Main Forms of Business Organisations in Hong Kong – Part 2russonxiao
This article comes after a first article on the same topic and continue to explain other main forms of business organisations in Hong Kong.
Representative Office of a Foreign Company
A foreign corporation may also consider setting up a representative office in Hong Kong. A representative office is required to register with the Companies Registry under the CO unless one of the three following conditions is met:
- The representative office does not conclude contracts in Hong Kong other than contracts for employing domestic staff, purchasing furniture and fixture, etc.;
- The representative office does not maintain accounts in Hong Kong; and.
- The representative office receives no income in Hong Kong.
If the representative office only acts as a liaison or buying office of its overseas head office and does not conclude any sales contract in Hong Kong, it is not subject to Hong Kong profits tax. However, business registration is still required for setting up a representative office in Hong Kong.
The only formality for the establishment of a partnership is to obtain a business registration certificate. Copies of the Hong Kong Identity Cards or passports of all the partners need to be attached to the business registration application form. Furthermore, there must be an office address in Hong Kong and at least one of the partners must reside in the territory. If all the partners are not residing in Hong Kong, they have to appoint a resident individual as their agent for the purpose of business registration. The Partnership Ordinance governs the operations of partnership business in the territory.
There is no specific legislation in Hong Kong governing the operations of joint venture. Usually, a joint venture is treated as a partnership and is so assessed by the IRD unless it is carried out through a separate limited liability company.
The main types of JVs are:
- Incorporated (or corporate) JVs. These are often formed using limited liability companies incorporated under the Companies Ordinance (Cap 622) (HK JVCo). Alternatively, the JV company may be incorporated in offshore jurisdictions.
- Unincorporated (or contractual) JVs. Members form an unincorporated association, which may be appropriate for single undertakings or projects of relatively short duration.
- Partnership JVs. These can carry on the JV business under a firm name, but the partnership is not a separate legal entity. Each partner is held out as a principal and is jointly and severally liable with other partners. Hong Kong partnerships are governed by the Partnership Ordinance (Cap 38).
It is simple to set up a sole proprietorship business in Hong Kong. The only formality is to obtain a business registration certificate from the Business Registration Office. A copy of the sole proprietor’s Hong Kong Identity Card/ passport/ identity card issued by the relevant government authority has to be attached to the application form.
If you have any questions about legal requirements or accounting regulations in Hong Kong, please feel free to contact us.