Hong Kong

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


The Legal Tech industry is steadily following in the footsteps of its sibling FinTech, generating worldwide revenue of over 17.3 billion USD in 2019 alone. The pandemic has only further contributed to this trend, acting as a huge catalyst in its growth. In-house legal teams have a lot to gain from experimentation in the field, with many Legal Tech projects focussing on simplifying the core legal processes that in-house teams complete every day. 

However, this also means that in-house teams have much to lose during the implementation process. Their smaller scale relative to their company’s chosen counsel, combined with their more selective focus on the core and everyday legal issues faced by the company, means that the imposition of any new process or tool will significantly impact the team, its workload, and its efficiency. 

No in-house legal team, but still interested in the benefits of legal tech?

That’s where Zegal comes in! With tools such as contract automation, contract lifecycle management, and approval workflows, Zegal brings legal tech tools directly to over 20,000 businesses. 

Ensuring legal tech success within in-house teams

With over three-quarters of in-house legal professionals having experienced at least one failed tech adoption project, it is clear that the in-house legal industry has a lot to learn about how to best craft the user experience of the process. 

So how do you ensure success when integrating legal tech into an in-house legal team?T here are three key areas to consider:

  • Selection
  • Implementation
  • Continued support

Selecting the right legal tech

1 in 4 in-house legal professionals cited employee resistance as a barrier to the future adoption of legal tech. Given that 1 in 3 also cited it as a reason why legal tech projects fail, it is clear to see how a dangerous cycle appears. Once an employee has suffered one failed legal tech implementation, they are more likely to be resistant to trialing another, resulting in a lower chance of success for future projects. 

To help combat this resistance, getting employees of all levels involved in the selection process is critical. The most successful legal tech projects are often those that aid the most mundane of processes because these processes usually take the most time cumulatively and ultimately present little financial return for the company.

Engaging with employees to discover these processes and how they are currently conducted will mean they are more likely to advocate the legal tech. Successful adoption of legal tech tools could boost team morale, further improving productivity and employee retention. 

Implementation

While most tools will aim to be somewhat self-explanatory, and employees will be able to pick them up as they work, it is often the case that tools won’t be used to their full potential unless adequate training is given.

Training also presents a further opportunity for employee engagement, especially where custom-built tools are being implemented. 

Continued support and development

Gone are the days when a company could upgrade to the newest version of Windows before breathing a sigh of relief that they were sorted for the next several years. Technology is now patched, developed, and upgraded far more often, and legal tech is no exception. 

Asking what more the tool could do or how it could do what it is currently doing better will help shape future development goals. 

Now is a great time to turn to legal tech

While there are risks of failed legal tech integration, the potential benefits are far greater. Equally, as the field grows, adoption will become imperative.

Considering the process of how to implement legal tech, before embarking on it, will help to ensure success.

 

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


The Legal Tech industry is steadily following in the footsteps of its sibling FinTech, generating worldwide revenue of over 17.3 billion USD in 2019 alone. The pandemic has only further contributed to this trend, acting as a huge catalyst in its growth. In-house legal teams have a lot to gain from experimentation in the field, with many Legal Tech projects focussing on simplifying the core legal processes that in-house teams complete every day. 

However, this also means that in-house teams have much to lose during the implementation process. Their smaller scale relative to their company’s chosen counsel, combined with their more selective focus on the core and everyday legal issues faced by the company, means that the imposition of any new process or tool will significantly impact the team, its workload, and its efficiency. 

No in-house legal team, but still interested in the benefits of legal tech?

That’s where Zegal comes in! With tools such as contract automation, contract lifecycle management, and approval workflows, Zegal brings legal tech tools directly to over 20,000 businesses. 

Ensuring legal tech success within in-house teams

With over three-quarters of in-house legal professionals having experienced at least one failed tech adoption project, it is clear that the in-house legal industry has a lot to learn about how to best craft the user experience of the process. 

So how do you ensure success when integrating legal tech into an in-house legal team?T here are three key areas to consider:

  • Selection
  • Implementation
  • Continued support

Selecting the right legal tech

1 in 4 in-house legal professionals cited employee resistance as a barrier to the future adoption of legal tech. Given that 1 in 3 also cited it as a reason why legal tech projects fail, it is clear to see how a dangerous cycle appears. Once an employee has suffered one failed legal tech implementation, they are more likely to be resistant to trialing another, resulting in a lower chance of success for future projects. 

To help combat this resistance, getting employees of all levels involved in the selection process is critical. The most successful legal tech projects are often those that aid the most mundane of processes because these processes usually take the most time cumulatively and ultimately present little financial return for the company.

Engaging with employees to discover these processes and how they are currently conducted will mean they are more likely to advocate the legal tech. Successful adoption of legal tech tools could boost team morale, further improving productivity and employee retention. 

Implementation

While most tools will aim to be somewhat self-explanatory, and employees will be able to pick them up as they work, it is often the case that tools won’t be used to their full potential unless adequate training is given.

Training also presents a further opportunity for employee engagement, especially where custom-built tools are being implemented. 

Continued support and development

Gone are the days when a company could upgrade to the newest version of Windows before breathing a sigh of relief that they were sorted for the next several years. Technology is now patched, developed, and upgraded far more often, and legal tech is no exception. 

Asking what more the tool could do or how it could do what it is currently doing better will help shape future development goals. 

Now is a great time to turn to legal tech

While there are risks of failed legal tech integration, the potential benefits are far greater. Equally, as the field grows, adoption will become imperative.

Considering the process of how to implement legal tech, before embarking on it, will help to ensure success.

 

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


The Legal Tech industry is steadily following in the footsteps of its sibling FinTech, generating worldwide revenue of over 17.3 billion USD in 2019 alone. The pandemic has only further contributed to this trend, acting as a huge catalyst in its growth. In-house legal teams have a lot to gain from experimentation in the field, with many Legal Tech projects focussing on simplifying the core legal processes that in-house teams complete every day. 

However, this also means that in-house teams have much to lose during the implementation process. Their smaller scale relative to their company’s chosen counsel, combined with their more selective focus on the core and everyday legal issues faced by the company, means that the imposition of any new process or tool will significantly impact the team, its workload, and its efficiency. 

No in-house legal team, but still interested in the benefits of legal tech?

That’s where Zegal comes in! With tools such as contract automation, contract lifecycle management, and approval workflows, Zegal brings legal tech tools directly to over 20,000 businesses. 

Ensuring legal tech success within in-house teams

With over three-quarters of in-house legal professionals having experienced at least one failed tech adoption project, it is clear that the in-house legal industry has a lot to learn about how to best craft the user experience of the process. 

So how do you ensure success when integrating legal tech into an in-house legal team?T here are three key areas to consider:

  • Selection
  • Implementation
  • Continued support

Selecting the right legal tech

1 in 4 in-house legal professionals cited employee resistance as a barrier to the future adoption of legal tech. Given that 1 in 3 also cited it as a reason why legal tech projects fail, it is clear to see how a dangerous cycle appears. Once an employee has suffered one failed legal tech implementation, they are more likely to be resistant to trialing another, resulting in a lower chance of success for future projects. 

To help combat this resistance, getting employees of all levels involved in the selection process is critical. The most successful legal tech projects are often those that aid the most mundane of processes because these processes usually take the most time cumulatively and ultimately present little financial return for the company.

Engaging with employees to discover these processes and how they are currently conducted will mean they are more likely to advocate the legal tech. Successful adoption of legal tech tools could boost team morale, further improving productivity and employee retention. 

Implementation

While most tools will aim to be somewhat self-explanatory, and employees will be able to pick them up as they work, it is often the case that tools won’t be used to their full potential unless adequate training is given.

Training also presents a further opportunity for employee engagement, especially where custom-built tools are being implemented. 

Continued support and development

Gone are the days when a company could upgrade to the newest version of Windows before breathing a sigh of relief that they were sorted for the next several years. Technology is now patched, developed, and upgraded far more often, and legal tech is no exception. 

Asking what more the tool could do or how it could do what it is currently doing better will help shape future development goals. 

Now is a great time to turn to legal tech

While there are risks of failed legal tech integration, the potential benefits are far greater. Equally, as the field grows, adoption will become imperative.

Considering the process of how to implement legal tech, before embarking on it, will help to ensure success.

 

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


The Legal Tech industry is steadily following in the footsteps of its sibling FinTech, generating worldwide revenue of over 17.3 billion USD in 2019 alone. The pandemic has only further contributed to this trend, acting as a huge catalyst in its growth. In-house legal teams have a lot to gain from experimentation in the field, with many Legal Tech projects focussing on simplifying the core legal processes that in-house teams complete every day. 

However, this also means that in-house teams have much to lose during the implementation process. Their smaller scale relative to their company’s chosen counsel, combined with their more selective focus on the core and everyday legal issues faced by the company, means that the imposition of any new process or tool will significantly impact the team, its workload, and its efficiency. 

No in-house legal team, but still interested in the benefits of legal tech?

That’s where Zegal comes in! With tools such as contract automation, contract lifecycle management, and approval workflows, Zegal brings legal tech tools directly to over 20,000 businesses. 

Ensuring legal tech success within in-house teams

With over three-quarters of in-house legal professionals having experienced at least one failed tech adoption project, it is clear that the in-house legal industry has a lot to learn about how to best craft the user experience of the process. 

So how do you ensure success when integrating legal tech into an in-house legal team?T here are three key areas to consider:

  • Selection
  • Implementation
  • Continued support

Selecting the right legal tech

1 in 4 in-house legal professionals cited employee resistance as a barrier to the future adoption of legal tech. Given that 1 in 3 also cited it as a reason why legal tech projects fail, it is clear to see how a dangerous cycle appears. Once an employee has suffered one failed legal tech implementation, they are more likely to be resistant to trialing another, resulting in a lower chance of success for future projects. 

To help combat this resistance, getting employees of all levels involved in the selection process is critical. The most successful legal tech projects are often those that aid the most mundane of processes because these processes usually take the most time cumulatively and ultimately present little financial return for the company.

Engaging with employees to discover these processes and how they are currently conducted will mean they are more likely to advocate the legal tech. Successful adoption of legal tech tools could boost team morale, further improving productivity and employee retention. 

Implementation

While most tools will aim to be somewhat self-explanatory, and employees will be able to pick them up as they work, it is often the case that tools won’t be used to their full potential unless adequate training is given.

Training also presents a further opportunity for employee engagement, especially where custom-built tools are being implemented. 

Continued support and development

Gone are the days when a company could upgrade to the newest version of Windows before breathing a sigh of relief that they were sorted for the next several years. Technology is now patched, developed, and upgraded far more often, and legal tech is no exception. 

Asking what more the tool could do or how it could do what it is currently doing better will help shape future development goals. 

Now is a great time to turn to legal tech

While there are risks of failed legal tech integration, the potential benefits are far greater. Equally, as the field grows, adoption will become imperative.

Considering the process of how to implement legal tech, before embarking on it, will help to ensure success.

 

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


The Legal Tech industry is steadily following in the footsteps of its sibling FinTech, generating worldwide revenue of over 17.3 billion USD in 2019 alone. The pandemic has only further contributed to this trend, acting as a huge catalyst in its growth. In-house legal teams have a lot to gain from experimentation in the field, with many Legal Tech projects focussing on simplifying the core legal processes that in-house teams complete every day. 

However, this also means that in-house teams have much to lose during the implementation process. Their smaller scale relative to their company’s chosen counsel, combined with their more selective focus on the core and everyday legal issues faced by the company, means that the imposition of any new process or tool will significantly impact the team, its workload, and its efficiency. 

No in-house legal team, but still interested in the benefits of legal tech?

That’s where Zegal comes in! With tools such as contract automation, contract lifecycle management, and approval workflows, Zegal brings legal tech tools directly to over 20,000 businesses. 

Ensuring legal tech success within in-house teams

With over three-quarters of in-house legal professionals having experienced at least one failed tech adoption project, it is clear that the in-house legal industry has a lot to learn about how to best craft the user experience of the process. 

So how do you ensure success when integrating legal tech into an in-house legal team?T here are three key areas to consider:

  • Selection
  • Implementation
  • Continued support

Selecting the right legal tech

1 in 4 in-house legal professionals cited employee resistance as a barrier to the future adoption of legal tech. Given that 1 in 3 also cited it as a reason why legal tech projects fail, it is clear to see how a dangerous cycle appears. Once an employee has suffered one failed legal tech implementation, they are more likely to be resistant to trialing another, resulting in a lower chance of success for future projects. 

To help combat this resistance, getting employees of all levels involved in the selection process is critical. The most successful legal tech projects are often those that aid the most mundane of processes because these processes usually take the most time cumulatively and ultimately present little financial return for the company.

Engaging with employees to discover these processes and how they are currently conducted will mean they are more likely to advocate the legal tech. Successful adoption of legal tech tools could boost team morale, further improving productivity and employee retention. 

Implementation

While most tools will aim to be somewhat self-explanatory, and employees will be able to pick them up as they work, it is often the case that tools won’t be used to their full potential unless adequate training is given.

Training also presents a further opportunity for employee engagement, especially where custom-built tools are being implemented. 

Continued support and development

Gone are the days when a company could upgrade to the newest version of Windows before breathing a sigh of relief that they were sorted for the next several years. Technology is now patched, developed, and upgraded far more often, and legal tech is no exception. 

Asking what more the tool could do or how it could do what it is currently doing better will help shape future development goals. 

Now is a great time to turn to legal tech

While there are risks of failed legal tech integration, the potential benefits are far greater. Equally, as the field grows, adoption will become imperative.

Considering the process of how to implement legal tech, before embarking on it, will help to ensure success.

 

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


The Legal Tech industry is steadily following in the footsteps of its sibling FinTech, generating worldwide revenue of over 17.3 billion USD in 2019 alone. The pandemic has only further contributed to this trend, acting as a huge catalyst in its growth. In-house legal teams have a lot to gain from experimentation in the field, with many Legal Tech projects focussing on simplifying the core legal processes that in-house teams complete every day. 

However, this also means that in-house teams have much to lose during the implementation process. Their smaller scale relative to their company’s chosen counsel, combined with their more selective focus on the core and everyday legal issues faced by the company, means that the imposition of any new process or tool will significantly impact the team, its workload, and its efficiency. 

No in-house legal team, but still interested in the benefits of legal tech?

That’s where Zegal comes in! With tools such as contract automation, contract lifecycle management, and approval workflows, Zegal brings legal tech tools directly to over 20,000 businesses. 

Ensuring legal tech success within in-house teams

With over three-quarters of in-house legal professionals having experienced at least one failed tech adoption project, it is clear that the in-house legal industry has a lot to learn about how to best craft the user experience of the process. 

So how do you ensure success when integrating legal tech into an in-house legal team?T here are three key areas to consider:

  • Selection
  • Implementation
  • Continued support

Selecting the right legal tech

1 in 4 in-house legal professionals cited employee resistance as a barrier to the future adoption of legal tech. Given that 1 in 3 also cited it as a reason why legal tech projects fail, it is clear to see how a dangerous cycle appears. Once an employee has suffered one failed legal tech implementation, they are more likely to be resistant to trialing another, resulting in a lower chance of success for future projects. 

To help combat this resistance, getting employees of all levels involved in the selection process is critical. The most successful legal tech projects are often those that aid the most mundane of processes because these processes usually take the most time cumulatively and ultimately present little financial return for the company.

Engaging with employees to discover these processes and how they are currently conducted will mean they are more likely to advocate the legal tech. Successful adoption of legal tech tools could boost team morale, further improving productivity and employee retention. 

Implementation

While most tools will aim to be somewhat self-explanatory, and employees will be able to pick them up as they work, it is often the case that tools won’t be used to their full potential unless adequate training is given.

Training also presents a further opportunity for employee engagement, especially where custom-built tools are being implemented. 

Continued support and development

Gone are the days when a company could upgrade to the newest version of Windows before breathing a sigh of relief that they were sorted for the next several years. Technology is now patched, developed, and upgraded far more often, and legal tech is no exception. 

Asking what more the tool could do or how it could do what it is currently doing better will help shape future development goals. 

Now is a great time to turn to legal tech

While there are risks of failed legal tech integration, the potential benefits are far greater. Equally, as the field grows, adoption will become imperative.

Considering the process of how to implement legal tech, before embarking on it, will help to ensure success.

 

How does Share Vesting work?


If you’re here, you’re likely wondering how share vesting works. In a nutshell, share vesting is the process by which a company gives its equity to its employees or consultants as a means to keep them with the company for a period of time and incentivize them to reach certain established performance goals.

Share vesting is often used when a senior employee or an important advisor or consultant comes on board.

What exactly does share vesting mean?

Share vesting means the company gives its shares to an individual upfront and the shares are subject to the company’s right to buy them back. These shares are known as “unvested shares”. The buyback right extinguishes over time (or upon fulfillment of certain conditions).

The shares that are released from the 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” (check out how a Share Option Plan works by clicking here).

Share vesting enables a senior employee or an important advisor to have equity immediately upon coming on board, but 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. This is how share vesting works.

share vesting

How Share Vesting works

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

Check if the constitutional document of the company restricts the buyback of its own shares. If it does, you may build in some appropriate mechanisms in your Share Vesting Agreement, or you may 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 shareholder of the company. The numbers 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.

What is a Share Power?

A 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.

share vesting

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” that you set in the agreement.

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

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

Also on the Purchase Date, the company secretary issues share certificates in the name of the employee/consultant who then becomes a shareholder of the company. The number of share certificates and the number of 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.

This is how share vesting works. However, there are a few more options available.

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. (Note that the vested shares are not subject to buyback but may be subject to the call option. See Step 4 below.)

The company may exercise its buyback right for three months from the date the employee/consultant leaves the company. The buyback right is deemed to be automatically exercised by the company upon the expiry of the three-month period. 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 (which is 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 canceled. Make sure the company secretary makes the necessary filing 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 decision-making of the company).

The company may exercise the call option for six months from the date when the employee/consultant leaves the company.

The fair value of the shares is determined by the auditors of the company or an independent firm of accountants.

Conclusion

Now you know how share vesting works. All you need to do is get yourself a share vesting agreement, some solid employees to vest shares to, and you’re good to go.

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

BECOME A ZEGAL REFERRAL PARTNER

ABOUT ZEGAL

Zegal is the end-to-end platform for the legal 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 businesses.

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.

READ MORE: UK Startups: Essential Legal Documents

FURTHER READING: Vest Shares to an Employee or Consultant

DOCUMENT: Share Power

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

BECOME A ZEGAL REFERRAL PARTNER

READ MORE: UK Startups: Essential Legal Documents

READ MORE: New April 2020 tax rules in UK and how to comply with IR35

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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The Guide to Hong Kong Corporate Tax Rate [Updated]


So, you’ve decided to set up your business in Hong Kong. What’s not to love about it? With its proximity to the mainland Chinese market and strong government support for innovation, it has emerged as one of the preferred locations for a number of global enterprises. You’ve gone through all the basic paperwork and you’re wondering what’s next for Setting Up A Company in Hong Kong. Taxes are the answer. A daunting task for some, this guide will take you through the important corporate tax regime in Hong Kong.

It might ease your mind a little to first know that Hong Kong generally has a highly attractive hong kong tax regime like profit tax stamp duty in Hong Kong , with low personal and corporate tax rates. In this post, we’ve broken down the essential Hong Kong taxes you have to take note of as you go about establishing your business in Hong Kong.

What is the corporate tax rate in Hong Kong?

The straightforward answer to this is 16.5% on all assessable profits made by a company annually. However, there are different tiers and classifications of tax rates that businesses owners should be aware of! Read on to find out more.

What corporate taxes must I pay as a business owner in Hong Kong?

Companies have to pay what is known as profit tax in Hong Kong at a rate of 16.5% of their assessable profits. Such a corporate tax rate in Hong kong  is considered low when compared against other economic powerhouses in. In Japan for example, the corporate tax rate is 31%, and in South Korea, it is 22%.

In addition to this, companies do not have to pay capital gains tax. Jargon aside, this can be plainly understood to mean a taxation on gains your business makes from the sale of stocks, bonds, precious metals and property, amongst other assets.

Furthermore, businesses do not have to pay value added taxes, or sales taxes. There is also no withholding tax on dividends and interest that are imposed on companies, and no collection of social security benefits. What this means is that dividends from local companies chargeable to tax are exempt from these. On the other hand, it should also be noted that dividends from overseas companies are generally offshore in nature and not subject to tax in Hong Kong.

Who is liable for paying Profits Tax in Hong Kong?

According to the Inland Revenue Ordinance (IRO), a person is liable to pay Hong Kong Profits Tax if the following conditions are met:

  • He carries on a trade, profession or business in Hong Kong;
  • The trade, profession or business derives profits; and
  • The profits arise in or are derived from Hong Kong.

With regard to the last requirement, what is essential to note is that taxation in Hong Kong is based on the territorial source principle. For the uninitiated, this means that companies registered in Hong Kong will only be liable to pay taxes on profits that come from within Hong Kong. It does not have to fork out taxes on profits sourced from outside of Hong Kong.

How do I determine what profits are taxable?

Companies are taxed based on their Assessable Profits, which are the net profits (or loss) [other than profits (or loss) arising from the sale of capital assets] for the basis period, arising in or derived from Hong Kong.

The following sums are excluded from the Assessable Profits:-

  • Dividends received from a corporation which is subject to Hong Kong Profits Tax;
  • Amounts already included in the assessable profits of other persons chargeable to Profits Tax;
  • Interest on Tax Reserve Certificates;
  • Interest on, and any profit made in respect of a bond issued under the Loans Ordinance (Cap. 61) or the Loans (Government Bonds) Ordinance (Cap. 64), or in respect of an Exchange Fund debt instrument or in respect of a Hong Kong dollar-denominated multilateral agency debt instrument;
  • Interest income and trading profits derived from long term debt instruments; and
  • Sums received or accrued in respect of a specified investment scheme by or to the person as:
    1. a person chargeable to Profits Tax in respect of a mutual fund, unit trust or similar investment scheme that is authorized as a collective investment scheme under section 104 of the Securities and Futures Ordinance (Cap. 571); or
    2. a person chargeable to Profits Tax in respect of a mutual fund, unit trust or similar investment scheme where the Commissioner is satisfied that the mutual fund, unit trust or investment scheme is a bona fide widely held investment scheme which complies with the requirements of a supervisory authority within an acceptable regulatory regime.

When is the filing of Profits Tax returns due?

You must file a different Profits Tax Return to the Inland Revenue Department (IRD) depending on the type of business you operate:

  • Corporations (BIR51)
  • Persons Other Than Corporations (BIR52)
  • In Respect Of Non-Resident Persons (BIR54)

Generally, profits tax return should be filed within 1 month from the date of issue. The compliance date of submission is specified on the first page of the Profits Tax Return. The deadline may be extended by 2 weeks if your business is using Electronic Filing.

Learn about the Profits Tax Return due dates.

If you fail to lodge a tax return by the due date or the extended due date, estimated assessment will be issued and you may be required to pay more tax. You may also be subject to penalty proceedings which include payment of penalty, or even prosecuted.

Taxes for Individuals

It is also important to take note of the tax rates for individuals in Hong Kong. This would be important knowledge for both you and your potential employees to be aware of in brief.

The table below effectively sums up the various levels of tax you will have to pay, based on your income bracket.

Income (in HKD currency)

Tax rate

1 – 40,000 HKD

2%

40,001 – 80,000 HKD

7%

80,001 – 120,000 HKD

12%

Above 120,000 HKD

17%

Tax rate on capital gains

0%

Tax rate on income earned overseas

0%

Tax rate on dividends from a Hong Kong company

 

Again, compared to other parts of the world and the Asia Pacific, Hong Kong’s personal income stands at a comparatively low percentage. This makes it even easier for you to build a team, and manage your finances as an employer.

What are tax payment methods in Hong Kong?

There are lot of option for paying tax  in Hong Kong.

Payment in Person:

Besides paying by post or via electronic means, you can also pay tax, Business Registration Fee and Stamp Duty or purchase Tax Reserve Certificates in person at the collection different points. check out collecting points here.

Payment by Post:

 When paying tax, Business Registration Fee, Stamp Duty, and purchasing Tax Reserve Certificates (TRCs) by post, you must ensure sufficient mailing time and postage to make delivery in order.  You should not not send in cash or post-dated cheque.  Underpaid mail will be rejected. Know more.

Payment by Telephone, Internet or Bank ATM

It is safe and convenient to pay by electronic means.  You can pay your tax, Business Registration Fees, Stamp Duty or purchase Tax Reserve Certificates (TRCs) by telephone, Internet or bank Automatic Teller Machine (ATM).  Know more.

The Electronic Tax Reserve Certificates Scheme

The Electronic TRCs Scheme is a “Save for Tax” scheme open to all taxpayers to assist them to build up funds for tax payment. It provides TRC users with a full range of electronic services, including purchase through various electronic channels (monthly bank autopay, telephone, internet and bank automated teller machine) and an auto tax payment service . Know more.

Payment from Overseas

In this case you can pay with and without bank account.

If you have a bank account in Hong Kong, you may pay tax through this bank account by either by cross cheque or by internet. You may send in a crossed cheque of your bank account in Hong Kong (payable to “The Government of the HKSAR”) to pay a tax bill. you should write down on the back of the cheque the tax file number and Shroff Account Number of the tax bill.  

if you do not have bank accounts in Hong Kong, you may pay tax by  Bank Draft, Crossed Cheque in Overseas Bank Account, Arrange Payment in Hong Kong through Related Party or Telegraphic Transfer. Know more.

Consequences of Not Paying Tax On Time

Ordinance shall be paid in the manner directed in the notice of assessment on or before a date specified in such notice. Any tax not so paid shall be deemed to be in default.

If the first instalment is not paid by the date specified on the notice of assessment, the second instalment will become immediately due. The entire balance of the total tax payable in the notice of assessment remaining unpaid shall be deemed to be in default and will be immediately recoverable.

The Commissioner of Inland Revenue will initiate recovery actions [including imposition of 5% surcharge on the entire balance of the demand notice, issue of recovery notice to third party and initiation of legal action, etc] as authorized by Part XII of the Inland Revenue Ordinance for recovering the total outstanding amount.

Summing Up

In sum, taxation is a fairly forgiving affair in Hong Kong for businesses. With low corporate and personal tax rates, it comes as no surprise that it remains as one of the top locations to do business in the Asia Pacific.

This aside, you should also be careful to note that corporate tax is not the only applicable tax for companies in Hong Kong. Other taxes that are typically levied on companies such as property tax and the stamp duty still apply.

Learn about stamp duty in Hong Kong.

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

 

Setting Up a Business in Hong Kong: First Considerations


Okay, so you’ve got a great idea for a business and now you need to put it into practice. But what kind of business structure is best for you? Limited Liability Company, Sole Proprietorship or Partnership?

LIMITED LIABILITY COMPANY

A Limited Liability Company is a separate legal entity from its shareholders, so the liability of the shareholders is limited to the assets in the company, and NOT their personal assets which are protected from business liabilities. A company has a share capital which is divided into a number of shares, which are held by the shareholders, who are entitled to a share of the profits and receive a dividend corresponding to their respective percentage. Continue reading…

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