Legal Advice on How to F orm and Register Business Organization in Hong Kong

1. Legal Advice on How to Form and Register Business Organization in Hong Kong By Mr. Ambrose Lam Senior Partner of Lam, Lee & Lai, Solicitors 13th Floor, Hip Shing Hong Centre, No.55 Des Voeux Road Central, Hong Kong Tel: (852) 2526 8008

2. INTRODUCTION – ORGANIZATION OPTIONS • Sole Proprietorship • Partnership • Company (Co)

4. MAIN CONSIDERATIONS • Ease of formation • Limitation of liability • GP: joint and several • LP: limited partners may have limited liability (LPO s. 7) • Co.: limited or unlimited • Tax treatment • GP & LP: personal tax rates on profits - 15% • Co.: corporate rate on profits-16.5% • Ownership structure • Co.: 50% shareholding v. 75% shareholding • Management structure • Maintenance

5. FORMATION • General Partnership • Express Agreement • Implied Agreement (by conduct; PO s. 4) • Limited Partnership • Express Agreement • Registration (LPO s.4) • Private Company • Registration (CO s.4) • Articles include private company limitation, restriction and prohibition (CO s.29) • Public Company • Registration (CO s.4) • Articles DO NOT include private company limitation, restriction and prohibition (CO ss.29 & 30) • Stringent requirement of prospectus, criminal liability if in breach

6. BUSINESS REGISTRATION • Business Registration Certificate (BR): • All BUSINESS ORGANIZATIONS in Hong Kong need to obtain it from Business Registration Office of the Inland Revenue Department. • Including branch offices • Expiration of the Certificate • The Certificate need to be renewed every year or three years before expiration. • Cost • US$58 per year; • Fine will be imposed for late payment.

7. How to form a company limited by shares in HK (1) • Name Search – Companies Registry (online) • Documentary preparation • MOA & AOA • Form NC1 • It shall at least include one secretary, one director and one founder member; • The director and the secretary cannot be the same person; • A person can be also a limited company • Notice of Situation of Registered Office • Letter of Appointment of first directors • Minutes of first Directors’ Meeting or written resolution of all Directors.

8. Memorandum of Association (MOA) • the most important documents to be prepared for incorporation a company as the constitution of the company • Indicating the nature of its business; • Defining the scope of activities of the company; • Strict restrictions on alterations. • It should include: • Name of company • Its Registered Office • Objects (optional under CO s.5(1A)) • Capital • Declaration by the Founder Member(s) • Liability of members

9. Table B Form of Memorandum of Association of A Company Limited by Shares.pdf

10. Articles of Association (AOA) • Nature: • regulations for the internal management of the company. • rules for carrying out the objects of the company. • Status: • subordinate to the MOA. • Note: • A company limited by shares need to have articles of its own • Application of Table A of CO

11. Articles of Association (AOA) • Alteration: • by special resolution • In the case of any conflict between MOA and AOA, the MOA will always prevail. • Table A 1st Schedule.pdf

12. How to form a company limited by shares in HK (2) One-stop Company and Business Registration (NEW) • Obtaining the Certificate of Incorporation (CI) • It is conclusive evidence that the association is a company authorized to be duly registered under the CO. • Forms required for registration are filed with the Companies Registry • Form NC1 • M&A • Notice to Business Registration Office (IRBR1)

13. How to form a company limited by shares in HK (3) Company Registration (Cont’): • Time: 4 working days • Fee: about US$220 + capital fee (For every or part of US$130 of the nominal share capital (subject to a maximum fee of US$3850 per case)) • Obtaining Business Registration Certificate (BR) • Time : [NEW] can be obtained at the same time when the company obtains the Certificate of Incorporation. • Validity: 1 year or 3 years

14. DUTIES AND OBLIGATIONS - After formation of a limited company in HK • Filing Annual Return (Form AR1& Form AR3) • Fee: for a limited company having a share capital, an annual registration fee of US$14 is payable if the annual return is delivered within 42 days after the most recent anniversary of incorporation of the company. • Note: A substantially higher registration fee ranging from US$112 to US$447 will be payable for the late filing of an annual return of a local private company having a share capital. • Tax Return • Any employee; • Any business or investment; • Any profit gained in Hong Kong • Notification of change of particulars • To the Companies Registry any change of members, directors, secretaries, shareholding and registered office • To the Business Registration Office any change of business registration particulars, i.e. registered office

15. Non-Hong Kong Companies • Meaning: • Companies not incorporated in HK • Every non-Hong Kong company that has a representative office in Hong Kong or has let out its property situated in Hong Kong needs registered in Business Registration Office of IRD, regardless of whether is has established a place of business in Hong Kong. • Registration: • Application Form (Form N1) • Notice to Business Registration Office (IRBR2)

16. Q&A END Presented by Ambrose Lam Messrs. Lam, Lee & Lai, Solicitors 13th Floor, Hip Shing Hong Centre, No.55 Des Voeux Road, Hong Kong Tel: (852) 2526 8008