Company in Hong Kong – choosing the organizational-legal form for your business

Modern Hong Kong is a good banking service, flexible tax policy and reliable legislation based on English law. Companies from all over the world come here to register their legal entity or open a representative office here.

We have written a lot about the advantages of doing business in Hong Kong, the process and the cost of registering a company, but we have never talked about the organizational-legal forms that exist in Hong Kong. Although this is an important thing, on which the success and prospects of your business in the Hong Kong SAR largely depend.

What organizational-legal forms of enterprises exist in Hong Kong?

1. An enterprise having the status of a limited liability company Ltd.

Main advantages:

• Having its own legal status, which makes it possible to take out loans, acquire assets and enter into contracts on its own behalf.
• A member of the company is liable according to his share in the business; personal property is not subject to liability.
• The ability to attract new shareholders, which will allow you to further increase your capital and expand your activities.
• The legal form is quite common in Hong Kong, so other companies will be willing to cooperate with you. 

The disadvantages include the relatively high cost of registering such an enterprise, as well as the complexity of liquidation due to its high cost. 

2. Limited partnership

This company can be created with full or limited liability. The distribution of income from activities is carried out taking into account the financial investments of the participants.

Among the advantages of this form, it is important to note preferential taxation and a simplified procedure for obtaining additional financing (loans, loans, loans, etc.).

The main disadvantage is the lack of the status of a separate legal entity.

3. Individual enterprise

A great solution for those who are opening a small business in Hong Kong or doing it for the first time.

Main advantages:

• Minimum expenses for the opening and maintenance of the enterprise.
• All income from the company's activities belongs to its owner.
• You have complete autonomy in decision-making.
• Simple liquidation procedure. 

Main disadvantages:

• It is not a separate legal entity (the owner and the company itself are a single entity).
• It may be difficult to attract financing.
• The owner bears full financial responsibility for the company's debts.

4. Representation of a foreign company

Another great option for those who want to probe the Hong Kong market, launch a pilot project or open a business for the first time. You can create a subsidiary or a branch. There are no special requirements for these forms.

About 80% of the world's major companies have their representative offices in Hong Kong, including: Aeroflot, Siberia, Kaspersky Lab, etc.

If you are only looking closely at Hong Kong and have not made a final decision on starting your own business yet, we suggest opening a representative office based on the RASPP in Hong Kong.

It is necessary to approach the choice of the organizational-legal form in Hong Kong responsibly and with special care. Not only taxation will depend on it, but also opportunities for expansion and liquidation of the company, attraction of various forms of financing, etc.