| The current economic crisis has hit most countries | | | | to their respective shareholdings. In case of a financial |
| across the globe to varying degrees. Some countries | | | | crunch, where the company accrues high debts and |
| are already on the path to recovery, but other | | | | liabilities, the assets of the company might be used |
| countries are taking a longer time. Hong Kong is one | | | | to pay off the creditors, but the shareholders of the |
| of the countries that is recovering faster than others | | | | company would not be required to settle the balance |
| mainly due to the increasing support of China. The | | | | in case there are insufficient funds to settle all the |
| other factors that have helped its economy to grow | | | | debts. A prospective entrepreneur would need to |
| faster are its political stability, attractive tax and | | | | decide the type of company to incorporate in |
| business incentives, and its free market environment. | | | | consultation with a professional consultancy firm. |
| Its reputation as a desirable place for offshore | | | | Company Formation Procedure |
| companies to set up business has held its ground in | | | | The required services for setting up the company |
| spite of the current worldwide economic downturn. | | | | are confirmed by the corporate services firm after it |
| Advantages Of Setting Up A Business In Hong Kong | | | | has collected the required diligence. The legal, |
| 1) Setting Up Business is Easy: Hong Kong is one of | | | | accounting, and tax implications of company |
| the most efficient places in the world for | | | | incorporation are settled with this firm. The availability |
| incorporating an offshore company mainly because of | | | | of the company name is reviewed. Thereafter, the |
| its free market and trade policies and its free | | | | client and the corporate services firm finalize the |
| business environment. Moreover, as there are | | | | optimum corporate structure for starting the new |
| relatively fewer restrictions on investment, it is an | | | | company. This structure includes the number of |
| investor-friendly business city. It has the reputation | | | | directors and shareholders. The consultancy firm then |
| of being the world's freest economy because there | | | | delivers the incorporation documents for signing to |
| are no controls on foreign exchange transactions and | | | | the client. The client signs the documents and returns |
| corporate ownership. It has maintained this status for | | | | them to the corporate services firm. The interaction |
| more than 10 years. As such, there is complete | | | | with the relevant government bodies for the |
| business freedom for offshore entrepreneurs. | | | | business incorporation is done by the professional |
| 2) Low Start-Up Cost: As per the Milken Institute's | | | | consultancy firm, leading to completion of the |
| Opacity Index, Hong Kong ranks second in five key | | | | incorporation process. |
| measures, such as lower risk, low cost of doing | | | | Once the company is set up, the entrepreneur will |
| business, corruption, policy effectiveness, and | | | | have to open a corporate bank account, get |
| efficiency. The Hong Kong dollar is fully convertible, | | | | corporate and trade finance and merchant accounts, |
| and it is not linked to the Yuan. An offshore | | | | and then look for a suitable local office space or a |
| company can be started in Hong Kong with very little | | | | virtual office. It is easy to open multicurrency |
| cost. | | | | accounts of the highest quality, along with Internet |
| 3) Favorable, Convenient, and Low Taxes: With a | | | | banking facilities. Many international banks operate in |
| maximum corporate tax of 16.5% and a maximum | | | | Hong Kong, and entrepreneurs can choose any of |
| income tax of 15%, Hong Kong has the third lowest | | | | them for opening their corporate bank accounts. Due |
| tax burden in the world. Moreover, there are no | | | | to the fact that there are no foreign exchange |
| auxiliary taxes, such as tax on dividends, sales tax, | | | | controls or restrictions on inward or outward |
| capital gains tax, withholding tax, and individual estate | | | | remittances, operating an international business from |
| tax. | | | | an office in Hong Kong is without any hassles at all. |
| 4) Availability of Skilled and Productive Workforce: | | | | The other necessary adjuncts for starting a business, |
| The workforce is productive, efficient, has good | | | | such as launching a company website, establishing a |
| work ethics and a good can-do attitude, and is | | | | company logo and search engine advertising, are |
| proficient in English. Hong Kong also has a liberal | | | | easily accomplished. One of the major advantages of |
| immigration policy, and the official language at the | | | | operating a business from Hong Kong is that it has an |
| work place is English, making it a highly desirable place | | | | easy corridor to China, which is the world's third |
| to start a business. Starting a business is also without | | | | largest economy. |
| any hassles. | | | | Company Structure |
| 5) Confidentiality of Operations: Nominee directors | | | | The composition of the company must necessarily |
| and a company secretary can be elected by an | | | | have the following elements: at least one shareholder; |
| offshore company owner to maintain confidentiality | | | | one director of any nationality or residence; a |
| of the company's operations. Nominee services are | | | | company secretary; a registered Hong Kong office |
| normally provided by professional consulting | | | | address; auditors from a Hong Kong accountants |
| companies. | | | | company; and a business registration certificate. It is |
| Setting Up An Offshore Company In Hong Kong | | | | possible for one person to operate as a director, |
| The procedure for setting up an offshore company in | | | | shareholder, and secretary, but if there is only one |
| Hong Kong is simple, fast, and inexpensive because | | | | director, then he/she cannot act as secretary. There |
| its free economy provides low business costs and | | | | is no minimum requirement for the amount of share |
| corporate taxes, strict privacy laws, and an efficient | | | | capital. |
| workforce. Normally, it takes less than 4 days to set | | | | It is advisable to appoint a good corporate service |
| up a company in Hong Kong, and if help from a | | | | provider for opening bank accounts and fulfilling all the |
| professional consultancy firm is taken, the procedure | | | | other formalities, as they would be aware of |
| is relatively simple. | | | | whatever needs to be done. It is well recognized by |
| Deciding The Type Of Company To Be Formed | | | | international banking institutions that doing business in |
| For incorporation of a company, it is necessary to | | | | Hong Kong is without any hassles and is |
| register it with the Companies Registry under the | | | | straightforward with positive aspects, such as the |
| Companies Ordinance. However, as a first step, the | | | | ease of getting construction permits, investor |
| entrepreneur has to decide the type of company | | | | protection, and no restrictions on trading in |
| that he/she wishes to form. Basically, there are two | | | | international markets or paying taxes abroad. If the |
| types of companies: private and public. A private | | | | structure of the company is legal and proper, it can |
| company is usually formed for operating a small | | | | benefit from legal tax exemptions for profits earned |
| business, and its characteristics are that there are | | | | from across the borders. |
| restrictions on the right to transfer its shares; the | | | | The decision to set up a business in Hong Kong |
| number of members is limited to 50, which do not | | | | should, however, be made only after taking into |
| include employees and former employees; and the | | | | consideration all the pros and cons of doing so with |
| public cannot subscribe for any of its shares or | | | | the business objectives in mind. It would also be |
| debentures. A public company, on the other hand, | | | | worthwhile to get an expert opinion from an |
| has none of the above restrictions. Private companies | | | | offshore company specialist who will give a |
| far outnumber the number of public companies. | | | | third-party perspective and a clear picture of the |
| Moreover, most companies are limited companies, | | | | prospects of business success. |
| implying that the liability of the shareholders is limited | | | | |