Types of Business Entities in Hong Kong

Before you contemplate establishing a company in Hong Kong, you must first decide on the kind of business entity that is best for your business concept.

Hong Kong is regarded as one of the world’s most desired financial markets. As a result, it is rapidly becoming the preferred location for most business travelers. Along with free trade and a free business economy, Hong Kong has created non-interfering government policies and a trustworthy political climate. All of this, along with a business-friendly legal structure and tax policy, has contributed to the influx of millions of firms and companies into Hong Kong.

However, before you contemplate establishing your company in Hong Kong, you must first decide on the kind of business entity that is most suited to your business concept.

Branch Office Representative Office Limited Liability Company Sole Proprietorship Partnership

Hong Kong Business Entity Types

1. Limited Liability Company in Hong Kong

When compared to other business organisations, the limited liability company is the most common option for Hong Kong firms. This is because the personal assets of the firm owners are shielded from liabilities and business hazards under this category. The company is run as a distinct legal entity from its proprietors.

Limited liability firms are classified into two kinds.

• Private limited company: this is the most common form for medium-sized to small businesses. The corporation limited by shares is widely used for commerce and trade. Furthermore, this company organisation divides its share capital into several shares or a defined value. The company’s owners, often known as shareholders, then hold these shares and split the earnings.
• Public Limited Company: The main distinction between a public limited company and a private limited company is that the business shares are available to the general public. In most circumstances, a medium or large limited liability business will elect to extend its shareholder base and go public only after it has achieved significant market growth.

2. Single-proprietorship in Hong Kong

This is one of the most basic and straightforward forms of business companies in Hong Kong. A business is owned and run by a single individual under this business structure and is not a distinct legal entity from the owner. Simply simply, the company and its owner are seen as one.

3. Collaboration in Hong Kong

This kind of corporate company is co-owned and created by two or more persons, up to a maximum of twenty people, to share earnings. Partnerships are classified into two types:

General Partnerships: In which each partner is individually accountable for the business’s responsibilities and debts. Furthermore, each partner is held liable for the activities of other business partners, if these acts were performed throughout the course of the business partnership.

Limited Partnerships: In which each partner’s responsibility is limited to the amount of unpaid share capital. Furthermore, the limited partners have no say in the company’s management.

4. Branch Office in Hong Kong

A branch office business entity is an extension of a parent firm in Hong Kong. The parent corporation might be located in or outside of Hong Kong. Because the branch office has no ownership rights, the parent company is fully liable for the branch office’s duties and debts.

Assume the branch office’s parent firm is a foreign corporation based outside of Hong Kong. In such situation, the branch office must be registered with the Company Registry in order to get a registration certificate. The Hong Kong Inland Revenue Department handles all branch office registrations.

5. Representative Office in Hong Kong

This corporate entity, also known as a liaison office, is designed for firms or enterprises with parent companies that are located outside of Hong Kong. The representative office has the same name as the parent firm and is not permitted to do business in Hong Kong. Market research, advertising, and promotion are the primary tasks of the representative office.

Disclaimer: The material in this article was compiled using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material that were applicable at the time. The completeness and correctness of the material has been ensured with due diligence. It is required of users of this material to consult the relevant, applicable legislation. The data given may change without prior notice and does not constitute professional advice. As a result, Estabizz Fintech disclaims all liability for the results of using such material.