Hong Kong Companies

Hong Kong is a global financial centre, a business hub for multinational companies in the region and the premier gateway to the mainland China. Her open economy is built on free trade, free enterprise and a level playing-field for business. Hong Kong nowadays is the 10th largest (6th if EU countries are regarded as one entity) trading economy and largest exporter of commercial services in the world.

Languages
English and Chinese are official languages in Hong Kong and all the government publications are bilingual.

Legal System
Hong Kong's corporate law is mainly based on British common Law. Hong Kong became a Special Administrative Region of the People's Republic of China since July 1, 1997. Under the practise of "one country, two systems", Hong Kong's judicature remains independent.

Banking
Hong Kong is an important banking and financial centre in Asia. At the end of August 2000, there were 153 licensed banks, 50 restricted licensed banks and 62 deposit-taking companies operating in Hong Kong.

Money
There is no foreign exchange control in Hong Kong and the Hong Kong dollar is freely convertible. In Hong Kong, any currency, including mainland RMB, can be bought and sold in the open market.

Investment
There is no regulation concerning the minimum capital requirement of a company, except for full service banks, insurance companies and trust companies, nor any regulation concerning the relative degree of local/overseas participation in the ownership or capital structure of the company. Either from profits or capital account, companies may transfer money at will. Hong Kong has been chosen to host the 2001 Fortune Global Forum in March 2001, a prestigious international event which brings business leaders, policy makers and scholars from around the world together. The choice indicates Hong Kong is a favourable place in the world to do business.

Taxation
The tax rates in Hong Kong are among the lowest in the world. Hong Kong tax is computed on incoming arising in, or derived from Hong Kong. Therefore, corporations carrying on business in Hong Kong do not have to pay Profits Tax on income that has a non-Hong Kong source. The Profits Tax rate for the year 2000/2001 is 16% of income sources in Hong Kong through trade, profession or business. Any individual who visits Hong Kong do not exceed a total of 60 days in any year of assessment is not subject to tax.

Duties
There is no customs tariff in Hong Kong. Minimal customs formalities are required for importing and exporting goods. Excise duties are levied only on tobacco, liquor, methyl alcohol and hydrocarbon oil, whether imported or locally manufactured.

Gateway to Mainland China
Hong Kong is the premier gateway for trade and investment moving into and out of mainland China. About 50,000 Hong Kong companies have production facilities in Southern China, employing some five million workers in total. On May 24, 2000, The House of Representatives of the US Congress voted to grant permanent normal trade relations (PNTR) to China upon its accession to the World Trade Organisation. The US Senate also voted to grant PNTR to China on September 19, 2000. A PNTR status helps to reduce the uncertainty for Hong Kong in conducting Sino-US trade.

INCORPORATION OF HONG KONG COMPANY
A company can be incorporated by registration with the Companies Registry under the Companies Ordinance. There are two kinds of limited liabilities companies in Hong Kong, i.e. private and public companies. More than 99% of investors set up their business by forming a private limited company.

The Companies Ordinance requires every limited company to have at least two directors and two shareholders and there is no restriction on the nationality of the directors and shareholders as long as the person is over 18 of age. The same directors can also be shareholders of the Company. All Hong Kong limited companies must maintain a registered office in Hong Kong and appoint a company secretary who must be Hong Kong resident or corporation incorporated in Hong Kong.

Basically, all limited liability companies are required to hold Annual General Meeting and file Audited Financial Statements with a Profits Tax return annually with the Inland Revenue Department in Hong Kong.