Mitsuba International - Requirement of a Limited Company in HK

Knowing More of Limited Company
The following sections cover more in depth information of a limited company in Hong Kong. These information can be your reference when you form a limited company in Hong Kong. If you have enquiry, please feel free to contact us. Structure of a Limited Company Legal Status and Liability Necessary Documents to be Kept and Filed

Structure of a Limited Company
Limited company, where the liability of its members is limited by shares, is the most widely adopted form of legal entity in Hong Kong. All limited companies have to register with the Companies Registry, and have to obtain Business Registration Certificate within one month of commencement of operation. According to the Companies Ordinance, from 13/February/2004, a limited company must have at least 1 director, 1 shareholder and 1 company secretary. Directors can also act as shareholders in the same company. Directors and shareholders are not necessary to be Hong Kong resident, but the company secretary must be a Hong Kong resident with a valid Hong Kong I.D. Card or a body corporate having its registered office or place of business in Hong Kong. A private limited company has 1 (min.) - 50 (max.) shareholders (excluding members); a public limited company has 2 (min.) to unlimited shareholders.
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Legal Status and Liability
A limited company has a separate legal identity and is therefore independent of its owners. The liability of the members of a limited company is limited to the amount (if any) unpaid on their shares. A limited company has greater facilities for borrowing because it can borrow on debenture. It can also create floating charges to secure its loans, thus making it a more attractive prospect to a potential lender. A limited company is subject to provisions in the Companies Ordinance governing the raising and maintenance of its share capital. A limited company is subject to a number of formalities, including the requirement for an audit and the need to submit an annual return. Further, it is subject to profits tax and property tax (if holding a property in Hong Kong).
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Necessary Documents to be Kept and Filed
The formation of a limited company is by registration under the Companies Ordinance and must therefore comply a number of formalities. A limited company must submit documents described as the below:
1.	*Annual Return -* Every limited company shall complete an annual return making up to its anniversary date (according to date of incorporation of the company) in each year. The said annual return shall then be required to be filed with the Hong Kong Companies Registry within 42 days after the company's anniversary date at a prescribed normal filing fee. If an annual return is not filed within 42 days after the company's anniversary date, progressive filing fees up to the maximum of, currently, HK$3,480.00 will be applied to an annual return which is filed more than nine (9) months after the company anniversary date.
2.	Business Registration Fee - Business Registration (BR) is for 2 main purposes: to provide business information for opening of tax files, and to provide business information to enable members of the public to know with whom they are going to deal with. Under the provisions of the Business Registration Ordinance (Cap. 310), every person or company carrying on any business must register his business within 1 month of the commencement of the business. Failure to do so may result in a fine of $5,000 and imprisonment for 1 year. The current BR Fee is discounted to HK$450 for 1 year (discounts valid to 31-July-2010).
3.	Tax Return - Every limited company has to furnish Profits Tax Return to the Inland Revenue Department (IRD) every year. If a company cannot provide auditors' report and Profits Tax Return within a stated period of time, IRD can assess the tax liability of the company by estimation. In order to avoid excess tax liabilities, directors should prepare the accounts of the company as soon as possible and hand to the auditor for preparation of auditors' report. A newly incorporated company will receive its first Profits Tax Return in 18 months after the date of commencement of business or the date of incorporation.
4.	Auditors' Report - Every limited company must complete fully and properly all items in Profits Tax Return together with the following documents (collectively called "Supporting Documents"): a certified true copy of Balance Sheet, Auditor's Report where required by Hong Kong or foreign Law or has otherwise been prepared and Income Statement in respect of the basis period; a tax computations with supporting schedules showing how the amount of Assessable Profits (or Adjusted Loss) has been arrived at; and other documents as specified in the Notes and Instructions to Return.
5.	Annual General Meeting - Every limited company's first Annual General Meeting (AGM) must be held within 18 months of incorporation. Unless the Registrar of Companies agrees in writing to an extension in a particular case, the period between AGM must not exceed 15 months.
6.	Books of Accounts and Business Records - Every limited company including a person carrying on a business or profession in Hong Kong is required to keep sufficient books of accounts and business records in English or Chinese to enable the assessable profits of such business or profession to be readily ascertained. The penalty for failing to comply without reasonable excuse is at maximum HK$100,000.00. Every company shall keep proper books of accounts with respect to: all sums of money received and spent by the company and the matters in respect of which the receipt and expenditure takes place all sales and purchases of products/services by the company the assets and liabilities of the company
7.	Notification of Employment - Every limited company commences to employ an individual in Hong Kong is required to give written notice to the Commissioner of Inland Revenue Department no later than 3 months after the date of commencement of such employment, stating: the full name and address of the individual the date of commencement the terms of employment