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How to successfully implement legal tech into in-house legal teams


The emergence of Legal Tech, or LawTech, represents a significant shift in the legal profession, mirroring the impact of FinTech on the financial industry.

Improving technology remains a top priority for legal firms, particularly in-house legal teams. This deep dive addresses questions about Legal Tech and its implementation.

Legal tech, not to be confused with legal for tech, refers to a suite of technologies designed to support, supplement, or outright replace traditional methods for delivering legal services and improving operational efficiency.

The Solicitors Regulation Authority (SRA) has recognised legal tech potential to revolutionise the legal landscape, offering parallels to the FinTech revolution in finance.

With the market already worth an estimated $28 billion in 2022 and expected to grow, legal tech’s scope for expansion and innovation is vast.

The integration of legal tech offers many benefits to the legal industry.

Efficiency gains

One of the most significant advantages of legal tech is its ability to streamline operations. It automates routine tasks such as searching for contract terms or generating timelines, reduces the administrative burden on legal professionals, and frees up their time to focus on more complex and strategic activities.

Zegal, for instance, provides comprehensive solutions that encapsulate this efficiency through its platform, making legal processes more manageable and less time-consuming.

Enhancing transparency

The legal sector has historically been perceived as opaque, relying on complex jargon and processes.

Legal tech, however, is at the forefront of shifting this perception by offering user-friendly solutions that demystify legal processes. Platforms like Zegal play a pivotal role in this transformation, providing tools that promote clarity and understanding, thereby improving the overall quality of legal services.

Certainty and risk mitigation

Digitising legal processes through tech solutions significantly reduces the risk of human error and the loss of critical documents. Automated contract management systems will ensure that every piece of due diligence is accounted for, safeguarding against potential oversights.

Security enhancements

Data breaches are a constant threat, but legal tech offers robust security solutions, such as digital signatures and encrypted data rooms. These technologies secure sensitive legal documents and build trust with clients.

Despite its advantages, the adoption of legal tech is challenging. Initial barriers often include:

Funding constraints

One of the primary obstacles to legal tech adoption is the initial investment required. Legal technologies, especially sophisticated solutions like AI-powered contract analysis tools or comprehensive case management systems, can be expensive.

Strategies for overcoming funding constraints:

  • Cost-benefit analysis: Conduct a thorough cost-benefit analysis to understand the long-term savings and efficiency gains against the upfront costs. Demonstrating a clear ROI can help in securing budget approval.
  • Phased implementation: Consider a phased approach to adopting legal tech, starting with more affordable solutions to demonstrate value before investing in more expensive technologies.
  • Seek external funding: Explore options for external financing, such as grants, legal innovation funds, or partnerships with legal tech providers, which may offer favourable terms for new adopters.

A lack of tech literacy

The successful adoption of legal tech also hinges on the tech literacy of the legal team. A lack of familiarity with new technologies can slow down or even halt integration.

Strategies for enhancing tech literacy:

  • Tailored training programs: Implement comprehensive training programs designed to bring staff up to speed on the new systems. Consider leveraging the training modules provided by tech vendors.
  • Hiring tech-savvy staff: Enrich your team with professionals who can champion legal tech adoption and support their colleagues through the transition.
  • Encourage continuous learning: Foster an organisational culture that values continuous learning and innovation. Provide opportunities for staff to engage with new technologies through workshops, seminars, and conferences.

Resistance to change within organisations

Resistance to change is a natural human instinct, especially in traditional professions such as the legal industry. Concerns over job security, a preference for established ways of working, and scepticism about the effectiveness of new tools can all contribute to resistance.

Strategies for managing resistance to change:

  • Communicate benefits clearly: Ensure that the benefits of legal tech are communicated to all stakeholders. Highlight how it can alleviate burdensome tasks, allowing legal professionals to focus on higher-value work.
  • Involve teams in the selection process: Engage potential users in decision-making. Allowing them to have a say in selecting legal tech tools increases buy-in and reduces resistance.
  • Success stories and pilot programs: Share success stories and case studies from other organisations that have successfully adopted legal tech. Consider running a pilot program to demonstrate the technology’s practical benefits before a full rollout.

Overcoming these obstacles requires comprehensive planning, prioritisation, and the proper support to ensure legal teams can effectively integrate legal tech into their workflows.

Selecting the right tools

The selection process is crucial to overcoming potential resistance to new technologies. Involving employees at all levels in choosing the right tools ensures buy-in and identifies solutions that address the most pressing needs.

Effective implementation

Beyond selection, successful implementation hinges on thorough training and engagement. Custom-built tools and platforms require a deep understanding to be used to their full potential, underscoring the importance of comprehensive onboarding processes.

Ongoing support and evolution

The fast-paced nature of technology means that legal tech solutions require regular updates and feedback to remain effective. Engaging with service providers like Zegal ensures that legal teams have continuous support and access to the latest advancements in legal tech.

Legal templates, from NDA templates to shareholder agreements, are among the most transformative tools available to in-house legal teams. They serve as a foundational element for swiftly creating consistent, compliant, and professionally structured documents.

By starting with a template, legal professionals can significantly reduce the time and effort involved in drafting documents from scratch and ensure that all necessary legal and regulatory provisions are included.

  • Efficiency and time savings: Legal templates streamline document creation, allowing legal teams to produce necessary documents much faster than traditional methods. This efficiency frees up time for legal professionals to focus on more strategic tasks.
  • Consistency and compliance: Templates provide a standardised format that ensures consistency across all documents. Moreover, because templates can be updated to reflect the latest legal requirements, they help maintain compliance with current laws and regulations.
  • Reduced risk of errors: Using a pre-vetted legal template minimises the risk of omitting crucial clauses or incorporating outdated legal language, reducing the likelihood of contractual disputes or compliance issues.
  • Accessibility for non-legal professionals: Legal templates demystify the document creation process for individuals without legal training, making it easier for other departments to draft preliminary documents without immediate legal input.

Customisation and flexibility

While templates offer a solid starting point, customisation is vital to ensuring that each document accurately reflects the specific needs and circumstances of the transaction or matter at hand.

Zegal grants users access to various legal templates and customises them to suit their unique requirements. This flexibility allows for creating legally sound documents that are perfectly tailored to the specific context in which they will be used.

Integrating legal templates into the daily operations of an in-house legal team involves several steps:

  1. Template selection: Begin by identifying the most commonly used documents within your organisation and selecting templates for these documents as your starting point.
  2. Customisation process: Use platforms like Zegal to customise these templates, ensuring they align with your organisation’s legal and operational requirements.
  3. Review and approval: Establish a review process for customised templates to ensure they meet legal standards and receive approval from senior legal team members.
  4. Training and access: Provide training for the legal team and relevant non-legal staff on accessing and using these templates. Ensure everyone understands the importance of sticking to approved templates to maintain consistency and compliance.
  5. Ongoing updates: Review and update the templates regularly to reflect any changes in law, regulation, or company policy, maintaining a cycle of continuous improvement.

The role of Zegal

Platforms like Zegal play a crucial role in this process, providing a repository of legal templates and a comprehensive legal document management environment.

With features that support customisation, collaboration, and electronic signature, Zegal offers a holistic solution for leveraging legal templates effectively within in-house legal teams.

The platform facilitates the drafting and customisation of documents, their execution, and storage, creating a streamlined workflow from start to finish.

Contract automation

Contract automation stands out as a transformative solution for in-house legal teams. This technology harnesses the power of legal tech to simplify and accelerate the contract lifecycle, from initial drafting to final approval and execution.

Integrating contract automation into legal departments’ processes can achieve unparalleled efficiency, accuracy, and operational agility. 

Understanding contract automation

Contract automation involves using software to automate legal contract creation, negotiation, approval, and management. This technology leverages pre-defined templates and rules to generate contracts, streamlines the review and editing process through collaborative tools, and often includes digital signing capabilities to expedite execution.

The ultimate goal of contract automation is to minimise manual tasks, reduce the risk of human error, and shorten contract cycles.

Key benefits of contract automation

  • Increased efficiency: Automating repetitive tasks and utilising templates for standard agreements drastically reduces the time required to produce contracts. This efficiency allows legal teams to focus on more strategic aspects of their roles, such as risk management and compliance.
  • Enhanced accuracy: By standardising contract creation, automation reduces the likelihood of errors and inconsistencies. This ensures all contracts comply with current laws and company policies, mitigating legal risks.
  • Improved collaboration: Contract automation platforms often feature tools that enable real-time editing, commenting, and version control. This fosters better communication between legal teams, stakeholders, and external parties, facilitating smoother negotiations and faster consensus.
  • Streamlined approval processes: Automated workflows can route contracts to the appropriate parties for review and approval, ensuring that no time is wasted and all necessary checks are in place before a contract is executed.
  • Easier contract management and retrieval: Storing contracts in a centralised digital repository makes managing and retrieving documents more accessible. Advanced search capabilities and tagging mean users can quickly find specific contracts or clauses as needed.

Implementing contract automation with Zegal

Zegal is at the forefront of contract automation, offering robust solutions designed to integrate seamlessly with the workflows of in-house legal teams. Here’s how organisations can leverage Zegal for effective contract automation:

  1. Template customisation: Customise legal templates within Zegal for your most frequently used agreements. This ensures that your automated contracts align with legal and business requirements.
  2. Workflow design: Utilise Zegal’s workflow design features to establish automated processes for contract review, approval, and execution. This includes setting up notifications and reminders to keep contracts moving efficiently through the pipeline.
  3. Collaboration and negotiation: Use Zegal’s collaborative tools to negotiate contract terms directly within the platform. This speeds up the negotiation process and maintains a clear audit trail of changes and discussions.
  4. Digital execution: Leverage Zegal’s electronic signature capabilities to enable parties to sign contracts digitally, further reducing turnaround times and facilitating remote transactions.
  5. Contract management: Finally, use Zegal to store and manage completed contracts. The platform’s robust search and management features make it easy to keep track of contractual obligations, renewal dates, and compliance requirements.

The impact of contract automation

The impact of contract automation on in-house legal teams cannot be overstated. Freeing legal professionals from time-consuming administrative tasks allows them to devote more energy to strategic decision-making, risk assessment, and proactive legal counselling. 

Moreover, contract automation’s enhanced speed and agility enable businesses to respond more quickly to market changes, secure deals faster, and maintain a competitive edge.

Speeding up contract execution with bulk e-signing

Bulk e-signing is a groundbreaking feature of modern legal technology, redefining the efficiency and scalability of executing contracts and legal documents.

As businesses grow and the volume of contracts increases, a streamlined, secure, and time-saving document signing becomes paramount. 

The essence of e-signing

Bulk e-signing allows multiple documents to be signed electronically by one or more signatories in a single action. This technology bypasses the traditional, cumbersome process of signing legal documents individually, offering a seamless and expedited path to document execution.

By integrating bulk e-signing into their workflows, legal teams and businesses can significantly accelerate the contract execution phase, ensuring legal agreements are finalised promptly and efficiently.

Advantages of bulk e-signing

  • Enhanced efficiency: Bulk e-signing reduces the time and effort involved in the signing process. Legal teams can send out dozens or even hundreds of documents for signature in the time it would take to manually process just a few, freeing up valuable time for other tasks.
  • Improved accuracy and compliance: By automating the signing process, bulk e-signing minimises the risk of human error, such as missed signatures or misplaced documents. It ensures that every document is signed correctly and complies with legal requirements, reducing the risk of disputes or compliance issues.
  • Scalability: As organisations grow, so does the volume of contracts and legal documents requiring signatures. Bulk e-signing scales effortlessly to meet increasing demands, making it an ideal solution for businesses of all sizes.
  • Cost reduction: Bulk e-signing eliminates the need for physical document handling, including printing, mailing, and storing paper documents. This reduces direct costs and contributes to environmental sustainability by decreasing paper use.
  • Enhanced security: Digital signatures used in bulk e-signing are encrypted, providing higher security than traditional signatures. They also include a tamper-evident seal and an audit trail, ensuring the integrity and authenticity of signed documents.

Implementing bulk e-signing with Zegal

Zegal’s platform offers robust bulk e-signing capabilities designed to integrate seamlessly with the needs of modern businesses and legal teams. Here’s how to leverage Zegal for efficient bulk e-signing:

  1. Document preparation: Start by preparing the documents that require signatures, using Zegal’s template library and customisation tools to ensure they meet your specific needs.
  2. Signatory identification: Identify the parties required to sign each document. Zegal allows for flexible signatory assignments, accommodating various signing scenarios and hierarchies.
  3. Bulk sending: Upload and send multiple documents for signature in a single batch. Zegal’s intuitive interface simplifies this process, guiding users through each step.
  4. Tracking and management: Use Zegal’s tracking features to monitor each document’s status in real-time. Receive notifications as documents are signed and easily follow up on outstanding signatures.
  5. Secure storage: After signing documents, they are automatically stored in Zegal’s secure, cloud-based repository. This facilitates easy access and management of executed contracts.

Bulk e-signing is not just a feature; it’s a strategic tool that propels businesses into the future of digital contract execution. Its adoption signifies a commitment to operational excellence, leveraging technology to streamline processes, enhance compliance, and drive business growth. 

As legal tech advances, bulk e-signing stands out as a critical enabler of efficiency and scalability in the digital age.

The integration of legal tech represents a forward-thinking approach to legal practice, offering unparalleled benefits in efficiency, security, and accessibility.

While the path to full integration may present challenges, the strategic application of resources, careful planning, and support

Platforms like Zegal play a crucial role in this process, providing a repository of legal templates and a comprehensive legal document management environment.

With features that support customisation, collaboration, and electronic signature, Zegal offers a holistic solution for leveraging legal templates effectively within in-house legal teams. 

How does Share Vesting work?


Share vesting is when a company gives its equity to its employees or consultants to keep them with the company and incentivize them to reach established performance goals.

You will likely find your share options in your Employment Contract, and they are often used when a senior employee or an important advisor or consultant comes on board.

What are vesting shares?

Share vesting means the company gives its shares to an individual upfront, and the shares are subject to the company’s right to repurchase them.

These shares are known as unvested shares. The buyback right extinguishes over time (or upon fulfilment of certain conditions).

Shares released from this buyback right are known as vested shares. This mechanism is sometimes known as reverse vesting, as opposed to the grant of a share option, which is forward vesting.

Share vesting enables a senior employee or an advisor to have equity immediately upon coming on board. However, the company still retains control over those shares by way of a right to buy back, and, in this way, the company keeps the employee or advisor on board until the end of the vesting period. 

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How share vesting works

Step 1: Check your company’s Articles of Association/Constitution

Check if the company’s constitutional document restricts the buyback of its shares.

If it does, you may build in some appropriate mechanisms in your Share Vesting Agreement or consider another form of rewarding your team (for example, a Share Option Plan).

Step 2: Create a Share Vesting Agreement

Create and sign the Share Vesting Agreement. After signing, the following will take place:

  1. The employee/consultant pays for the shares on the “Purchase Date” that you set in the agreement;
  2. On the Purchase Date, the company secretary issues share certificates in the name of the employee/consultant, and he then becomes a company shareholder. The number of the share certificates and the number of shares covered by each certificate should match the vesting schedule;
  3. The employee/consultant signs a document known as a “Share Power” and delivers this document to the company secretary;
  4. The company secretary keeps the share certificates in the name of the employee/consultant and the Share Power in escrow; and
  5. When shares are vested (i.e. released from the company’s right to buy back) according to the terms of the Share Vesting Agreement, the share certificate in respect of that part of the shares will be delivered by the company secretary to the employee/consultant.

Step 3: The share recipient pays for the shares and signs the Share Power Agreement

The employee/consultant pays for the shares on the “Purchase Date” you set in the agreement.

In addition, the employee/consultant signs a “Share Power” and delivers this document to the company secretary.

Step 4: The company secretary issues and holds on to the share certificates

On the Purchase Date, the company secretary issues share certificates in the name of the employee/consultant, who then becomes a company shareholder.

The number of share certificates and shares covered by each certificate should match the vesting schedule.

The company secretary keeps the share certificates in the name of the employee/consultant and the Share Power in escrow.

Optional: Exercise of the buyback right

If the employee/consultant leaves the company, any unvested shares will be subject to the company’s right to buyback.

The company may exercise its buyback right for three months after the employee/consultant leaves. The buyback right is deemed to be automatically exercised by the company upon the expiry of the three months.

This is unless the company notifies the employee/consultant that it does not intend to exercise the buyback right.

If and when the company exercises the buyback right, the company needs to pay the buyback price for the shares (the same price that the employee/consultant paid for the shares in the first place) to the employee/consultant.

Following this, the company secretary takes the necessary steps to make the transfer effective.

After the buyback, under Hong Kong and Singapore law, those shares will be regarded as cancelled. Ensure the company secretary files with the Companies Registry/ACRA within the applicable statutory timeframe after the share buyback.

Optional: Exercise of the call option

When creating the Share Vesting Agreement, you may opt for a “call option” to be put in place. This call option enables the company to do one of two things:

  1. Buyback all vested shares at fair value; or
  2. Convert all vested shares to non-voting shares (i.e. the employee/consultant, being the holder of the vested shares, can still receive dividends from the company but has no say in the company’s decision-making).

The company may exercise the call option for six months after the employee/consultant leaves the company.

What is a Share Power?

Share Power is a document in which the employee/consultant gives his authorization to transfer his shares to the company.

It is only used if and when the company exercises the buyback right (which may or may not happen). Some information in the Share Power has to be left blank and can only be filled in by the company when it exercises the buyback right.

ZEGAL SEES HUGE CUSTOMER GROWTH IN THE UK


small business

Zegal, the end-to-end legal platform for small businesses, launched in Australasia, sees tremendous growth in the UK. 

LONDON, UK, 20 June, 2021 —Increasing small business demand for online end-to-end legal services in the UK has Zegal rapidly expanding its team and product range. 

Small businesses in the UK, well-versed in using cloud accounting services like Xero with their accountants, are demanding the same and more from their legal advisors.  Enter Zegal.  The Zegal platform, which is used across Australia and Asia by more than 20,000 smaller companies and their legal advisors, has seen tremendous growth in the UK as businesses adapt to work-from-home offices.

Zegal is designed to be end-to-end—enabling companies to do legal work that is more complex. Zegal’s sophisticated software is the core of the experience, providing the technology for businesses to work alone; or together with good old fashioned real-life lawyers, working virtually through the platform, whenever needed.  The result is streamlined and affordable legals.

As a global Software as a Service (SaaS) company, Zegal was built for the cloud and is an example of how technology companies are providing significant opportunities to small businesses the world over by leveraging the benefits of scale and leveling the playing field.  Zegal recently announced a collaboration with British leading virtual law firm 360 Business Law, selected by Zegal to deliver legal advice to its UK clients. Clients using Zegal’s contract management application can now access a free 30-minute consultation with a lawyer at 360 Business Law.

Daniel Walker, Zegal Founder says, ‘The transition we’ve seen from office to remote working has driven a huge demand in the UK market for virtual legal counsel and platform solutions. We are seeing the strongest demand within the mid-market space, which is a very exciting opportunity.’  

For more information and/or interview requests please contact Alicia Walker at alicia.walker@zegal.com 

 

Linkedin | Facebook | www.zegal.com 

ABOUT ZEGAL

Zegal is the end-to-end platform for the legals smaller companies need. 

Our story

Zegal was founded in 2014 by lawyer friends Daniel Walker and Jake Fisch. Having been a part of the system that preserves quality legal advice only for those that can afford it, the two were determined to build a model that delivers the ‘corporate law firm’ experience to small business.

Today Zegal is the world’s only end-to-end platform for smaller companies to create, negotiate, and sign both the simple, and complex contracts they need to run their business, with expert legal advice, 100% online every step of the way. Since our launch, we have helped more than 20,000 companies close commercial contracts, run leaner HR teams, and enter new markets. You can use Zegal for your company in the UK, Australia and across Asia. Make your legals simple.

 

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

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How to start a business in Hong Kong


How to start a business in Hong Kong

 

This article covers the main points on how to start a business in Hong Kong.

Read on for details on Hong Kong’s requirements, procedures, and the estimated timeline to register a company. 

Zegal: FREE COMPANY INCORPORATION

 Minimum Setup Requirements to Register a Company in Hong Kong

  • Designated Representative – 1
  • Individual Director – 1
  • Shareholder – minimum 1 and maximum 50
  • Company Secretary – 1, must be based in Hong Kong 
  • No minimum share capital requirement 
  • Have a local Hong Kong registered address for the company

Registration Timeline 

The Hong Kong Companies Ordinance has undergone a recent amendment in 2018 and has since streamlined the process of incorporation in Hong Kong. The entire process to incorporate in Hong Kong will take around 5 to 7 days (subjected to the completion of the required documents). 

Step 1: Get Companies Registry’s Approval for Your Company Name

The Companies Registry is Hong Kong’s official formal organization that oversees the incorporation of companies in Hong Kong. Your application must first be submitted via electronic means or in hard copy before the registration of your company can be approved. 

The very first step is to choose the type and name of your company. In Hong Kong, there are 2 types of companies:

  • Company limited by shares
  • Company limited by guarantee 

The name of your company must be in compliance with the Guideline on Registration of Company Names for Hong Kong Companies. Additionally, the company name must not:

  • Appear on Hong Kong’s Cyber Search Centre or Company Search Mobile Service 
  • Infringe the intellectual property rights (IPR) of a third party 

Next, it is the delivery of the application – either electronically or in hard copy. Electronically should be done through Hong Kong’s “e-Registry” or “CR eFiling” whilst the hard copy must be submitted to the Shroff on the 14th floor of the Queensway Government Offices.

The application stage requires 3 sets of documents, namely:

  1. Incorporation Form (Form NNC1 – Company limited by shares, Form NNC1G – Company not limited by shares)
  2. Copy of the company’s articles of association 
  3. Notice to business registration office (IRBR1)

Approval of the company application will occur within an hour if it is done electronically while hard copy will be approved within 4 working days

To register your company name, visit the Companies Registry’s website

Step 2: Prepare Documents to start a business in Hong Kong

to start a business in Hong Kong you’ll need to provide:

  • An official copy of the Articles of Association for the company 
  • The Company name
  • The company’s registered address
  • A Brief description of the business activities conducted
  • The particulars of the shareholders, directors, and company secretary 
  • Liability of company’s members
  • Share capital registered upon the incorporation of the company
  • The number of shares taken up by subscribers 
  • An official copy of the parent company registration documents (e.g. Certificate of Incorporation and Articles of Association) for corporate shareholders and directors
  • Official copies of passport, overseas residential address proof – for non-resident shareholders and directors
  • Official copies of Hong Kong identity card and residential address proof for resident shareholders and directors

*If the documents are in a language other than English, an officially endorsed translated copy is required.

Read more: Documents required when incorporating your business

Step 3: Submit Application to Companies Registry 

As mentioned above, the application forms required must be submitted either electronically or in a hard copy to the Queensway Government Offices in Hong Kong. 

The correct registration fees of HKD$1,720 must also be submitted along with the application forms. If the application is unsuccessful, a refund of HKD$1,425 may be made. The registration fee for a 1-year certificate is HKD$250 while a 3-year certificate is HKD$3,950.

In order to retrieve the registration forms (e.g. Form NNC1/NNC1G), the charges differ depending on whether it is viewed/downloaded electronically or obtained in hard copy. 

*Onsite: 13th Floor, Public Search Centre, Queensway Government Offices, Hong Kong

Incorporating a non-Hong Kong company?

A non-Hong Kong company is a company that is incorporated outside of Hong Kong but it has an established place of business in Hong Kong. It is compulsory to apply for registration as a non-Hong Kong company within a month of its establishment as a place of business in Hong Kong. 

Documents required for submission: (either electronically or in hardcopy)

  • Form NN1 
  • A certified copy of the instrument defining the company’s constitution (e.g. charter, statutes or memorandum & articles of association)
  • A certified copy of the company’s latest published accounts
  • A Notice to Business Registration Office (Form IRBR2)

The approval upon submission of the correct and completed forms along with the registration fees will take approximately 10 working days.

After Incorporation

Once the company has been incorporated, within a month of commencing business, the business must be registered with the Business Registration Office of the Inland Revenue Department. It is compulsory to display the Business Registration Certificate at the place of business. 

Hong Kong allows for a simultaneous application for business registrations together with the application for company incorporations. The additional business registration fee of HKD$2,000 (1-year certificate) or HKD$2,500 (3-year certificate) must be made together with  these documents:

  • A Notice to Business Registration Office (IRBR1)
  • Levy to the Protection of Wages on Insolvency Fund (1-year Certificate, HKD$250 or 3-year Certificate, HKD$750)

If the simultaneous business registration is done electronically, it would take an hour or 4 working days for hard copies. 

If it is a separate business registration, it can only be done in hard copy and it would take 30 minutes in person or 2 working days by post. 

Accounting

The Hong Kong Institute of Certified Public Accountants (HKICPA) issues official standards relating to accounting and auditing practices. The Hong Kong law requires all Hong Kong-incorporated companies to prepare audited financial statements. All private companies must keep and maintain proper books of account. Companies must also file annual returns specifying directors, members, and the location of a registered office. 

Annual General Meeting

All companies must convene their annual general meeting in respect of each financial year of the company, as opposed to every calendar year. 

Annual filing

All Hong Kong-based companies are required to meet annual filing requirements with the Inland Revenue Department (IRD) and Companies Registry, once every calendar year.

 

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

MORE IN THIS SERIES: Company Incorporation: Hong Kong, Singapore, Japan, New Zealand, Australia,Taiwan, Macau, China, Philippines, BVI, Vietnam,Thailand, Indonesia, Cayman Islands, United Kingdom

READ MORE: Documents required when incorporating your business

READ MORE: Company Incorporation Hong Kong: Foreigner’s Essential Guide

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Benefits of Setting Up a Company in Hong Kong


Photo by Unknown Wong on Unsplash

Much of Hong Kong’s appeal as a potential business destination can be attributed to the ease of setting up a business here. Online applications for incorporating and registering a business can be processed within one hour. If you are already in Hong Kong, the entire incorporation procedure can be completed in less than a week. Visitors to Hong Kong can stay up to 180 days without a Visa ( varies by nationality), and directors can be of any nationality.

Here is a handy chart filled with some of the myriad benefits to setting up shop in the 852:

Benefits of Setting Up a Company in Hong Kong

No need for a local Director or Shareholder

This minimises your costs and simplifies management. For example, Singapore and Australia require a local resident Director who will then be part of the decision making procedures and wish to see books and records etc.
Other countries in SE Asia require either a local partner or entire local ownership.
Hong Kong does not have these requirements. 

English common law system

The legal framework is very familiar to those coming from the US and UK. The law is written in English and so easy to navigate. 

Best route to China

It’s location and political system ensure that either buying or selling into China is easier with a HK company. 

Agreements such as the Closer Economic Partnership Arrangement (CEPA) and the Greater Bay Area initiative demonstrate this. 

Freedom of capital

The company can have several bank accounts, in different currencies and in different locations. There are no restrictions on movement of capital. 

An RMB bank account may be set up to facilitate trade with China. 

Territorial taxation, and a low rate if taxed. 

Hong Kong uses the territorial source principle of taxation, in which profits made outside of Hong Kong are tax-free. 

Many online sellers pay 0% tax as their profits are not made in Hong Kong. 

Revenue created inside Hong Kong and taxed at around 16.5%. There are large numbers of allowances and deductions possible. 

There is no VAT or GST on sales. 

No capital gain tax

There is no capital gains tax in Hong Kong. A Hong Kong company selling it’s assets )ie intellectual property) will not pay tax on the profits of this sale. 

Simple Corporate Structure

A Limited Company has no minimum capital requirement, can be set up very quickly, and changes such as a capital increase can happen very quickly

Intellectual Property protection

Intellectual Property registration, and enforcement of rights, is protected by Hong Kong law and straightforward. 

   

Regular Use Cases for Hong Kong companies:

  • Online reseller (ie ebay etc) for European owners
  • Trading company between Asia and Europe (ie garment, medical)
  • IP Holding Company (ie for Fintech)
  • Professional Services for Asia clients
  • Employment company for international business (ie air travel, cruise ships)
  • Asset holding company (ie for international families)

Support

The tax rate mentioned above of 16.5 per cent, is one of the world’s lowest. Business owners file their own tax returns with little audit interference from the government.

Further, Hong Kong has committed to support the startup and small business community. Measures introduced include the waiver of business registration fees and subsidies for use of technological services and solutions to improve productivity and upgrade business processes.

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

READ MORE: Step by Step to Incorporating a Company in Hong Kong

 

Company Incorporation Hong Kong


Company Incorporation in Hong Kong continues to maintain its edge in international rankings for ease of doing business. Government support for startups also remains strong. Last year, the government injected HKD 5 billion into the Innovation and Technology Fund (ITF)and announced a HKD 2 billion Innovation and Technology Venture Fund to encourage private venture funds to invest in startups through a matching process.

Read on for detailed requirements, procedures, and the estimated timeline to incorporate a company in Hong Kong.

Photo by Ruslan Bardash on Unsplash

Company Incorporation HongKong: Registering your business

In order to start your business in Hong Kong, you will need to register your company with the Companies Registry. The Companies Registry is responsible for processing applications for the incorporation of local limited companies, as well as the registration of non-Hong Kong companies which were incorporated outside Hong Kong and have established a place of business in Hong Kong.

Minimum Requirements to Register a Company in Hong Kong

  • Designated Representative – 1
  • Individual Director – 1
  • Shareholder – minimum 1 and maximum 50
  • Company Secretary – 1, must be based in Hong Kong 
  • No minimum share capital requirement 
  • Have a local Hong Kong registered address for the company

Registration Timeline for Company Incorporation in Hong Kong

The Hong Kong Companies Ordinance has undergone a recent amendment in 2018 and has since streamlined the process of incorporation in Hong Kong. The entire process to incorporate in Hong Kong will take around 5 to 7 days (subjected to the completion of the required documents).

However, with Zegal, we streamline and work on the process for you, cutting down company incorporation time to just 24 hours, with the need to sign the required Directors’ Consent and personally filed to the  Companies Registry within 15 days. 

Get Started: Company Incorporation Documents

Step 1: Apply for a business name & obtain a certificate of incorporation

The Companies Registry is Hong Kong’s official organization that oversees the incorporation of companies in Hong Kong. Your application must first be submitted via electronic means or in hard copy before the registration of your company can be approved. 

The very first step (and an exciting way to begin!) is to choose the type and name of your company. In Hong Kong, there are 2 types of companies:

  • Company limited by shares
  • Company limited by guarantee 

The name of your company must be in compliance with the Guideline on Registration of Company Names for Hong Kong Companies. Additionally, the company name must not:

  • Appear on Hong Kong’s Cyber Search Centre or Company Search Mobile Service 
  • Infringe the intellectual property rights (IPR) of a third party 

Next, it is the delivery of the application – either electronically or in hard copy. Electronically should be done through Hong Kong’s “e-Registry” or “CR eFiling” whilst the hard copy must be submitted to the Shroff on the 14th floor of the Queensway Government Offices.

The application stage requires 3 sets of documents, namely:

  1. Incorporation Form (Form NNC1 – Company limited by shares, Form NNC1G – Company not limited by shares)
  2. Copy of the company’s articles of association 
  3. Notice to business registration office (IRBR1)

Approval of the company application will occur within an hour if it is done electronically while hard copy will be approved within 4 working days

To register your company name, visit the Companies Registry’s website

Step 2: Prepare Documents to Set Up A Hong Kong Company

In order to incorporate a company in Hong Kong, You’ll need to provide:

  • An official copy of the Articles of Association for the company 
  • The Company name
  • The company’s registered address
  • A Brief description of the business activities conducted
  • The particulars of the shareholders, directors, and company secretary 
  • Liability of company’s members
  • Share capital registered upon the incorporation of the company
  • The number of shares taken up by subscribers 
  • An official copy of the parent company registration documents (e.g. Certificate of Incorporation and Articles of Association) for corporate shareholders and directors
  • Official copies of passport, overseas residential address proof – for non-resident shareholders and directors
  • Official copies of Hong Kong identity card and residential address proof for resident shareholders and directors

*If the documents are in a language other than English, an officially endorsed translated copy is required.

Read more: Documents required when incorporating your business

Step 3: Submit Companies registry Application

As mentioned above, the application forms required must be submitted either electronically or in a hard copy to the Queensway Government Offices in Hong Kong. 

The correct registration fees of HKD$1,720 must also be submitted along with the application forms. If the application is unsuccessful, a refund of HKD$1,425 may be made. The registration fee for a 1-year certificate is HKD$250 while a 3-year certificate is HKD$3,950.

 In order to file for incorporation, you will need to submit the following documents:

  • An Incorporation Form signed by the founding member(s) – Form NNC1 (for a company limited by shares) or Form NNC1G (for a company not limited by shares);
  • A copy of the Articles of Association (AA);
  • A Notice to Business Registration Office (IRBR1).

These documents can be submitted with the relevant fees either in hard copy at the Queensway Government Offices or online Companies Registry at the e-Registry portal. 

Incorporating a non-Hong Kong company?

A non-Hong Kong company is a company that is incorporated outside of Hong Kong but has an established place of business in Hong Kong. It is compulsory to apply for registration as a non-Hong Kong company within a month of its establishment as a place of business in Hong Kong. 

Documents required for submission: (either electronically or in hardcopy)

  • Form NN1 
  • A certified copy of the instrument defining the company’s constitution (e.g. charter, statutes or memorandum & articles of association)
  • A certified copy of the company’s latest published accounts
  • A Notice to Business Registration Office (Form IRBR2)

The approval upon submission of the correct and completed forms along with the registration fees will take approximately 10 working days.

Upon filing these documents and successful approval, you will be issued a Certificate of Incorporation (or the Certificate of Registration of Non-Hong Kong Company) and Business Registration Certificate in electronic form for online applications and in hard copy for hard copy applications. Electronic Certificates will typically be issued within one hour after submission of documents while it may take several days for applications submitted in hard copy form.

Want more comprehensive information about how to go about registering your company in Hong Kong? Learn more with our eBook on Incorporation in Hong Kong.

After company incorporation in Hong Kong

Once the company has been incorporated, within a month of commencing business, the business must be registered with the Business Registration Office of the Inland Revenue Department. It is compulsory to display the Business Registration Certificate at the place of business. 

Hong Kong allows for a simultaneous application for business registrations together with the application for company incorporations. The additional business registration fee of HKD$2,000 (1-year certificate) or HKD$2,500 (3-year certificate) must be made together with  these documents:

  • A Notice to Business Registration Office (IRBR1)
  • Levy to the Protection of Wages on Insolvency Fund (1-year Certificate, HKD$250 or 3-year Certificate, HKD$750)

If the simultaneous business registration is done electronically, it would take an hour or 4 working days for hard copies. 

If it is a separate business registration, it can only be done in hard copy and it would take 30 minutes in person or 2 working days by post. 

Annual filing

All Hong Kong-based companies must meet annual filing requirements with the Inland Revenue Department (IRD) and Companies Registry, once every calendar year.

Your company will need to comply with annual filing requirements and deadlines administered by the Companies Registry and the Inland Revenue Department (IRD). This may include the following:

  • An Annual Return filed with the Companies Registry once, every calendar year (except in the year of incorporation);
  • Additional statutory documents in addition to the Annual Returns, as required under the Companies Ordinance (CO). The filing requirements vary depending on whether you are a Local Limited Company or a Registered Non-Hong Kong Company.

 

Corporate Tax

Hong Kong requires corporate tax filing depending on the end of a company’s financial year. 

Financial year ended Filing due date
Between 1 January – 31 March 15 November of the calendar year in which the financial year ended
Between 1 April and 30 November 2 May of the calendar year in which the financial year ended
Between 1 December and 31 December 15 August of the calendar year in which the financial year ended

Check out the Profits Tax section on the GovHK website for more information.

FURTHER READING: The Guide to Hong Kong Corporate Tax Rate

Open a corporate bank account

Before heading down to a bank to open a corporate bank account, make sure that you prepare the following:-

  • All the documents required by the bank’s application form, including certification by either a certified, public accountant, company secretary, lawyer or banker;
  • Initial minimum deposits (required by most banks in Hong Kong in order to open a bank account);
  • Any other requirements for foreign companies (check with the bank accordingly).

Due to strict due diligence procedures, almost all banks in Hong Kong will require the physical presence of the account signatories, principal directors, and shareholders at the time of opening the bank account. However, this requirement may be exempted in some cases and the documents can be signed at one of the bank’s overseas branches in the presence of a witness should a key party not be able to be present.

Apply for the relevant licenses & permits

In order to commence business operations in Hong Kong, you may require particular government licenses, permits, certificates, or approvals. To determine which licenses and permits apply to your business, check out the following useful resources:

Accounting

The Hong Kong Institute of Certified Public Accountants (HKICPA) issues official standards relating to accounting and auditing practices. The Hong Kong law requires all Hong Kong-incorporated companies to prepare audited financial statements. All private companies must keep and maintain proper books of account. Companies must also file annual returns specifying directors, members, and the location of a registered office. 

Annual General Meeting

All companies must convene their annual general meeting in respect of each financial year of the company, as opposed to every calendar year.

Fulfill your obligations under the MPF system

As a business employing staff, whether full-time or part-time, you must enroll your employees aged 18 to below 65 in a Mandatory Provident Fund (MPF) scheme. You may select from one of the schemes under the MPF system and should consider factors such as the types of constituent funds available and the fees and charges payable under the scheme. For more information, check out the Employers’ Handbook on MPF Obligations by the MPF Schemes Authority (MPFA).

Access funds & resources for small businesses

Seek advice on startup issues as well as grants available to you’re your small business by Hong Kong government. Some resources for picking up information relevant to small businesses include the following:

  • InvestHK which works with foreign entrepreneurs, SMEs and multinationals looking to set up an office or expand their existing business in Hong Kong offers free advice and services to support companies.
  • HKTDC SME Start-up Programme which provides supporting services for the stages in your startup roadmap, including operational management and sales promotion.

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

Related Article: Company Incorporation London | Detailed Guide 2021

READ MORE: Documents required when incorporating your business

FURTHER READING: Company Incorporation Step by Step: Singapore

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5 Reasons to Set Up Your Business in Hong Kong


Photo by Arnie Chou from Pexels

1) A stable economy for sustainable business growth

Hong Kong has consistently ranked seventh in the world for economic competitiveness for the last four years. Hong Kong’s economic strengths include a sound banking system, low public debt, ample foreign exchange reserves, and close ties with Mainland China.

2) Setting up is easy

Similar to Singapore, Hong Kong’s appeal as a potential business destination can be attributed to the ease of setting up a business here. Online applications for incorporating and registering your business can normally be processed within one hour. If you are already in Hong Kong, the entire incorporation procedure can be completed in as little as five to seven days! (Source: Guide me Hong KongForeigners in Hong Kong, can go up to 180 days without a Visa (varies by nationality), and directors can be of any nationality.

A first-time entrepreneur, new to Asia, or needing mentorship? Tap into a selection of incubation and accelerator programmes run by global banks as well as the Hong Kong government. Such programmes are great for generating PR for your startup, especially in its early days, and will help grow your network exponentially. 

3) The government has clearly-defined out schemes for you to choose from

Companies in Hong Kong enjoy a tax rate of 16.5 per cent, one of the world’s lowest. Business owners file their own tax returns with little audit interference from the government.

Further, Hong Kong announced in this year’s Budget her commitment toward supporting the startup and small business community. Measures introduced include the waiver of business registration fees and subsidies for use of technological services and solutions to improve productivity and upgrade business processes.

As a Special Administrative Region of China, Hong Kong enjoys a highly active and cooperative business relationship with Mainland China. For example, under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), Hong Kong service suppliers enjoy preferential treatment when entering into the Mainland market in selected sectors.

4) Transportation efficiency, reliable connectivity and access to talent

Businesses thrive on efficient delivery of goods and services. With a prime geographical location in the Asia Pacific, Hong Kong offers the best of land, sea and air transportation. Despite its association with China, Hong Kong presents no obstacles to internet access.

Apart from favourable policies that allow for the free movement of capital, talent and goods, the governments of both Mainland China and Hong Kong commit to equally recognise professional qualifications and certificates that are obtained in either nation. This will let your Hong Kong business tap into a much bigger market and talent pool.

5) A great place to live and work

Hong Kong welcomes expatriates as much as it takes care of its own citizens. Aside from a business-friendly environment, you can expect low crime rates, high-quality health care, beautiful country parks, as well as high education standards for your children with more than 50 international schools. The well-established and inexpensive transport network will also get you to and from work easily if you opt for cheaper accommodation options outside the city.

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

READ MORE: Step by Step to Incorporating a Company in Hong Kong

5 Benefits To Launching Your Startup in Hong Kong


 

So you’re thinking of launching your startup in Hong Kong?

For entrepreneurs all over the world, Hong Kong has always been an attractive place to start a business. As a top financial hub for many entrepreneurs, Hong Kong has one of the most competitive and stable economies and relatively low tax rates. 

When it comes to startups, Hong Kong is similarly rising to be one of the most friendly cities for new founders and entrepreneurs to start their businesses. 

Here are 5 benefits of launching your startup in Hong Kong. 

It’s easy to incorporate

Hong Kong is known for having an entrepreneur economy and along with the favourable tax system, it’s very straightforward and fairly inexpensive to incorporate a company. (You can find the basic fees charged by the Hong Kong government here.)

Your entire application can even be done remotely, and you’ll have your company opened in a couple days. 

If you’re handling incorporating your company yourself, you can submit your incorporation documents either online through the 24-hour Companies E-registry or in person at the Companies Registry.

That being said, most people choose to hire a professional service provider to take care of all of this on their behalf. There may be some additional fees if you are hiring an agency to do this (i.e. handling the paperwork or providing a (virtual) office address). The total costs are, however, still low compared to establishing a company in most other offshore jurisdictions.

If you’re looking for more information, here’s a handy guide to incorporation in Hong Kong

You’ll be launching into a global business hub

Another benefit of launching your startup in Hong Kong? It’s an incredibly business-friendly city.

Hong Kong is widely recognised as a global business hub and the location of choice for many international companies. What’s more, unlike many other (offshore) jurisdictions, Hong Kong law allows foreigners and non-residents to be the sole shareholder and director of a company.

The city comes in third on Forbes’ list of best countries to do business, and first, according to PWC, for having the world’s most business-friendly tax system.

The startup community in particular is also incredibly international – according to InvestHK, 35% of founders come from outside Hong Kong. Vibrant sectors include fintech, followed by e-commerce, supply chain management, and logistics technology.

Hong Kong is home to a growing number of startup accelerators

The startup ecosystem is growing and thriving here in Hong Kong – the presence of startups also attracts a number of other organisations that want to see it grow.

There are no shortage of accelerators in Hong Kong, all with the goal of training and enabling young startups and founders with the tools they need to successfully launch and grow their businesses. Accelerators typically provide funding, coaching, training and access to a network, and often include office space.

Here are a list of just a few accelerators in Hong Kong: 

  • SuperCharger is a leading FinTech accelerator, dedicated to taking startups into their corporate-sponsored accelerator program. Most participating startups are later-stage, B2B (Business-to-Business solutions) looking to partner with banks.
  • Brinc has a variety of different accelerator programs, for connected hardware, robotics, food technology, and energy startups. 
  • Betatron’s program is 3 months long, and was founded by a group of VCs in Hong Kong. They won 1st place for Outstanding Contribution to the Asian Startup Ecosystem 2019 for the Greater China area and 2nd place for All-Asia. 
  • China Accelerator helps internet startups cross-borders from within China to beyond, and also from outside into the Chinese market. 

What’s more, the presence of startups also attracts a lot of venture capitalists, especially because of Hong Kong’s geographical proximity to China as well. 

There are also other dedicated communities to tech, like Cyberport and Science Park, which are government-backed organisations that act as hubs for startups. These two communities offer office space and incubators as well. If you immerse yourself in a startup community, you can find a lot of support when it comes to raising money too.

Launch your startup in hong kong
On the up and up at Cyberport

There’s no shortage of flexible office space options

While this might be surprising to someone who’s not familiar with Hong Kong, another benefit of launching in Hong Kong is actually the variety of flexible office space options there are.

It’s no secret that Hong Kong property is expensive. And if you’re looking for an office space as a startup, it can be difficult to put down a deposit in an office building (let alone commit to a year long lease) when you’re strapped for cash, and don’t know for sure what size the team’s going to be a year from now. But the good news is that in response to this, a number of co-working spaces have begun popping up all over Hong Kong, built with entrepreneurs and startups in mind.

Most co-working spaces offer the flexibility that many new businesses need at the beginning. For example, most offer hot desks as well as private offices. Along with this is more flexible options for renting the space, such as month-by-month memberships, instead of year-long contracts. 

What’s more, because of the crowd that is typically attracted to co-working spaces, it also gives you greater opportunities to connect with peers and other similar entrepreneurial-minded folks.

Here’s a guide on how to compare different co-working spaces!

You’ll join a vibrant (and growing) startup community

Hong Kong is ranked 5th in the top twenty fastest growing startup ecosystems in the world. Along with the variety of accelerators and VC attention that Hong Kong has, this also means that the startup community in Hong Kong is active and vibrant.

Any given week, there are a number of startup and entrepreneurial events put on by different organisations. There are always opportunities to learn, network, and be inspired by peers and other passionate people in the startup space. 

A good place to get plugged into the local startup community is to connect with the Whub community, who regularly host startup events and partner with other organisations. Also, many other startups also host their own events related to their specific industries, which you can browse through on event sites like Eventbrite. At Neat, for example, we host entrepreneur-centric workshops, seminars, and community events (to meet our user community). 

We’d also recommend subscribing to the mailing lists of various co-working spaces, since co-working spaces are often the venues of these events and meet ups. Many co-working spaces offer memberships that include other valuable perks aimed to help support and grow burgeoning startups too. Ooosh specifically also offers growth initiatives such as a mentorship program, a trusted vendor list, access to their VC arm, Catalyst Ventures (as well as connections to ~80% of the VCs in Hong Kong).

So you want to launch your startup in Hong Kong?

There are a lot of communities, businesses, and infrastructure here designed to support startups like yours – and the community is growing. In short, if you decide to launch your startup here in Hong Kong, you’ll be in good company. 

Launch your startup in hong kong

Elizabeth Ching is the PR & Content Manager at Neat, a modern alternative to banks, built for entrepreneurs, startups, and SMEs. With every Neat Business account, we offer corporate expense cards that can work in tandem with a simple app on your phone.

 

 

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

RELATED READING: 5 Reasons to Set Up Your Business in Singapore

READ MORE: 5 Fintech Solutions for Small Businesses in Hong Kong

Setting Up a Company in Hong Kong


Hong Kong continues to maintain its edge in international rankings for ease of doing business. It came out on top in the IMD’s World Competitive Scoreboard and the Index of Economic Freedom and was ranked 7th in the world in the Global Competitiveness Index 2018.

set-up-business-in-hong-kong-Global Competitiveness Index 4.0 2018 Hong Kong

Government support for startups also remains strong. Last year, the government injected HKD 5 billion into the Innovation and Technology Fund (ITF) and announced a HKD 2 billion Innovation and Technology Venture Fund to encourage private venture funds to invest in startups through a matching process.

If you are currently running a business in Australia and New Zealand and would like to expand into the Asian market, Hong Kong is a good choice given its prime environment for entrepreneurship. Here, we’ll give you the lowdown on how to set up your business in Hong Kong.

set-up-business-in-hong-kong-business market

Registering your business

In order to start your business in Hong Kong, you will need to register your company with the Companies Registry. The Companies Registry is responsible for processing applications for the incorporation of local limited companies, as well as the registration of non-Hong Kong companies which were incorporated outside Hong Kong and have established a place of business in Hong Kong.

Apply for business name & obtain a certificate of incorporation

The first step would be to choose a company name (which may be in English, Chinese or both). The Guideline on Registration of Company Names for Hong Kong Companies contains information you should keep in mind as you select a company name. Search online at the Cyber Search Centre of the Integrated Companies Registry Information System (ICRIS) to ensure that your proposed company name is not already taken.

Note that your company name will only be confirmed after your application has been processed.

Decide business structure

Before registering your business, think about the advantages and disadvantages of each type of business structure and determine which best suits your purposes. The business structure will affect your tax obligations. If you’re thinking about using the business structure of a company, the following options are available to you:

  • Company limited by shares
  • Company limited by guarantee
  • Unlimited company
  • Branch

Incorporate your company

 In order to file for incorporation, you will need to submit the following documents:

  • An Incorporation Form signed by the founding member(s) – Form NNC1 (for company limited by shares) or Form NNC1G (for company not limited by shares);
  • A copy of the Articles of Association (AA);
  • A Notice to Business Registration Office (IRBR1).

These documents can be submitted with the relevant fees either in hard copy at the Queensway Government Offices or online Companies Registry at the e-Registry portal. 

Upon filing of these documents and successful approval, you will be issued a Certificate of Incorporation (or the Certificate of Registration of Non-Hong Kong Company) and Business Registration Certificate in electronic form for online applications and in hard copy for hard copy applications. Electronic Certificates will typically be issued within one hour after submission of documents while it may take several days for applications submitted in hard copy form.

Want more comprehensive information about how to go about registering your company in Hong Kong? Learn more with our eBook on Incorporation: 

registering a company in hongkong

After incorporation

Once your company is incorporated, the next step would be to get your business up and running.

Open a corporate bank account

Before heading down to a bank to open a corporate bank account, make sure that you prepare the following:-

  • All the documents required by the bank’s application form, including certification by either a certified, public accountant, company secretary, lawyer or banker;
  • Initial minimum deposits (required by most banks in Hong Kong in order to open a bank account);
  • Any other requirements for foreign companies (check with the bank accordingly).

Due to strict due diligence procedures, almost all banks in Hong Kong will require the physical presence of the account signatories, principle directors and shareholders at the time of opening the bank account. However, this requirement may be exempted in some cases and the documents can be signed at one of the bank’s overseas branches in the presence of a witness should a key party not be able to be present.

Apply for the relevant licenses & permits

In order to commence business operations in Hong Kong, you may require particular government licenses, permits, certificates or approvals. To determine which licenses and permits apply to your business, check out the following useful resources:

Determine your tax obligations

If you are a business operating in Hong Kong, you will have to pay corporate taxes on the profits from your business. Your tax obligation varies depending on various factors, including the scope of charge, exemption and deductions to name a few.

Check out the Profits Tax section on the GovHK website for more information.

Fulfil your obligations under the MPF system as an employer

As a business employing staff, whether full-time or part-time, you are required to enrol your employees aged 18 to below 65 in a Mandatory Provident Fund (MPF) scheme. You may select from one of the schemes under the MPF system and should consider factors such as the types of constituent funds available and the fees and charges payable under the scheme. For more information, check out the Employers’ Handbook on MPF Obligations by the MPF Schemes Authority (MPFA).

Comply with annual filing requirements

Your company will need to comply with annual filing requirements and deadlines administered by the Companies Registry and the Inland Revenue Department (IRD). This may include the following:

  • An Annual Return filed with the Companies Registry once, every calendar year (except in the year of incorporation);
  • Additional statutory documents in addition to the Annual Returns, as required under the Companies Ordinance (CO). The filing requirements vary depending on whether you are a Local Limited Company or a Registered Non-Hong Kong Company.

Access funds & resources for small businesses

Seek advice on startup issues as well as grants available to you’re your small business by Hong Kong government. Some resources for picking up information relevant to small businesses include the following:

  • InvestHK which works with foreign entrepreneurs, SMEs and multinationals looking to set up an office or expand their existing business in Hong Kong offers free advice and services to support companies.
  • HKTDC SME Start-up Programme which provides supporting services for the stages in your startup roadmap, including operational management and sales promotion.

Bonus:

5 Reasons to Set Up Your Business in Hong Kong

1) A stable economy for sustainable business growth

Hong Kong has consistently ranked seventh in the world for economic competitiveness for the last 4 years. Hong Kong’s economic strengths include a sound banking system, low public debt, ample foreign exchange reserves, and close ties with Mainland China.

Businesses in Hong Kong stand to benefit from the nation’s free trade policy whereby international trade faces minimal government intervention. This helps keep costs and prices low. Politically Hong Kong upholds a strong and fair legal system which includes the implementation of rigorous anti-corruption measures.

2) Setting up is easy

Similar to Singapore, Hong Kong’s appeal as a potential business destination can be attributed to the ease of setting up a business here. Online applications for incorporating and registering your business can normally be processed within one hour. If you are already in Hong Kong, the entire incorporation procedure can be completed in as little as five to seven days! (Source: Guide me Hong Kong) Foreigners in Hong Kong, can go up to 180 days without a Visa (varies by nationality), and directors can be of any nationality.

A first-time entrepreneur, new to Asia, or needing mentorship? Tap into a selection of incubation and accelerator programmes run by global banks as well as the Hong Kong government. Such programmes are great for generating PR for your startup, especially in its early days, and will help grow your network exponentially. NEST.vc’s accelerator programme, for example, connects participating startups to bigger technology players such as Amazon and Microsoft; relationships that would otherwise be hard for a startup to access.

3) The government has clearly-defined out schemes for you to choose from

Companies in Hong Kong enjoy a tax rate of 16.5 per cent, one of the world’s lowest. Business owners file their own tax returns with little audit interference from the government.

Further, Hong Kong announced in this year’s Budget her commitment toward supporting the startup and small business community. Measures introduced include the waiver of business registration fees and subsidies for use of technological services and solutions to improve productivity and upgrade business processes.

As a Special Administrative Region of China, Hong Kong enjoys a highly active and cooperative business relationship with Mainland China. For example, under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), Hong Kong service suppliers enjoy preferential treatment when entering into the Mainland market in selected sectors.

4) Transportation efficiency, reliable connectivity and access to talent

Businesses thrive on efficient delivery of goods and services. With a prime geographical location in the Asia Pacific, Hong Kong offers the best of land, sea and air transportation. Despite its association with China, Hong Kong presents no obstacles to internet access.

Apart from favourable policies that allow for the free movement of capital, talent and goods, the governments of both Mainland China and Hong Kong commit to equally recognise professional qualifications and certificates that are obtained in either nation. This will let your Hong Kong business tap into a much bigger market and talent pool.

5) A great place to live and work

Hong Kong welcomes expatriates as much as it takes care of its own citizens. Aside from a business-friendly environment, you can expect low crime rates, high-quality health care, beautiful country parks, as well as high education standards for your children with more than 50 international schools. The well-established and inexpensive transport network will also get you to and from work easily if you opt for cheaper accommodation options outside the city.

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Do you have any additional tips for setting up your business in Hong Kong?

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