Frequently Asked Questions (FAQs)
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Frequently Asked Questions (FAQs)
Author:xcd   Article source:  Hits:926  Add time:2009-6-19  

1. What types of companies are recognized in Hong Kong?
There are two types of companies: limited companies and unlimited companies. Limited companies have their own legal status. The share holders' assets are "shielded" from that of the companies. The share holders' liabilities do not exceed the values of their shares. Unlimited companies include sole proprieto-rships and general partnerships. In an unlimited company, the owners have personal liability fo-r all the business' debts and obligations.

2. What are the differences between a share holder (also known as a subscriber) and a directo-r in a limited company?
The share holders of a limited company are the owners of the company. The ownership of each share holder depends on the percentage of shares he has. The directo-rs are appointed and autho-rized by the share holders to run the company. The directo-r may o-r may not receive salaries. The share holder can also be appointed as a directo-r of the company.

 3. How many directo-rs are required in a Hong Kong limited company?
The company must have at least one directo-r of any nationality.

4. Can a limited company be appointed as a directo-r o-r share holder of another company?
Yes, it is because a limited company is an independent legal entity. However, an unlimited company cannot.

5. What are the differences between registered capital and issued capital? Does the amount of issued capital need to match the registered capital? Is capital certification required?
Registered capital is the maximum amount of share capital the company can issue. Issued capital is the actual amount of share capital the company issues. Fo-r example, a limited company has 10,000 registered shares with HK$1.00 fo-r each share. Then the registered capital of the company is HK$ 10,000. The minimum number of issued share is 1 share, so the minimum issued capital is HK $1.00. One the other hand, the maximum number of issued share is 10,000 shares, so the maximum issued capital is HK $10,000. Hong Kong limited companies are not required to maintain fund (in a bank) to match the issued capital. In addition, there is no need to certify the amount of capital.

6. What are the restrictions fo-r naming a Hong Kong company?
The company English name must end with "Limited". The Chinese name must end with "有限公司". There are some prohibited wo-rds, such as "Bank" and "Trust". If the name does not contain the prohibited wo-rds, and as long as the name is not taken, then the name can be used. Note that some wo-rding arrangements are considered identical, eg Limited = Co. Limited, Hong Kong Limited = (Hong Kong) Limited, etc. maintains a list of prohibited wo-rds and info-rms users when such wo-rds are used.

7. What businesses can a Hong Kong limited company conduct?
Except fo-r some businesses such as banking, travel-related, insurance-related, etc. which require licenses, as long as the business is legal, there is no restriction as to what kind of businesses the company can conduct.

8. What are the differences between the Company Inco-rpo-ration Certificate and the Business Registration?
The Company Inco-rpo-ration Certificate is issued by the Companies Registry. It lists the Chinese and English company names, as well as company number and inco-rpo-ration date. The Business Registration is issued by the Inland Revenue Department. All businesses are required to apply the Business Registration.

9. What is a registered address of a company?
A registered address is the legal address of the company. It facilitates communication between the government and the company. It must be a Hong Kong address. A P.O. Box address cannot be a registered address.

10. What is a company secretary?
A Hong Kong company must appoint a Hong Kong citizen o-r a limited company as a secretary. The job of the secretary is to submit and safe-keep company documents, such as the Annual Return.

11. What is the Annual Return?
The Annual Return is a document that reco-rds the names of directo-rs, share holders, and share capital. The document needs to be prepared and submitted to the government every year, even if the company does not conduct business. A fine is imposed on failure of on-time submission. The fine fo-r late submission is as follow: late between 42 days and 3 months: HK$ 870.00; between 3-6 months: HK$ 1,740; between 6-9 months HK$ 2,610; over 9 months: HK$ 3,480.

12. What is the Profits Tax Return?
The Profits Tax Return is a fo-rm issued by the Inland Revenue Department (IRD). The first one is issued 18 months after inco-rpo-ration. If the company has profit in the first year, the fo-rm is issued on October yearly. If the company suffers a lost, then the fo-rm is issued after three to four years. If the company has profits but does not receive the fo-rm, it must info-rm IRD to issue the fo-rm. If the company conducts business, it must submit the Profit Tax Return fo-rm along with a financial statement audited by a Hong Kong Certified Public Accountant.

13. What are the differences between the Annual Return and the Profits Tax Return?
The Annual Return is issued by the Company Registry. A company needs to submit the fo-rm whether o-r not it conducts business. The Profits Tax Return is issued by the Inland Revenue Department which requires the company to complete accounting and audit within a specified time period.

14. What are the differences between pre-fo-rmed companies and brand new companies?
A brand new company does not have a name. The name is decided by the share holders. It takes longer to fo-rm a brand new company (about 11 days after governmental submission). However, it is cheaper to fo-rm a brand new company. A pre-fo-rmed company is a company that is already inco-rpo-rated but is never operated. The share holders cannot decide the name of a pre-fo-rmed company. It takes sho-rter time to transfer the names of the share holders and directo-rs than to inco-rpo-rate a brand new company.

15. Rules and restriction of company names
Company name should not be same as those already in company register and can be
only English name
only Chinese name
in HK, Traditional Chinese is the official written language. Simplified Chinese is not acceptable.
Fo-r practical reason, we don't suggest using only Chinese name. English name is useful fo-r daily use, including banking transaction.
o English plus Chinese name
 enough.§ In daily use, quoting only English name is
 To check availability of a company name, client can visit this site: [Companies Registry ICRIS System]
• Fo-r restriction of using certain wo-rds, please refer to [Company Names Guidelines] from Companies Registry.

16. What is the difference between tailo-r made and ready made company?
Ready made means the company is fo-rmed and put in list fo-r purpose of selling. There are already 2 shareholders each holding 1 share. Instead of fo-rming a brand new tailo-r made company, we arrange to transfer the 2 shares to new shareholders. The company can be used instantly and saves time of at least 7 days.
Other than saving time, sometimes you may need a company with inco-rpo-ration date several months ago. This helps fo-r management to "ratify" (o-r "inject") certain business transaction into a company.

17. Is there any risk in buying a ready made company?
No. It is definitely no need to wo-rry about buying a ready-made company from us and taking over any unknown responsibility. We issue letter of guarantee and indemnity to buyer stating that no business has ever been carried out by the company. The o-riginal shareholders are the one responsible fo-r all financial liability befo-re the date you bought the company.

18. When can I use the company o-rdered?
You can use the o-rdered company when you receive our confirmation. This means you can use the company name to enter into any contract. Of course, it takes time to arrange sending the company chop to you. However, you can use the company to start negotiation and document preparation.
Generally, fo-r ready-made company, we can confirm your o-rder once the payment is received. Fo-r tailo-r-made company, it takes 7 days because we need to ensure the approval of company name and this cannot be done until Certificate of Inco-rpo-ration is received from the government.
19. What document & material I will get ?

Fo-r both tailo-r made and ready made company, you'll receive:
• Certificate of Inco-rpo-ration
• Business Registration Certificate
• Copies of document filed to Company Registry
• Green Box -
• Memo-randum& Articles
• Common seal (stainless steel)
• Signature chop
• Round chop
• Share Certificate book
• Statuto-ry Book
Usually, the materials will be under the custody and maintenance of company secretary. Therefo-re, if we are appointed as your company secretary, you may select to leave them in our office.
20. What is "Green Box" ?
Green Box is a collective term of :
• Memo-randum& Articles
• Common seal (stainless steel)
• Signature chop
• Round chop
• Share Certificate book
• Statuto-ry Book
Together with
• Certificate of Inco-rpo-ration
• Business Registration Certificate
• Copies of document filed to Company Registry
they are the material you will have after a company is fo-rmed. They may not be handed over to you because they are usually kept in hand of Company Secretary fo-r custody and fo-r convenience of wo-rk.

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