Legal Advice on How to Form and Register

Legal Advice on How to Form and Register Business Organization in Hong Kong By Mr. Ambrose Lam Senior Partner of Lam, Lee & Lai, Solicitors 13 th Floor, Hip Shing Hong Centre, No. 55 Des Voeux Road Central, Hong Kong Tel: (852) 2526 8008

INTRODUCTION – ORGANIZATION OPTIONS Sole Proprietorship Partnership Company (Co)

BUSINESS ENTITIES Sole Proprietor Partnership Unlimited Limited Company * Private Public Listed Unlisted

MAIN CONSIDERATIONS Ease of formation Limitation of liability Tax treatment Ownership structure ◦ GP: joint and several ◦ LP: limited partners may have limited liability (LPO s. 7) ◦ Co. : limited or unlimited ◦ GP & LP: personal tax rates on profits - 15% ◦ Co. : corporate on profits-16. 5% Co. : 50% shareholding v. 75% shareholding Management structure Maintenance

FORMATION General Partnership Limited Partnership Private Company Public Company ◦ Express Agreement ◦ Implied Agreement (by conduct; PO s. 4) ◦ Express Agreement ◦ Registration (LPO s. 4) ◦ Registration (CO s. 4) ◦ Articles include private company limitation, restriction and prohibition (CO s. 29) ◦ Registration (CO s. 4) ◦ Articles DO NOT include private company limitation, restriction and prohibition (CO ss. 29 & 30) ◦ Stringent requirement of prospectus, criminal liability if in breach

BUSINESS REGISTRATION Business Registration Certificate (BR): ◦ All BUSINESS ORGANIZATIONS in Hong Kong need to obtain it from Business Registration Office of the Inland Revenue Department. ◦ Including branch offices ◦ Expiration of the Certificate The Certificate need to be renewed every year or three years before expiration. ◦ Cost US$58 per year; Fine will be imposed for late payment.

How to form a company limited by shares in HK (1) Name Search – Companies Registry (online) Documentary preparation ◦ MOA & AOA ◦ Form NC 1 ◦ It shall at least include one secretary, one director and one founder member; ◦ The director and the secretary cannot be the same person; ◦ A person can be also a limited company ◦ Notice of Situation of Registered Office ◦ Letter of Appointment of first directors ◦ Minutes of first Directors’ Meeting or written resolution of all Directors.

Memorandum of Association (MOA) the most important documents to be prepared for incorporation a company as the constitution of the company ◦ Indicating the nature of its business; ◦ Defining the scope of activities of the company; ◦ Strict restrictions on alterations. It should include: ◦ ◦ ◦ Name of company Its Registered Office Objects (optional under CO s. 5(1 A)) Capital Declaration by the Founder Member(s) Liability of members

Table B Form of Memorandum of Association of A Company Limited by Shares. pdf

Articles of Association (AOA) Nature: ◦ regulations for the internal management of the company. ◦ rules for carrying out the objects of the company. Status: ◦ subordinate to the MOA. Note: ◦ A company limited by shares need to have articles of its own ◦ Application of Table A of CO

Articles of Association (AOA) Alteration: ◦ by special resolution In the case of any conflict between MOA and AOA, the MOA will always prevail. Table A 1 st Schedule. pdf

How to form a company limited by shares in HK (2) One-stop Company and Business Registration (NEW) Obtaining the Certificate of Incorporation (CI) It is conclusive evidence that the association is a company authorized to be duly registered under the CO. ◦ Forms required for registration are filed with the Companies Registry ◦ Form NC 1 ◦ M&A ◦ Notice to Business Registration Office (IRBR 1) ◦

How to form a company limited by shares in HK (3) Company Registration (Cont’): ◦ Time: 4 working days ◦ Fee: about US$220 + capital fee (For every or part of US$130 of the nominal share capital (subject to a maximum fee of US$3850 per case)) Obtaining Business Registration Certificate (BR) ◦ Time : [NEW] can be obtained at the same time when the company obtains the Certificate of Incorporation. ◦ Validity: 1 year or 3 years

DUTIES AND OBLIGATIONS - After formation of a limited company in HK Filing Annual Return (Form AR 1& Form AR 3) Fee: for a limited company having a share capital, an annual registration fee of US$14 is payable if the annual return is delivered within 42 days after the most recent anniversary of incorporation of the company. Note: A substantially higher registration fee ranging from US$112 to US$447 will be payable for the late filing of an annual return of a local private company having a share capital. Tax Return Notification of change of particulars ◦ Any employee; ◦ Any business or investment; ◦ Any profit gained in Hong Kong To the Companies Registry any change of members, directors, secretaries, shareholding and registered office To the Business Registration Office any change of business registration particulars, i. e. registered office

Non-Hong Kong Companies Meaning: ◦ Companies not incorporated in HK Every non-Hong Kong company that has a representative office in Hong Kong or has let out its property situated in Hong Kong needs registered in Business Registration Office of IRD, regardless of whether is has established a place of business in Hong Kong. Registration: ◦ Application Form (Form N 1) ◦ Notice to Business Registration Office (IRBR 2)

Q&A END Presented by Ambrose Lam Messrs. Lam, Lee & Lai, Solicitors 13 th Floor, Hip Shing Hong Centre, No. 55 Des Voeux Road, Hong Kong Tel: (852) 2526 8008