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BACKGROUND
Geographical Location
Hong Kong is on the south east coast of China and consists of a large number of islands and a part of the mainland
totalling approximately 400 square miles. The principal areas are Hong Kong Island, Kowloon and the New Territories.
These areas were ceded to Britain in perpetuity in 1842 under the treaty of Nankinu, and in 1898 the New Territories
were leased by Britain from China for a period of 99 years and includes all the land north of Boundary Street in
Kowloon up to the border with China as well as 235 small islands.
Climate: tropical monsoon; cool and humid in winter, hot and rainy from spring through summer, warm and
sunny in fall.
Population
The population of Hong Kong is currently 6,847,125 (July 1999 est.) made up principally of people of Chinese
origin and is one of the most densely populated areas in the world.
Religions: eclectic mixture of local religions 90%, Christian 10%.
Political Structure
Hong Kong has been a British Crown Colony since 1842. The Governor appointed by the Queen presides over the Hong
Kong Government which consists of two Houses, the Executive and Legislative Councils
The Executive Council consists of five ex-officio members, one nominated official member and nine nominated
unofficial members, with representatives of the community appointed by the Governor. The Governor consults the
Executive Council on all important matters. He also has power to make legislation by way of rules, regulations
and orders.
The Legislative Council includes four ex-officio members: ten official members from Government departments;
and 60 elected members. Whereas previously the latter were nominated by Government agencies and various sectors
of the community, the first direct election for 18 of the seats took place in 1991. The United Democrats was the
victorious party. Giving the vote to individuals is intended to strengthen the Government before the Chinese take-over.
Before 1985, the non-official members had been appointed by the Governor. Five prominent Hong Kong business leaders
serve on both Councils.
The future of Hong Kong
Pursuant to the agreement signed by China and the UK on 19 December 1984, Hong Kong became the Hong Kong Special
Administrative Region (SAR) of China on 1 July 1997. Under the terms of this agreement, China has promised that
under its "one country, two systems" formula its socialist economic system will not be practiced in Hong
Kong, and that
Hong Kong shall enjoy a high degree of autonomy in all matters except foreign and defense affairs.
Infrastructure and Economy
Separating Hong Kong island and the Kowloon peninsular is Victoria Harbour which is recognised internationally
as one of the world's perfect natural harbours. It varies in width from one to six miles and has a total of 37
miles. An additional two million square feet of land has been reclaimed in the New Territories to provide additional
dockyard and warehousing facilities. It is estimated that 100,000 containers per month pass through the port and
it serves more than 9,000 ocean going vessels.
Hong Kong is the leading south east Asian centre for both finance and commerce and ranks as the world's third
largest financial centre after New York and London. There are more than 160 licensed banks with 128 foreign banks
having representative offices in Hong Kong and a further 225 licensed deposit taking Finance Companies all of which
play an active role in the financing of international trade and commerce.
Language
The official languages are English and Chinese with English being used in the commercial and political context
and Cantonese Chinese used widely in industry and domestic trade.
Currency
Hong Kong Dollar which is officially pegged to the U.S. Dollar at a rate of US $1.00 = HK $7.75.
Exchange Control
None
Type of Law
Common Law
Principal Corporate Legislation
Companies Ordinance
KEY FEATURES TABLE
| General |
| Political Stability |
Good |
| British Based Legal System |
Yes |
| Type of Company |
Limited |
| Disclosure of Beneficial Owner |
No |
| Migration of Domicile Permitted |
No |
| Tax on Offshore Profits |
Nil |
| Non-English Language Names Allowed |
No |
| Corporate Requirements |
| Minimum Number of Shareholders |
Two |
| Minimum Number of Directors |
Two |
| Bearer Shares Allowed |
No |
| Corporate Directors Permitted |
Yes |
| Secretary Required |
Yes |
| Standard Authorised Share Capital |
HK$1,000 ($129) |
| Local Requirements |
| Registered Office/Agent |
Yes |
| Company Secretary |
Yes |
| Local Directors |
No |
| Local Meetings |
No |
| Government Register of Directors |
Yes |
| Government Register of Shareholders |
Yes |
| Annual Requirements |
| Annual Return |
Yes |
| Audited Accounts |
Yes |
| Recurring Government Costs |
| Annual Tax/Licence Fee |
HK$2,250 |
| Annual Return Filing Fee |
HK$95 |
COMPANY FORMATION
Type of Company for International Trade and Investment
Private Company limited by Shares.
Procedure to Incorporate
Submission of Memorandum and Articles of Association and a Declaration of Compliance A Notice of Situation
of Registered Office is also required to be filed. This can either be done now, or within fourteen days after the
date of incorporation.
Restrictions on Trading
Cannot undertake banking or insurance activities. To take full advantage of Hong Kong's taxation legislation,
the company must not undertake activities which will produce income in Hong Kong. It cannot solicit funds from
or sell its shares to the Public.
Powers of Company
A Hong Kong Company has all the powers of a natural person.
Language of legislation and corporate documents
English, but Chinese Characters may be added if desired. The Chinese characters do not form part of the name,
but are merely a translation.
Name Approval Required
It is not possible to reserve a name. It is usual just to check that there is no similar name on the Register
which would prevent the company being incorporated.
Shelf Companies available
Yes
Time Scale to Incorporate
Approximately two weeks from the submission of documentation.
Name Restrictions
A name that is similar to or identical to an existing Company. A name that implies illegal activities. A name
that implies royal or U.K. or Hong Kong Government Patronage.
Names requiring Consent or a Licence
"British", "Building Society", "Chamber of Commerce", "Chartered",
"Co-operative", "Imperial", "Kaifong", "Mass Transit", "Municipal",
"Royal", "Savings", "Tourist Association", "Trust", "Trustee"
and "Underground Railway".
Suffixes to denote Limited Liability
Limited
Disclosure of Beneficial Ownership to Authorities
No
SHARE CAPITAL, TAXATION, LICENCE FEES AND COMPLIANCE MATTERS
Authorised Share Capital
HK $1,000 ($129)
Classes of Shares Permitted
- Registered Shares
- Preference Shares
- Redeemable shares
- Shares with or without voting rights
Bearer Shares Permitted
No
Taxation
The principle of Hong Kong income tax is that it is a tax on income that has its source in Hong Kong rather
than a tax based on residence. Hong Kong does not therefore impose tax on non Hong Kong source income even when
remitted to Hong Kong. Consequently, if a Hong Kong company's trading or business activities are based outside
Hong Kong no taxation will be levied.
Hong Kong companies with Hong Kong source income currently pay a rate of taxation on profits of 16.5 per cent
and for individuals there is a maximum rate of taxation on income of 15 per cent.
Double Taxation Agreements
Hong Kong has no double taxation Agreement with any country, with the exception of a limited Treaty with the
United States of America relating to shipping matters only.
Licence Fees
The Business Registration Fee ("BRF"), currently HK $3,250.00 ($417), is due and payable within one
month of the date of incorporation and then annually on the anniversary of the first payment.
Financial Statement Requirements
A Hong Kong company must keep accounting records, which may be kept at the registered office address or elsewhere
at the discretion of the directors. Every company must appoint an auditor who must be a member of the Hong Kong
Society of Accountants and hold a practising certificate. Although there is no requirement to file accounts with
the registrar, there is a requirement to file the accounts with the Tax Authorities.
STRUCTURE OF MANAGEMENT
DIRECTORS
Minimum number of Directors
Two
COMPANY SECRETARY
Company Secretary Required
Yes
SHAREHOLDERS
Minimum number of Shareholders
Two
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