the Companies Ordinance (amended in 2013) under Hong Kong law.
The incorporation of a Hong Kong private company will take approximately 10 working days, providing that all the necessary documentation is in place and the proposed name of the company has been approved. The initial subscriber must submit the Articles of Association with the Registrar of Companies; the company is officially incorporated when the Registrar issues the Certificate of Incorporation.
Restrictions on Trading
Hong Kong private companies cannot undertake banking or insurance activities or solicit funds from or sell its shares to the Public.
Business registration applies to every business in Hong Kong and application should be made within one month of business commencement.
The name of a company, which must be stated in the Articles of Association, can be in English, Chinese, or both. It may not be identical to that of an already existing company and should end with the word “Limited” or its Chinese equivalent. The name search can usually be done same day, and clients are requested to provide 3 alternative names to be checked.
The requirement under the Companies Ordinance (Cap. 32) (“Cap. 32”) to paint or affix the company name on the outside of every office or place in which the company’s business is carried on in a conspicuous position in legible characters is replaced by a requirement to display continuously the company’s registered name in legible characters at the registered office and every business venue (being an office or place, other than the registered office, where the company carries on business and that is open to the public) and the company’s name is so positioned that it can be easily seen by any visitor to the premises.
Under the Regulation, there is no need to display the company’s registered name at the registered office etc. if the company has had no accounting transaction at any time since its incorporation, or if a liquidator, receiver or manager of the property of the company has been appointed; and the registered office or any business venue of the company is also the place of business of the liquidator, receiver or manager.
To facilitate the display of company names at locations which serve as the registered offices or business venues for multiple companies, if the location is the registered office or business venue of more than 6 companies, the requirement to display the registered name at the location is complied with if the registered name is displayed through an electronic device continuously for at least 15 continuous seconds once in every 4 minutes or if the registered name is capable of being displayed within 4 minutes after a request to make the display is made through the electronic device.
The requirements to state the registered name and liability status on communication documents and transaction instruments extend to communication documents and transaction instruments in both hard copy and electronic form. A company is also required to display its registered name and liability status in legible characters on any website of the company.
Name Approval and Restrictions
It is not possible to reserve a name. It is essential to check that there is no similar or identical name on the register, which would prevent the company being incorporated. A company may not have a name that: is similar to or identical to an existing company; constitutes a criminal offence or is otherwise contrary to the public interest; or, gives the impression of which it is connected with the Government of PRC, the Government of HKSAR or any departments of either Governments.
Names Requiring Consent or a Licence: building society, chamber of commerce, co-operative, mass transit, municipal, savings, tourist association, trust, trustee, underground railway, bank, insurance, assurance, reinsurance, etc.
Articles of Association
The requirement to have a Memorandum of Association (“MA”) as a constitutional document of a local company has been abolished. A company incorporated in Hong Kong under the new CO is only required to have Articles of Association (“AA”). Under the new CO, the information which was required to be contained in the MA under the Companies Ordinance (Cap. 32) (“Cap. 32”) will be set out in the AA.
Share Capital and Shares
- Issued/ Paid-up capital
The minimum issued/paid-up capital is usually 1 share of HKD 1.00. There is no limit or restriction on the maximum amount of share capital for both types. Share capital can be expressed in any major currency and is not restricted to the Hong Kong Dollar alone. Shares can be freely transferred, subject to a stamp duty fee. Hong Kong company formation law does not permit bearer shares.
Shares with par value are not permitted, nor are bearer shares. The minimum issued capital is one share. Classes of shares permitted include ordinary shares, preference shares, redeemable shares and shares with or without voting rights. Although the share capital is usually in HK dollars, share capital in other currencies and multi-currency share capital is allowed. The usual authorised share capital is HK$1,000.
The Registrar of Companies, announced that the capital duty used to be levied on Hong Kong companies has been abolished from June 1, 2012. Before the date, Capital duty is payable to the Government at the rate of 0.1% on incorporation and on any subsequent increase of any amount of the authorized capital.
There should be at least one registered shareholder. Names of shareholders are on public record with the Company Registry, but it is permitted to have a shareholder who may be nominee of a third party; the name of the nominee will then be filed with the Registrar. There are no restrictions on the nationality or residence of the shareholder and shareholder meetings may be held outside Hong Kong.
A minimum of one director, being a natural person, can be appointed for private companies. A body corporate can continue to act or be appointed as its director for listed companies so long as the private company is not a member of a group of companies of which a listed company is a member. Listed companies must have at least two individuals as managing directors. No restrictions exist as to the nationality or residence of the director(s), and directors’ meetings may be held in or outside of Hong Kong. The names of the directors are on public record with the Company Registry.
The company must have a company secretary. If this is an individual, this individual must ordinarily be resident in Hong Kong. A corporate secretary must have its registered office in Hong Kong. A sole director may not be the secretary of the company; a legal entity cannot serve as a secretary if the sole director is also the sole director of that specific entity.
The company must have a registered office in Hong Kong. The registered address must be a physical address and cannot be a PO Box.
The register of directors and the register of company secretaries may be kept separately under the new CO. The particulars in respect of a shadow director are no longer required to be contained in the register of directors. If the company secretary is a natural person, his or her correspondence address, instead of “usual residential address”, is required to be contained in the register of company secretaries. The registers may be kept at the company’s registered office or a place prescribed by the Company Records (Inspection and Provision of Copies) Regulation. The place prescribed by the regulation is any place in Hong Kong.
Annual General Meeting (AGM)
A company must hold an annual general meeting in respect of each financial year of the company unless:
- everything that is required to be done at the meeting is done by a written resolution and copies of the documents required to be laid or produced at the meeting are provided to each member of the company on or before the circulation date of the written resolution;
- the company is a single member company;
- the company has dispensed with the holding of AGMs by a written resolution or a resolution at a general meeting passed by all members. The company is required to deliver a copy of the resolution to the Registrar of Companies within 15 days after it has been passed; or.
- the company is a dormant company.
A company may hold a general meeting at two or more places using any technology that enables the members who are not together at the same place to listen, speak and vote at the meeting.
A company must in respect of each financial year hold its AGM by reference to its accounting reference period as follows:
- in the case of a company limited by guarantee or a private company that is not a subsidiary of a public company, 9 months after the end of its accounting reference period; and
- in the case of any other company, 6 months after the end of its accounting reference period.
The accounting reference period is the period by reference to which the financial year is to be determined.
The directors or a member of a company may propose a resolution as a written resolution. The company must circulate a proposed written resolution to all members who are entitled to vote if it has received requests from members representing not less than 5% of the total voting rights or a lower percentage specified for the purpose in the company’s articles.
A company is required to bear the expenses of circulating members’ proposed resolutions for AGMs and members’ statements relating to the business of AGMs, provided that the required threshold for requests to circulate the proposed resolution is received by the company not later than 6 weeks before the AGM or before the time at which notice of the meeting is given; and in the case of a statement, the required threshold for requests to circulate the statement is received by the company in time to be sent with the notice of the meeting.
The threshold for demanding a poll under the new CO is reduced to 5% of the total voting rights or 5 members having the right to vote at the meeting.
The annual return of a public company or a guarantee company will no longer be filed with reference to the date of AGM as an AGM may be dispensed with under section 612 of the new CO. The requirement is to deliver the annual return in respect of every financial year of the company instead of in each calendar year.
The annual return of a public company or a guarantee company should be filed (together with certified true copies of the relevant financial statements, directors’ report and auditor’s report) within 42 days after the company’s return date. The return date for a public company is 6 months after the end of the company’s accounting reference period while the return date for a guarantee company is 9 months after the end of the company’s accounting reference period. The accounting reference period is the period by reference to which the company’s annual financial statements are to be prepared. For example, if a company prepares its financial statements up to 31 December every year, the accounting reference period is from the 1 January of a year to 31 December of the same year.
A listed company is only required to provide the particulars of members who held 5% or more of the issued shares in any class of the company’s shares as at the date of the return.
There is no change in the requirement to file annual returns of private companies. The annual return of a private company must be delivered for registration within 42 days after the anniversary of the date of incorporation of the company.
Liquidation of the company
A company can be liquidated (“deregistered”) with unanimous consent of its shareholders when it has no outstanding liabilities. Prior to the liquidator submitting the required documents to the Registrar, the company must obtain a written notice of no objection from the Commissioner of Inland Revenue. The de-registration process will take approximately 6 months.
Companies incorporated outside of Hong Kong establishing a place of business in Hong Kong must, within one month, submit to the Register of Companies a copy of its Memorandum and Articles of Association (or equivalent document), a Certificate of Incorporation, a list of Directors and Secretary, the address of principal place of business and incorporation outside of Hong Kong and the address of the intended place of business in Hong Kong, and a copy of the company’s latest audited financial statements. A Hong Kong company is not permitted to re-domicile to another jurisdiction.
The usual residential address of a director and the full identification numbers of any person (“protected information”) will not be made available for public inspection.
For directors, the new CO requires the provision of correspondence addresses in addition to usual residential addresses. Only the directors’ correspondence addresses will be shown on the Companies Register.
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