Fridman Investments Hong Kong Company FormationFridman Investments
Company Formation, Incorporation, Business startup for Limited and Unlimited Company, Sole Proprietor, Partnership, Wholly Foreign Owned Enterprise, WFOE, Joint Venture, JV, Representative Office, RO

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Company Formation

 

Prices are in HKD ( Hong Kong Dollars ) 1.00 USD = 7 HKD
Prices & Conditions are subject to Change, please contact us for more details

 

 

Limited Companies / Incorporation of HK Companies

 

We can Also Help With Sole Proprietor and Partnership

 

Contact Us For Information About:

  • Setup requirement
  • Setup cost & annual maintenance
  • Exemption from Business Registration Certificate fee

 

 

 Advantages

People form company to achieve different purpose, such as tax planning, risk diversification, investment, market entry etc.

Generally, Hong Kong companies are being used because of following advantages:

  1. With British Legal System as background which is well adopted;
  2. With English and Chinese as bilingual legal language;
  3. With very low tax rate ( around 17.5% on net profit )
  4. Tax exempt for income not incurred in Hong Kong
  5. With very stable social and political environment;
  6. With very active and freedom in financial activities. No restriction in fund transfer to and from most part of the world;
  7. Close to and with excellent relationship with Mainland China;
  8. Being international center of information exchange and transportation hub;
  9. Enjoy convenience of international banking system;
  10. With huge supply of high quality manpower;
  11. Save legal and government fee when transfer of asset is effected by transfer of shares of a company holding the asset, rather than transfer of the title of the asset directly;
  12. Winding up of the HK Company is relatively low in cost and simple in procedure – this may happen due to change of investment strategy, change of business environment etc.

 

 Advantage of using Hong Kong Company to apply for RO

  1. Diversify investment risk away from mother flagship company;
  2. More easy to change ownership of China investment (change shareholding of Hong Kong Company effectively change the shareholding of China business);
  3. The activity of the RO can be stopped completely by winding up of the HK Company – this may happen due to change of investment strategy, change of business environment etc;
  4. Close relationship between HK and China makes application of RO setup easier and quicker.

 

 Incorporation Requirement

  1. Minimum 1 Shareholder and Director is required;
  2. Directors & Shareholders can be same person;
  3. No nationality restriction for shareholders and directors;
  4. Corporate shareholder and director is allowed and documents required include:
    • Certificate of Incorporation of corporate;
    • Memorandum & Articles of corporate;
    • Minutes of Directors approving taking up shares / directorship in the HK Company, and authorization of signatory;
  5. Minimum subscribed share capital is HK$1
  6. Registered address in Hong Kong;
  7. One Company Secretary and should either be Hong Kong resident or Hong Kong limited company;
  8. Company name should not be same as those already in company register and can be
    • only English name or only Chinese name, or
    • English plus Chinese name

 

 Incorporation procedure and required time

Clients do not need to come to Hong Kong to buy the Hong Kong Company.
Client can make a selection between :
  1. Tailor made company
  2. Ready made company ( Shelf company )

 1. Tailor made company

Day 1

Client to pass following information to Fridman Investments for name search:

  • Address and passport (ID) copy of at least 1 shareholder and 1 director.
  • Detail of registered address and company secretary.
  • At least 3 intended company names in order of preference.
  • 50% service fee as down payment.

There are 3 possible ways for client to send us information :

Method :

Contact Us For An Order Form

or:

Directly send us an Email : info@fridmaninvestments.com with following information :

  1. Preferred
    company names    		 • only English name or
    • only Chinese name or
    • English & Chinese name together    for your company.
  1. Shareholder
    • Surname
    • Given name
    • Passport Number
    • Nationality
    • Residential Address
    • % of shareholding of each shareholder
  1. Director
    • Surname
    • Given name
    • Passport Number
    • Nationality
    • Residential Address
  1. Bank Account Operator : Who will be bank account authorized signatory, and whether signing singly or jointly.

Above should be same as showing in passport.
Please send passport copy to us by email / fax - to ensure the info is correct. Thanks.

Day 2
  • Fridman Investments confirm to client whether the names can be used.
  • Fridman Investments send documents to client for signature.
Day 3
  • Client to pass the signed document back to Fridman Investments for processing.
Day 10

Documents will be available to client:

  • Certificate of Incorporation. ( CI )
  • Business Registration Certificate (full amount of service fee and disbursement should be settled before application of Business Registration Certificate).
When Certificate of Incorporation is available to client, the company is certified to be established and client can use the company to enter into business transaction.
Day 13 Whole set of company kit (green box) and processed documents will be available to client.

Important Note

  • Time required as stated is working days, not calendar days.
  • If client can arrange to pass information, sign documents and payment within same day, the whole process can be shortened to around 7 working days.

The whole incorporation process and service ends here and clients should have following items with them:

  • Green box
  • Certificate of Incorporation ( CI )
  • Business Registration Certificate
  • Copies of shareholders, directors etc registration documents ( Original is kept in government for public search.)

Courier fee for delivery of completed company registration material is not included yet in the standard service fee. Client needs to specify address and contact phone no. before exact courier fee can be quoted.

 

 2. Ready made company

Day 1
  • Client to choose preferred companies from ready made company list
  • Client to pass following information to Fridman Investments for document preparation:
    • Address and passport (ID) copy of at least 1shareholder and 1 director.
    • Detail of registered address and company secretary.
    • Company name chosen from ready made company list.
    • Full payment is required.
  • Fridman Investments send Certificate of Incorporation and company kit (green box) to client.
When Certificate of Incorporation is available to client, client can use the company to enter into business transaction, even though some registration process need to handle in following days.

There are 3 possible ways for client to send us information :

Method :

Contact Us For An Order Form

or:

Directly send us an Email : info@fridmaninvestments.com with following information :


  1. Preferred company names : from ready made company list.
  1. Shareholder
    • Surname
    • Given name
    • Passport Number
    • Nationality
    • Residential Address
    • % of shareholding of each shareholder
  1. Director
    • Surname
    • Given name
    • Passport Number
    • Nationality
    • Residential Address
  1. Bank Account Operator : Who will be bank account authorized signatory, and whether signing singly or jointly.

Above should be same as showing in passport.
Please send passport copy to us by email / fax - to ensure the info is correct. Thanks.

Day 2
  • Fridman Investments send documents to client for signature.
Day 3
  • Client to pass the signed document back to Fridman Investments for processing.
Day 4
  • Fridman Investments to pass processed documents to client plus Business Registration Certificate.

The whole incorporation process and service ends here and clients should have following items with them:

  • Green box
  • Certificate of Incorporation ( CI )
  • Business Registration Certificate
  • Copies of shareholders, directors etc registration documents (Original is kept in government for public search.)

Courier fee for delivery of completed company registration material is not included yet in the standard service fee. Client needs to specify address and contact phone no. before exact courier fee can be quoted.

Change of company name : After buying a ready made company, client may need to change the company name to their preferred name.

 

 

 Incorporation Cost

(1) Additional international courier fee may apply according to client's location;
(2) Below fee applies - for company with incorporation date from 1/4/2008 to 31/3/2009;
(3) Below fee should add HK$4,300 - if incorporation date other than from 1/4/2008 to 31/3/2009 - because the one-off government fee reduction no more applies.
             
  1.00 USD = about 7 HKD  
Package
1
Package
2
Package
3
Package
4
     
(#CFHK1)
(#CFHK2)
(#CFHK3)
(#CFHK4)
       
Ready made company
HK$
13,300
10,700
9,500
8,300
Tailor made company
HK$
13,300
10,700
9,500
8,300
       
  Company incorporation handling  
  Company Secretary parking (#CS1)  
  Register Address parking (#RA1)  
   
  Bank account opening service (#BA1)  
     
       
Including:     
  Company incorporation service fee  
2,000
2,000
2,000
2,000
  Company Secretary parking (#CS1)  
1,200
1,200
1,200
  
  Register Address parking (#RA1)  
1,200
1,200
    
  Bank account opening service (#BA1)  
2,600
      
     
  (1) Total  
7,000
4,400
3,200
2,000
     
======
======
======
======
       
  Disbursement          
  - Certificate of Incorporation  
3,600
3,600
3,600
3,600
  - Business Registration Certificate  
900
900
900
900
  - Company Kit (Green Box)  
1,400
1,400
1,400
1,400
  - Printing and Copying  
400
400
400
400
     
  (2) Total  
6,300
6,300
6,300
6,300
     
======
======
======
======
       
  (1) + (2) Total
 HK$
13,300
10,700
9,500
8,300
 

 

 Maintenance Requirement & Cost

In Hong Kong, each company needs to file tax return on annual basis (In China, tax filing is on monthly basis).
Most clients will use 31/3 as fiscal year end (to be same as government but actually client is free to choose any other date).
Naturally, for small to medium business, accounting work and auditing work is done once a year as well.

Some of the key maintenance requirement of a Hong Kong limited company are :

  1. Duty to Business Registration Office ( BRO )
    1. Renew business registration.
  2. Duty to Company Registry ( CR )
    1. File annual return once a year even though there is no change during the year in the shareholding, director or other information of the company.
    2. During the year, file to the CR of any changes in the shareholding, directors etc, that need to be filed according to the Companies Ordinance. The information need to be filed and ready for public search in order to protect the interest of the company and the public.
  3. Duty to Inland Revenue Department ( IRD )
    1. File tax return to the IRD:
      1. Profits Tax - once a year (Normally auditor's reported should be submitted together with tax returns);
      2. Salaries Tax (Employer Return) - once a year - to advise salary payment to employees;
    2. Maintain proper accounting books and records to produce financial statements for tax return filing for 7 years.
    3. Common misunderstanding
      1. Even a non-active company need to file tax return. It is the IRD to assess whether a company need to pay tax or no need to file tax return.
      2. Proper books and records need to be maintained in order to support any financial statements. IRD may ask how your accounting system works and how you keep your records. If it is not properly handled, IRD may be suspicious of the figures in financial statements. In certain situation, penalty or / and estimated assessment will be levied.

The service fee ranges from HK$4,000 for "Nil Business", HK$12,000 for "Small Business", or higher for higher volume of work.

Hong Kong Company - Annual Maintenance Cost
       
   
HK$
Note
Government fee :  Business Registration Certificate renewal
3,200
 4 
  Company Registry annual return filing
210
   
 
   
5,410
   
 
   
Service fee :  Registered address (#RA1)
1,200
 1 
Company Secretary (#CS1)
1,200
 2 
Accounting, auditing & tax filing
4,000
 3 
   
 
   
6,400
  
   
 
    
 
Total :  
11,810
  
       
    
Note
1 & 2
Minimum parking fee is quoted for easy reference. This may change according to different client's needs.
Note
3
HK$4,000 is service fee for a no activity company. The actual fee depends on the business nature and number of transaction of the company.
Note
4
Because the one-off government fee reduction.
From 1/4/2008 to 31/3/2009 ,Business Registration Certificate fee is HK$900

 

 Comparison with BVI Companies

Generally, Hong Kong company is more suitable for doing business while BVI company is more suitable for asset holding. However as situation of client varies case-by-case, professional advice should be sought before making decision. Below comparison is highlight of certain areas and help client to consider using which type of company.

  1. Incorporation Requirement
  2. Purpose and Benefit
  3. Cost in formation, maintenance and cancellation

  1. Incorporation Requirement

Recommendation : BVI company is more simple in incorporation requirement.
 
Hong Kong Company
BVI Company
Minimum No.
of shareholder
  • 1
  • 1
Minimum No.
of director
  • 1
  • 1
Minimum issued
share capital
  • HK$1
  • US$1
Company Secretary
  • 1 and should be
    Hong Kong resident
  • Not required
Nationality and address
of shareholder
and director
  • No restriction
  • No restriction
Hong Kong
Registered Address
  • Required
  • Not required.
  • Keeping of Hong Kong corresponding address
    is useful for corresponding with registration agent.
Time required
to Incorporate
  • Ready-made: 1 day
  • Tailor-made: 7 working days
  • Ready-made: 1 day
  • Tailor-made: 12 working days

 

 2. Purpose and Benefit

Recommendation : BVI company is more suitable for holding of asset.
Hong Kong company is more suitable for doing business.
 
Hong Kong Company
BVI Company
Business Image
  • Better
  • Less good
Resistance of
customer and client
  • Less resistance as registration is open for public search
  • Higher resistance as registration is not open for public search
Risk reduction
  • Same
  • Same
Tax benefit
  • Profits Tax rate 17.5% but exempt for profit not deriving from Hong Kong
  • Profits Tax rate Zero but limited to profit not derived from BVI.
  • Company may still subject to tax of another country.
Asset holding
  • Asset transfer can be achieved by share transfer.
  • Has to pay stamp duty for share transfer.
  • Updated financial statement is required for share transfer.
  • Asset transfer can be achieved by share transfer.
  • No stamp duty and no financial statement is required for share transfer.
Bank account opening
  • Easier and less requirement even for non-Hong Kong resident

More requirement and always request for

  • Personal banker's reference letter of directors.
  • Disclosure of beneficiary owner.
  • Purpose of opening bank account.

 

 3. Cost in incorporation, Maintenance and Cancellation

Recommendation : No obvious advantage for Hong Kong over BVI company, and vise versa.
 
Hong Kong Company
BVI Company
Cost of incorporation
  • From HK$8,300
  • From HK$14,800 (US$1,900)
Annual maintenance
  • Business Registration HK$3,200
  • Annual filing HK$210
  • Accounting, tax filing and auditing required.
    Service fee starts from HK$8,000 per year.
  • Total annual fee starts from around HK$14,000.
  • License renewal US$1,200 (US$1,300 from Year 2005)
  • No accounting, tax filing and auditing required
Business cancellation
  • No debt company can be de-registered at around HK$4,000
  • Debt bearing company has to be winding up at around HK$40,000
  • Just not to pay license renewal

 

 Closing a company - Method & Cost

There are several methods to close a limited company. However, they are not free for the choice of shareholders and directors. Specific conditions need to be met for the applicability of different method:

De-registration

This is the least costly way to bring a Hong Kong limited company to an end. The fee is HK$4,000 (including government fee of HK$840+HK$700 = HK$1,540) but some criteria applies :

    • ceased business
    • no outsider liability
    • no outstanding liability to government, both in money and in document filing, e.g. tax return
    • director to guarantee meeting criteria and keep record for future purpose

Winding up : There are different types of winding-up:

Members voluntary winding-up

Condition :

    • Consent of and initiated by all members
    • Financially solvent

Fee: from HK$40,000 (including government and disbursement of around HK$24,000)

Creditors voluntary winding-up

Condition :

    • Approved and initiated by directors
    • Financially in-solvent
    • Not via court proceeding
    • Liquidator appointed by directors or by creditors

Fee: from HK$40,000 (including government and disbursement of around HK$24,000)

Creditor Compulsory winding-up

Condition :

    • Initiated by creditors
    • Financially in-solvent
    • Court proceeding
    • Provisional / Liquidator appointed by court

Fee: Application fee payable to court around HK$20,000 plus service fee at discussion.

 

 Company / Business / Share Transfer - how to & the cost

Being a shareholder of a limited company, you can transfer your business in 2 different ways:

  1. Transfer the shares of the limited company;
  2. Transfer the business operating by the limited company.

Transfer of shares is always the simplest method and in most cases, the lowest in cost. For example, being a shareholder of HSBC (the Hong Kong Bank and listed in Hong Kong Stock Exchange), you transfer your shares easily without the need of caring what HSBC is actually doing. The only thing you need to do is knowing the value of the HSBC you are transferring, because the stamp duty is based on this.

For a private limited company, you need to prove to the stamp office how much the shares is worth Usually, this can be done by the transfer agreement between buyer and seller, the audited financial statements or / and with a recent management account.

Stamp duty is charged at HK$2 per HK$2,000 of share value.

Transfer of share is a deal between shareholders.

Transfer of business is more complicated because your company will remain under your ownership. The transfer does not concern you as a shareholder. It is a transaction between your limited company and another company.

As situation differs very much in each specific case, it is advisable to contact us for detail suggestion. However, it is worthwhile to highlight that transfer of business need to comply with the law "Chapter 49 - Transfer of Business Ordinance" in order to protect the interest of both buyer and seller.

 

 

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