Preparing to set up a Hong Kong company

More than 100,000 companies are formed in Hong Kong every year. Before forming a company there are three things you must settle in advance, otherwise errors or delays are likely at the application stage. This article focuses on these three preparations to help you be fully ready before you submit the application.

Before forming a limited company you must settle three things: the company structure (directors, shareholders, company secretary), the company name, and the registered address.
The company name must not be the same as, or too similar to, an existing company. The Chinese name must use Traditional Chinese, and the English name must end with “Limited”.
When appointing an external company secretary, you must confirm that it holds a TCSP licence, which is a statutory requirement.
Using a virtual office as the company address is legal in Hong Kong, at a cost from about HK$1,000 a year.

3 key preparations before forming a company in Hong Kong

There are three key preparations you must handle in advance when forming a company, otherwise you will find the process full of difficulties! The process for forming a limited company differs from that of an unlimited company, and more details need to be prepared beforehand, including the company structure, company name and registered address. Click to learn about the differences between Limited company and Unlimited company.

The following are the 3 things to prepare in advance for setting up a Hong Kong limited company:

Determine the company structure

Every private limited company must have at least one director who is a natural person and one company secretary, so you need to decide first which member will act as director and who will act as company secretary.

directors – Must be aged 18 or above, and may be a Hong Kong resident or an overseas person holding a passport. If the company has only one director, that director cannot also act as the company's company secretary.

Shareholder – at least 1, who may be the same person as a director, of any nationality. Shareholders contribute capital and own shares in the company, but do not necessarily take part in day-to-day management. For the detailed differences between shareholders and directors, see: What is the difference between a shareholder and a director?

Company secretary – The company secretary of a private company may be one of the directors. The company secretary must ensure that the company's administrative and legal duties are fully discharged, and also acts as an adviser on corporate governance.

Before appointing an external company secretary, you must confirm that it holds a valid TCSP licence. Providing company services without a licence is illegal, and carries a fine of up to HK$100,000 and imprisonment for 6 months. You can verify this in the Companies Registry's Register of Trust or Company Service Provider Licensees.

Company name

Is a company name fine as long as it is not a duplicate? Of course not. When choosing a company name, you must make sure it complies with the registration requirements. For details, please refer to the Hong Kong company name registration guidelines.

Company name registration guidelines in brief

A company may register one English name and/or one Chinese name, but may not use a name that combines Chinese and English. The Chinese name may only use Traditional Chinese, and Simplified Chinese cannot be used.
Rules on how the name must end: the last word of the English name must be “Limited”. Although Ltd and Limited mean the same, section 102 of the Companies Ordinance requires the last word of a limited company's English name to be ”Limited”. The last four characters of the Chinese name must be the Chinese equivalent of “limited company”.
It must not be the same as, or too similar to, an existing company name. Offenders will receive a direction to change the name. If the name is not changed in time, the persons concerned face a fine of up to HK$100,000 and a daily default fine of HK$2,000, or the company may be forced to change its name.
Approval must be obtained first before the following words can be used: chamber of commerce, kaifong, levy, savings, tourist board, tourist association, trust, trustee, and the Chinese equivalents of these terms.
Words regulated under other legislation: bank, exchange, stock exchange.

If a name cannot be used, a new application is required. If a name is too similar to another company's name, a direction to change the name will be issued. If the company does not change its name, the company or its officers may be prosecuted, with a maximum fine of HK$100,000, and for continued default a daily default fine of HK$2,000 may be imposed, or the company may be compelled to change its name. Changing a company name is therefore not something to be taken lightly.

Check the company name

To make sure the company name can be used, before applying to form a company you can use the Companies Registry's Cyber Search Centre to check whether the proposed company name has already been registered.

Note that a company name and a trademark are different: being able to register a company name does not mean you can use it as a trademark. Please use the Trademark registration This is a different department from the one responsible for company registration. If you want to use the company name to promote or trade its goods or services, you must separately apply to the Trade Marks Registry to register a trademark, in order to obtain the protection conferred by the Trade Marks Ordinance (Cap. 559).

So besides the Companies Registry's online search centre, you also need to search with the Intellectual Property Department online search system to check.

For the detailed search steps, see: How to search a company name: 5 steps to confirm it is available

Registered address

Under Hong Kong company law, the registered office of every company incorporated in Hong Kong must be located within Hong Kong, and a Hong Kong business address must be used as the company's registered address. Note that the registered address must be a physical address; a PO box cannot be used.

The registered address becomes public information at the Companies Registry. Also, many companies do not need an office or shopfront, so they choose a registered address or virtual office service provided by an accounting firm, business centre or secretarial company, and some even choose to register the company at their own home.

However, if you use your home as the company address, any dispute involving the company could cause you unnecessary trouble. So many people choose to rent a commercial registered address. This is quite affordable, costing as little as HK$1,000 a year, and can reduce unnecessary hassle.

For points to note when choosing a virtual office service, see: What is a virtual office? 2 key points for choosing

FAQ

Can a director be a foreign national?

Yes. Hong Kong places no restriction on the nationality of directors, and non-Hong Kong residents can also act as directors; they only need to provide a valid passport and proof of address. However, if the company has only one director and that director is not a local resident, a company secretary must be appointed separately, and you must confirm that the secretary holds a TCSP licence.

Can I act as company secretary myself?

It depends. If the company has several directors, one of them may also act as company secretary. But if the company has only one director, that director may not also act as secretary, and a secretary must be appointed separately. If an external secretarial firm is appointed, you must confirm that it holds a valid TCSP licence, otherwise it is operating illegally.

Must the company name be registered in both English and Chinese?

No. A company may register only an English name, only a Chinese name, or both, and all three ways are lawful. But a name mixing Chinese and English is not permitted (for example, a name such as “ABC” followed by the Chinese words for “Limited” is non-compliant).

Summary

Once the three preparations are confirmed, you can start submitting the company application.

If you have any questions about forming a Hong Kong company, please contact the SetupHK advisory team. We offer one-stop business advisory services to help you get your business plans under way.