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As the company secretary of our companies, we can handle share and debenture tranfers, and will keep the records of the companies including the records of the members, debenture holders, charges, and directors and secretaries, and can deliver documents and file the Registrar including the annual return, return of allotments, and return of directors and company secretaries. However, there are individual fees for the services.

Documents required for share transfer for company in business:

1. Instrument of Transfer
2. Bought Note / Sold Note
3. Memorandum and Articles of Association
4. Annual Return
5. Certificate of Incorporation
6. Management Account, certified by the director
7. Profit and Loss Account, certified by the director
8. Audited Account of the previous two years, certified by the director

We have been asked a few times about whether a Hong Kong company needs to pay profit tax if its income is not derived in Hong Kong.

Legally, a Hong Kong company does not have to pay tax for the profit derived outside of Hong Kong. However, it can only claim the “offshore status” after its book being audited. In addition, the director of the company will need to answer pages of questions presented by the Inland Revenue Department. Therefore, we do not advise anyone to count on the “offshore status”. One should consider to form a BVI company instead of a Hong Kong company if he wants to avoid tax. However, BVI companies are less reputable and acceptable than Hong Kong companies are. In fact, we have heard that someone who already had a BVI company eventually formed a Hong Kong company because the United Nations does not do business with BVI companies.

However, if a Hong Kong company does not conduct business, that is, if it does not sign contract or issue invoice, and if it only receives and makes payments, it may not need to do accounting, auditing and pay tax. Some of our mainland Chinese clients who already own other Chinese companies. They form Hong Kong companies simply because they want to use the companies as holding companies, ie, to make and receive payments only. They usually claim the companies as “not in commerce” on the tax forms and skip the accounting and auditing. While many people are doing that, however, such practice falls in the gray area of the law.

References:

1. http://www.ird.gov.hk/eng/paf/bus_pft_tsp.htm
2. Section 14, the Inland Revenue Ordinance: http://www.legislation.gov.hk/eng/home.htm
3. http://www.ird.gov.hk/eng/ppr/advance34.htm
4. http://www.ird.gov.hk/eng/ppr/advance35.htm
5. http://www.ird.gov.hk/eng/tax/stc.htm

From now on until 2016/12/31, our incorporation Package A also comes with a set of company chops (including a signature chop, an invoice chop, and a metal common seal). Instruction:

1. Select our Package A to incorporate a company;
2. Follow our incorporation workflow to submit information to us;
3. Make your payment before application submission to the government or 2016/12/31. Payment Methods
4. Postage cost:
   1. Pick up at our office: $0;
   2. to Hong Kong and Mainland China: $100;
   3. to other international address: $300

A subsidiary company is a company that is owned by other companies. The materials for opening a bank account in Hong Kong for a subsidiary is as follow:

1. A board minute of the parent company authorizing the incorporation of the subsidiary, and authorizing its directors / a director to sign for and on behalf of the subsidiary;
2. An organizational chart showing the relationship between the subsidiary, the parent company, and the shareholders of the parent company;
3. A copy of the Memorandum and Articles of Association of the parent company, certified by the directors;
4. An Apostile / the original of the Certificate of Incorporation of the parent company;
5. The certificate of Incumbency of the parent company;
6. A bank reference letter for the parent company;
7. The director’s declarations for the subsidiary and the parent company, accompanied by Hong Kong CPA letters;
8. Identity proofs and residential addresses proofs:
   1. If the parent company is a private company, identity proofs and residential addresses proofs of the majority shareholders of the parent company;
   2. If the parent company is a public company, its web site and stock symbol.
9. If the document is not in English, it must be translated and certified by the translator;
10. If the original documents can not be provided, the notarized photocopies of the documents are acceptable.
11. Bank account opening documents for the subsidiary

Financial Secretary announces new measures to support confidence in the Hong Kong banking system

The Financial Secretary, Mr John Tsang, announced today (Tuesday) two new precautionary measures to further strengthen confidence in Hong Kong’s banking system:

• First, the use of the Exchange Fund to guarantee the repayment of all customer deposits held with all Authorized Institutions in Hong Kong following the principles of the existing Deposit Protection Scheme, but including Restricted-Licence Banks and Deposit-Taking Companies as well as Licensed Banks.¹ The guarantee applies to both Hong Kong-dollar and foreign-currency deposits with Authorized Institutions in Hong Kong, including those held with Hong Kong branches of overseas institutions. It will cover the amount of deposits in excess of that protected under the Deposit Protection Scheme.
  

• Secondly, the establishment of a Contingent Bank Capital Facility (CBCF) for the purpose of making available additional capital to locally incorporated licensed banks, should this become necessary.

Both measures take immediate effect and will remain in force until the end of 2010, when a decision will be taken in the light of international financial conditions on whether they should be extended.

Mr Tsang stressed that he did not expect that the new arrangements would need to be triggered, since the Hong Kong banking sector was fundamentally sound.

Commenting on the measures, the Chief Executive of the Hong Kong Monetary Authority, Mr Joseph Yam, said that these were precautionary and pre-emptive measures designed to further strengthen confidence in the local banking system.  “The banking sector in Hong Kong continues to be healthy and robust, with capitalisation well above international requirements. Public confidence in the banking system remains strong. However, events around the world in recent weeks make it prudent for us to introduce these arrangements to bolster confidence and safeguard banking stability.  The measures are also consistent with global efforts to support financial stability,” Mr Yam said.

Annex

For further enquiries, please contact:
Thomas Chan, Senior Manager (Press), at 2878 1480 or
Peggy Lo, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
14 October 2008

¹ The guarantee covers all protected deposits as defined in the Deposit Protection Scheme Ordinance, Cap. 581, were the Ordinance to apply to all authorized institutions.

Source: http://www.info.gov.hk/hkma/eng/press/2008/20081014e6_index.htm

HSBC has introduced a new business account called “HSBC Business Direct” that requires no monthly fee and minimum account balance. Compared with the existing business account BusinessVantage, the HSBC Business Direct has the following features:

• No monthly fee;
• No monthly minimum balance;
• Counter service fees: $0 if there are less than 7 counter transactions per month, $75 if there are 7 to 12 transactions per month , and $10 per additional transaction.

Beside introducing the new Business Direct service, HSBC has also revised the fees of the existing BusinessVantage:

• If the average balance of 3 months is less than HKD $100,000, there is a service fee of HKD $150 per month;
• if the average balance is between HKD $100,000 and HKD $1million, the monthly fee is HKD $75;
• there is no monthly fee if the balance is above HKD $1million;
• unlimited free counter service

The service pricings are effective starting this Monday (Oct 27, 2008). For more information, please visit HSBC’s web site: http://www.commercial.hsbc.com.hk/1/2/commercial/accounts/businessdirect/

How do I know whether a Hong Kong shelf / pre-formed company is “safe” or not?

A shelf / pre-formed company is a company that has already been incorporated but has not conducted any business. Sometime people want to buy shelf companies because:

1. it takes about 3 working days to transfer a shelf company, while it takes up to six working days to form a brand new company;
2. transferring a shelf company does not require a witness, while forming a new company does;
3. there is no incorporation failure (such as name collision) because the company has already been formed;
4. there is no need to come up with a name.

Since a shelf company has already been formed before purchase, it is important to ensure the company does not have any liability. To ensure the company is “safe”:

• For shelf companies incorporated before July 16, 2008:
  1. There should be no director registered with the Companies Registry. Since there is no director, the companies are not operational;
  2. A letters issued by the subscriber indicating the company has not incurred any liability.
• For shelf companies incorporated on or after July 16, 2008:
  1. Beginning on July 11, 2008, the Companies Registry requires the appointments of first directors at the time of incorporation, therefore, all shelf companies registered on or after July 16, 2008 have directors and are operational right after incorporation. Because of that, the letters, issued by the founders indicating that the companies have not incurred any liability, are the only proof and protection for the purchasers.
  2. Since the “safety” of the shelf companies is not evidenced in the Companies Registry, one should purchase shelf companies from reliable sources, or simply form brand new companies.

How much does it cost annually to keep a Hong Kong company alive?

You should be aware of three sets of annual fees:

1. Company renewal fee:
   1. Annual Return
   2. Business Registration Renewal
   3. Company Secretary Renewal
   4. Registered Office renewal
2. Accounting and Auditing:
   1. The first accounting and auditing shall be done 18 months after incorporation, and every 12 months afterward.
3. Profit tax:
   1. which is 16.5% of the profit of the company. You also need to pay the provisional tax. For example, if you have to pay $5,000 tax, in the first year, you actually have to pay $10,000. The provisional tax of the previous year will be subtracted from the tax next year. For example, if you have to pay $8,000 tax on the following year, you have to pay $8,000 + $8,000 - $5,000 (provisional tax of the previous year) = $11,000.
4. De-registration
   1. If you decide not to continue the business, you need to de-register the company. If the company has conducted business, you also need to do accounting and auditing before the de-registration. If you do not de-register the company and file the Annual Return, the government will impose penalty, and the company will not be de-registered unless all penalty is paid.

If your company does not conduct business, then it does not have to do accounting and auditing, nor does it have to pay the profit tax.

Please note the following before choosing our registered office service:

• All banks in Hong Kong can send mails directly to overseas addresses. There is no need to send bank mails to us. Your corresponding address for the bank can be different from the registered address of the company.
• The Registered Office address belongs to the company and is not intended for personal use.
• If a mail is over 30g or too large for scanning, we will scan the front of the envelope or the way bill of the mail. Clients will need to arrange pick up of the over-sized mail
• We do not scan advertisements.

The Registered Office Service description should read as follow:

For HKD $800, we will scan only governmental mails.

For HKD $1,200, we will scan the mails under 30g addressed to the company.

Our Registered Office service is mostly for business startups. If you want more sophisticated virtual office service, you may want to check out http://www.regus.hk, as some of our clients use their services.