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HK Company

Benefits of Doing Business In Hong Kong


Hong Kong becomes a special administrative region (S.A.R.) of the People's Republic of China since 1st July 1997. Under the terms of the Joint Declarations signed between Great Britain and China, Hong Kong maintains its capitalist economic structure and high degree of autonomy as well as its distinct features from the rest of China. The infrastructure of Hong Kong including its legal, administrative and government machinery remained unchanged and is basically a British system which has been practising in Hong Kong since it became a British Crown colony in 1842.


There are a lot of advantages of doing business in Hong Kong and we simply list out a few as follows :-

  •        • geographical location : as a gateway to the hinterland of mainland China which is a vast market for consumption and capital goods
  •        • political and social stability
  •        • efficient and simple government structure
  •        • a tax regime with low tax rates
  •        • free port : no import and export tariffs, no sales tax, no exchange control
  •        • Languages : English is predominantly used in commercial activities and government administration
  •        • well-developed infrastructure such as Mass Transit Railway System, New International Airport at Chek Lap Kok, New Port and Container Terminal facilities - you feel very convenient and efficient
  •        • Well-educated and industrious workforce


  • Why Form a Hong Kong Company ?

  • These are a lot of advantages of trading with a Hong Kong limited company:

  • A limited company is a corporation, i.e. a separate legal person distinct from the members, whereas a partnership is merely the aggregate of the partners and a sole proprietor is the same legal person in business and personal life

    The result is :-

    1.      a.The debts and contracts of a limited company are those of the company itself and not those of the members, whereas in the case of a partnership every partner is jointly and severally liable with the other partners for all the firm debts and obligations incurred while he is a partner.
    2.      b.A limited company exists until it is wound up. It is not affected by death, bankruptcy, mental disorder or retirement of any of its members.
    3.      c.The property of a limited company belongs to and is vested in the company. It is not affected by change of ownership of shares in the company. In a partnership the property belongs to the partners and is vested in them. This means that there are changes of ownership of, and in the formal title to, the firm’s property from time to time on the death or retirement of a partner or trustee. In a company, transfer of shares does not affect the title of the company’s assets.
    4.      d.Subject to any restrictions in the articles, shares in the company may be transferred easily or mortgaged without the consent of the other shareholders.
    5.      e.Limited liability for the shareholders. Liability in the case of a company limited by shares is limited to the amount unpaid on the shares held.
    6.      f.Management of the company can be separate from ownership and therefore provides continuity after shareholder changes.
    7.      g.The taxation of companies is often more flexible than other types of organisations. The scope of deduction for expenses is wider than that for a sole proprietor or partnership..
    8.      h.A limited company is comparatively easier than a proprietor or partnership to raise capital to finance its operations.


    And the disadvantages

    1.      a.More formalities to be observed and therefore more publicity, e.g. filing of articles of association, keeping company registrar up to date with changes, filing of annual return.
    2.      b.A limited company must keep accounting records and must appoint an auditor who must be a member of the Hong Kong Society of Accountants and hold a practising certificate. The tax authorities require audited accounts to be filed with the tax return.

 

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