Incorporating a company in Hong Kong & China by a holding company in another jurisdiction

Introduction:

In today’s global business landscape, expanding operations internationally is a common strategy. Incorporating a company in Hong Kong and China can provide businesses with excellent opportunities for growth in the Asian market. In this article, we’ll explore the key steps and requirements for establishing your company in these two regions.

Incorporating a company in Hong Kong

Following are the two methods for available for incorporating an entity in Hong Kong:

• E-incorporation Process: (The processing time for the application is one day)
• Standard incorporation Process (The processing time for the application is five days)

A. Key points to be kept in mind while opting for a company name:

• The company name may either be in English or Chinese but not in both languages
• The company name must be printed in “New Sai Ming” font (新細明體) on certificate of incorporation
• The name must not conflict with a trademark as per the Trademark Register maintained by the Intellectual Property Department

B. The following activities must be carried out for incorporating a company:

• Appointment of atleast one First Director through Form NNC3
• Appointment of atleast one Founder Member/ Shareholder
• Appointment of atleast one Reserve Director
• Appointment of a Company Secretary (It must be resident individual or a body corporate having its registered office or a place of business in Hong Kong
• Appointment of auditor
• Appointment of officers or persons with executive authority of the Company
• Appointment of a designated representative
• Setting up of a location of keeping of significant controllers register
• Setting up a registered office
• The year end date must be selected which may be calendar year, financial year or quarter ending date (e.g. June, September)
• The description of nature of business must be restricted to 60 characters including punctuation, symbols & spaces

C. Documents required to be submitted for incorporation of New Co:

• Business profile
• Constitution of the company
• Information documenting the ownership and control structure of the entity (e.g., ownership chart signed by a director)
• Declaration of shareholders and beneficial owners

D. Following documents must be submitted with the Registration Department:

• Incorporation Form: Form NNC1 (for company limited by shares) or Form NNC1G (for company not limited by shares).
• A copy of the company’s Articles of Association
• A Notice to Business Registration Office (IRBR1)

Incorporating a company in China

Key points to be kept in mind while incorporating a company in China

• Obtain a legal Chinese name and reserve it with the in-charge Administration for Industry and Commerce (AIC)
• Register business scope with the company registry, the local AIC at the time of establishment and obtain business license
• Record filing with the in-charge Committee Of Commerce (COC) and tax bureau
• Engrave chops including company chop, financial chip, and legal representative’s chop
• In case the Chinese entity has a holding company, it must appoint the following:
  • Legal representative
  • Board of Directors (3 to 13 directors) or one executive director
  • Board of Supervisors or one or two supervisors
  • BOD/ executive director to appoint General Manager
• Open bank account, including capital account and RMB basic account and foreign exchange registration with designated banks
• Maintain registered capital commensurate with the business scale of the investment and sustain the minimum of pre-operation expenses such as lease cost and payroll cost. Following factors must be kept in mind while calculating registered capital:
  • Working capital needs depending on revenue realization
  • Overseas debt and domestic loans
  • Debt-Equity ratio. Following are the debt-equity ratio requirements:

Indicative list of documents required to be submitted for incorporation of New Co:

• Application form of the company name and registration
• Articles of association
• Letter of Appointment for the legal representative, board of directors or executive director and supervisor and general manager
• Identity proof of the proposed management
• Lease agreement of the new operational office
• Copies of approval documents or permits, if any
• Incorporation certificate (Certificate of Incorporation) of the holding company
• Board Resolution notarized and authenticated by the holding company’s lawyer
• Shareholder Resolution for incorporating Wholly Foreign Owned Enterprise (WFOE) in China.

Conclusion:

Incorporating a company in Hong Kong and China can be a strategic move for international businesses. Understanding the specific requirements, steps, and essential documents for each jurisdiction is crucial for a successful setup. Whether you opt for Hong Kong’s swift E-incorporation or China’s complex regulatory landscape, careful planning and compliance with legal standards are key to your company’s success in these regions.