If you plan to open a business in Hong Kong, the process is regulated by the Hong-Kong Company Ordinance. The Companies Ordinance (Cap 622) is targeted at enhancing Hong Kong’s status as a global business hub. The amendments that commenced in 2006 were completed and passed by the Hong Kong LegCo in 2012.
The New Companies Ordinance has 921 sections and 11 schedules that provide a modernized legal framework for registration and operation of companies. The core focus of the Hong Kong Company Ordinance is establishing the Company Registry, delineating its functions, and running of companies.
The creation of the Company Registry, Companies Registrar, and their functions
Notably, Hong Kong does not hold back any effort when it comes to supporting the establishment and growing companies. In Part 2 of the Companies Ordinance, the Office of the Registrar of Companies is established. This is targeted at providing continuity, clarity, and expanding the responsibilities of the companies’ registration from the older Companies Ordinance.
The registrar’s office is bestowed with the following responsibilities;
- Authenticating the documents issued by those seeking to register various forms of companies in Hong Kong.
- Receiving the specified fees for companies’ registration on behalf of the Hong Kong administration.
- Maintaining the companies’ registration info.
- The registrar is empowered to decide to decline any application that does not meet the requirements of the Companies Ordinance. For example, if the applicant does not provide all the required documents, the application will be declined.
Delineation of the types of companies that can be formed in Hong Kong
Part 1 of the Hong Kong Company Ordinance outlines the types of companies that are allowed to operate in Hong Kong. They include the following;
- Limited Liability Company: The limitation can be by shares or guarantee. Under this category of companies, the responsibilities of shareholders only extend to the shareholding or guarantee.
- Unlimited Liability Company: Under this arrangement, the liability of the company does not stop with the shareholding. If the company falls into debts or goes into bankruptcy, shareholders are required to meet the deficit.
- The last type of formation is a Holding Company. This is a company that is allowed to hold stock and possesses controlling voting rights of a different company. Many holding companies do not engage directly in business activities of the jurisdictions they are located in.
To register a company in Hong Kong, you have to present all the required documents to the registry’s office. You are also allowed to use an agency to complete the registration.
The company deregistration
On section 15, The Hong Kong Company Ordinance delves into company deregistration. While the Hong Kong administration makes registering a company very easy, the process of deregistration is not simple.
The Company Ordinance requires the management to apply for deregistration before the process can proceed. If the company is deregistered, any asset it held before dissolution will be vested in the government.
Other things outlined in the Hong Kong Ordinance
In addition to companies’ registration, the company’s ordinance also provides a framework for auditing and auditing standards, directors and companies’ secretaries, company records, acquisitions, and amalgamation. In the miscellaneous section, the ordinance outlines what constitutes an offense when operating a company in Hong Kong.
The Hong Kong Company Ordinance is a clear framework that defines the types of companies that can be created, registration, operations, and dissolution. If you are planning to open a company in Hong Kong, it is advisable to get versed with this ordinance because it defines every aspect of operations.