Guide to Setting up a Business in Hong Kong (3) - Hong Kong Branches of Foreign Companies

1. Introduction

Requirement to register

Foreign companies must register a Hong Kong branch with the Registrar within one month of "establishing a place of business in Hong Kong". In practice, it is sufficient if the application for registration is lodged with the Registrar within one month. It is common for foreign companies to complete the registration of a branch before actually establishing a place of business in Hong Kong.

The obligation to register with the Registrar discussed in this paragraph is separate from the obligation under paragraph 3 to register businesses with the Business Registration Office.

Representative office

A foreign company which has a presence in Hong Kong but does not create legal obligations (i.e. a representative office) is not considered as having established a place of business in Hong Kong for the purpose of registration with the Registrar. Advice should therefore be sought as to whether, based on the nature of the business, in a particular case it is necessary to register a "representative office" as a branch.

Name of company in Hong Kong

Foreign companies can and usually do register the Hong Kong branch in their own name. However, the Registrar has power to require a foreign company which is carrying on business in Hong Kong under its corporate name to use a different name under certain circumstances. This power must be exercised within six months of the date of registration of a branch or the date of registration of any change in the name of the foreign company.

Display of name of company

Foreign companies which register a branch must conspicuously exhibit at every place in Hong Kong where they carry on business, and include on their letterhead, the name of the company and the place of incorporation of the company. Where the liability of the shareholders of the foreign company is limited, this must also be stated. These requirements are generally complied with by the use of the words, "[Name of Company] incorporated in [place] with limited liability".

Continuing obligations

Once registered in Hong Kong, a foreign company has continuing maintenance obligations in relation to the Registrar and the Commissioner of Inland Revenue. The obligations in relation to the Registrar fall into two categories: the updating on a case by case basis of information filed with the Registrar and the filing of certain documents with the Registrar on an annual basis. The continuing obligations in relation to the Commissioner relate to the registration of each of the company's businesses and the filing of a profits tax return.

2. Registration procedure

Documents required for registration

To register a branch, an application for registration together with the following documents must be filed at the Companies Registry:

(1) certified copy of the charter, statutes or memorandum and articles of association (or equivalent) of the foreign company or if it is not in English or Chinese a certified translation hereof

(2) list in English or Chinese in the specified form of the directors and the secretary (if any) of the foreign company including, in the case of each individual:
(a) given name and family name in full (without initials) with Chinese characters where appropriate
(b) any former names
(c) any aliases
(d) usual residential address
(e) Hong Kong identity card number or the number and issuing country of passport and, in the case of a body corporate, corporate name and address of registered or principal office

(3) names and addresses in English or Chinese of either one or more persons who are resident in Hong Kong (which expression does not include a body corporate or a firm other than a solicitor corporation, a company which is for the time-being registered under the Professional Accountants Ordinance or a firm of solicitors or professional accountants) who are authorised to accept, on behalf of the foreign company, service of process and any notices required to be served on the foreign company (the company's authorised representative).

(4) address of the principal place of business of the company in Hong Kong

(5) the addresses of the principal place of business (if any) and the registered office (or equivalent) of the foreign company in its place of incorporation

(6) certified copy of the foreign company's certificate of incorporation or such other evidence of incorporation as the Registrar deems sufficient together with a certified translation into English or Chinese if the original is not in English or Chinese

(7) unless exemption is granted, a certified copy of the latest accounts of the foreign company in the form required by the law of the place of its incorporation or, if no such form is in force, in the form in which the accounts are submitted to the shareholders of the company - the accounts must also be confirmed to be in such form by a lawyer or an auditor. If the accounts in their original form are not in English or Chinese, only a certified translation hereof into English or Chinese is required.

Authorised representative

Often the chief local executive is appointed as the authorised representative of a foreign company but our firm can also provide this service.

Any translation required to be filed at the Companies Registry must be certified by the translator as correct. The translator must also be certified by a person fitting one of the descriptions in Guide to Setting up a Business in Hong Kong (3) - Hong Kong Branches of Foreign Companies as being a person competent to translate the document into English or Chinese (as appropriate). The Registrar will usually also require that:

(1) all translator's and certifier's signatures are hand written and not mechanical

(2) all certifications are in English or Chinese

(3) a copy of the Certificate of Incorporation or its equivalent is attached to the translation and identified as the original from which the translation was made

(4) any certificate of competence expressly refer to the competence of the translator and not simply the usual chop or stamp of the person certifying

Certification of translator

Those persons able to certify the skills of a translator are as follows:

(1) if the document is translated in Hong Kong - a Hong Kong notary public or a Hong Kong solicitor

(2) if the document is translated outside Hong Kong - a notary public in the place where the translation is made or such other person as may be specified by the Registrar in exceptional circumstances and on a case by case basis

(3) Where the Registrar is satisfied that compliance with the above provisions is not possible, the Registrar may allow the translation to be duly certified as a true translation by certain officially recognised translators instead.

Certification of documents

Where certified copies of documents are required, the copy should be certified as a true copy in the place of incorporation of the company by one of the following persons:

(1) an official of the government to whose custody the original is committed or

(2) a notary public of such foreign country

(3) Where the Registrar is satisfied that compliance with the above provisions is not possible, the Registrar may allow copies of documents to be duly certified as true copies on oath by a director, secretary, manager or authorized representative of the company, before a person having authority to administer an oath in the place where the certification is made.

Charges/mortgages

If a foreign company has, when it establishes a place of business in Hong Kong, property in Hong Kong which is subject to a registrable charge the foreign company must, within 5 weeks after the date on which it establishes a place of business in Hong Kong, send to the Registrar the following documents for registration:

(1) particulars of the charge and mortgage

(2) an original or copy of the instrument creating the charge or mortgage.

Branch registration certificate

It usually takes about 22 working days for the Registrar to issue the "Certificate of Registration of Oversea Company".

3. Maintenance - annual requirements

Annual filing obligations

Subject to it being exempted from the obligation to do so, every year the foreign company must file the following documents with the Registrar:

(1) a return confirming that there has been no alteration, other than those of which the Registrar has already been notified, in the documents and particulars which were filed with the Registrar at the time of registration of the branch

(2) certified copies of each of the following documents or certified translations if the original is not in English or Chinese:
(a) balance sheet as at the end of the company's last financial year
(b) profit and loss account for the company's last financial year
(c) group accounts, if any, in respect of the company's last financial year
(d) directors report, if any, in respect of the company's last financial year
(e) auditor's report, if any, on the balance sheet and the accounts.

Certification of accounts

Accounts and reports requiring certification must be certified by a director, the secretary or other principal officer of the company.

Exemption - US companies

In the case of companies incorporated in the United States, the Registrar has determined that an exemption from the annual filing requirements will be granted if the company can satisfy each of the following requirements in respect of the entire year for which the exemption is claimed:

(1) the company has been either a wholly-owned subsidiary of another company or the actual number of its members has not exceeded 35 and

(2) there has been no provision in its constitution, articles of association or bye-laws for the creation or issue of bearer issues or share warrants, and its shares have not been transferable by delivery and

(3) the company has not, under the law of its place of incorporation or origin, been obliged to publish its accounts or to deliver copies to any person in whose office they may be inspected as of right by members of the public

Exemption - other foreign companies

In the case of foreign companies incorporated other than in the United States, the Registrar has determined that an exemption from the annual filing requirements will be granted if the company can satisfy each of following requirements:

(1) the company has no more than 50 members and

(2) its shares are not listed on any official stock exchange and the company is prohibited from offering and has not offered any shares or debentures to the public and

(3) there is no power in its constitution to issue bearer shares or share warrants and

(4) shares in the company cannot be transferred merely by delivery and

(5) the company is not required by the law to file accounts or to make its accounts available for public inspection at its place of incorporation

Application for exemption

In order to apply for an exemption, a certificate must be provided by either

(1) the auditor or the lawyer of the foreign company practising in its place of incorporation or

(2) an "independent" solicitor or auditor practising in Hong Kong

The Registrar has a discretion as to whether or not to grant a foreign company an exemption and the practice of the Registrar is to deal with applications for exemption on a case by case and a year by year basis.

Tax authorities

It is important to note that the exercise by the Registrar of the discretion does not exempt the company from any obligation to file its accounts with the Hong Kong tax authorities if business is being conducted in Hong Kong

4. Maintenance - changes in particulars

Filing obligations.

Foreign companies registered in Hong Kong must deliver a return to the Registrar within a fixed period in the case of any change to any of the following particulars in relation to the company:

(1) its constitutional documents

(2) the details of its directors (and secretary where relevant)

(3) the details of its authorised representative(s)

(4) the address of its registered office or its principal place of business

(5) its corporate name

Liquidation

If liquidation proceedings against a foreign company registered in Hong Kong are commenced in its place of incorporation, notice of that fact and of the appointment of any liquidator must also be filed with the Registrar.