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hong kong subsidiary

Setting up a subsidiary company in Hong Kong can be a strategic move for expanding your business presence in Asia. With its dynamic economy, business-friendly environment, and attractive tax system, Hong Kong offers great opportunities for international companies seeking to establish themselves in the region. 

In this article, we will outline four essential steps to help you successfully establish a Hong Kong subsidiary. By following these steps and seeking professional guidance, you can navigate the process efficiently and lay a solid foundation for your subsidiary’s success in Hong Kong’s thriving business landscape.

Establishing a Hong Kong Subsidiary

Establishing a Hong Kong subsidiary offers a valuable approach to expanding business activities in Asia. By registering a private limited company, the subsidiary can be owned by a local or foreign corporate entity. 

This arrangement ensures that the subsidiary operates as a distinct legal entity, limiting the liability of the parent company to its contributed share capital. A significant benefit of a Hong Kong subsidiary is its eligibility for the various tax advantages accessible to locally incorporated companies only.

Hong Kong Subsidiary: Overview of Important Facts and Requirements

Setting up a Hong Kong subsidiary involves complying with certain requirements and understanding key facts about the process. The following details should be considered:

Directors and Shareholders

A subsidiary must have at least one director, who can be an individual or body corporate, above 18 years old, and free of bankruptcy or malpractice convictions. 

In addition, it is necessary to have at least one shareholder for the Hong Kong subsidiary, with a maximum cap of 50 shareholders. These shareholders can include individuals or corporate entities, both local and foreign, who must be above the age of 18.

Auditor and Company Secretary

It is a requirement for a Hong Kong subsidiary to engage the services of an auditor who possesses a valid practicing certificate issued by The Hong Kong Institute of Certified Public Accountants. Additionally, appointing a resident company secretary, whether as an individual or a corporate entity, is obligatory to ensure adherence to regulatory standards. The corporate body of the company secretary shall be the licensee of Trust or Company Service Provider (TCSP).

Registered Address

The registered address of the subsidiary needs to be a physical location rather than a PO Box. The permissible options for the registered address include a commercial or a home office, as long as it meets the requirement of a physical address.

Compliance and Reporting

To ensure compliance, it is essential to submit audited financial statements and tax returns to the appropriate tax authorities on an annual basis. Additionally, filing an Annual Return with the Companies Registry is a mandatory requirement. It is advisable to hold an Annual General Meeting (AGM) each year to address the company’s matters.

4 Steps to Successfully Set Up a Hong Kong Subsidiary

1. Choose the type of company

Select the type of company for your Hong Kong subsidiary, typically a private limited company, to benefit from limited liability and operational flexibility. Ensure the chosen name complies with the Companies Registry’s approval requirements and conduct a thorough name search.

2. File Articles of Incorporation

File the Articles of Incorporation with the Companies Registry through the e-Registry platform. Submit the required documents, including the Incorporation Form and Articles of Association.

3. Application for the business registration certificate

This is a prerequisite for registering a Hong Kong subsidiary. The business registration certificate will issue by Business Regisration Office once the company is incorporated,  display the certificate to signify proper registration and compliance with legal requirements.

4. Open a corporate Bank Account

Once the registration process with the Companies Registry and Inland Revenue Department is finished, proceed with the establishment of a corporate bank account

It’s important to note that different prominent banks in Hong Kong have diverse protocols and prerequisites for opening an account. Seek guidance from your registration assistance firm to select a bank that suits your needs, considering factors such as reputation, services, fees, and accessibility.

What are Hong Kong Subsidiary Laws?

When establishing a subsidiary company in Hong Kong, it’s important to note that subsidiaries operate as separate legal entities from their parent companies. This means that the parent company is not held liable for the actions of the subsidiary. The management and operations of the subsidiary must comply with the laws set by the Companies Registry. 

The subsidiary will have its independent accounts, engage in separate transactions, and be responsible for any losses or benefits incurred.

Benefits of Setting up a Hong Kong Subsidiary

Setting up a subsidiary in Hong Kong offers key advantages. Firstly, it operates independently, allowing flexibility to align with the parent company’s goals and adapt to the local market. Secondly, Hong Kong’s corporate taxation is simple, with a low flat tax rate of 16.5%, enhancing cost savings and profitability.

Independence from the parent company enables agile decision-making and tailored strategies for the local market. Additionally, a Hong Kong subsidiary provides limited liability, safeguarding assets for founders and the parent company.

With its distinct management structure, a subsidiary ensures efficient operations, independent financial management, and local control. Leveraging these benefits, establishing a Hong Kong subsidiary establishes a strong foundation for business expansion and accessing new regional opportunities.

How We Can Help – Our Company Secretary Services

Premia TNC offers professional company secretary services to support your subsidiary company in Hong Kong. Our experienced team ensures compliance with Companies Registry requirements, handling administrative tasks such as maintaining registers, filing annual returns, and facilitating structural changes.

Choose Premia TNC as your company secretary partner and benefit from our expertise and commitment to excellence. Contact us today for a FREE consultation and streamline your subsidiary’s operations in Hong Kong with confidence and peace of mind.

Hong Kong Subsidiary – FAQs

1. What is a Hong Kong subsidiary?

A Hong Kong subsidiary refers to a privately owned company that is registered in Hong Kong and has another local or foreign corporate entity as its shareholder. It functions as an independent legal entity separate from its parent company, which grants it the advantages of limited liability and the tax benefits that apply to locally registered companies.

2. What are the requirements for registering a Hong Kong subsidiary?

The requirements for registering a Hong Kong subsidiary include choosing a company name that conforms to the Company Name Guidelines, having at least one director and one shareholder (up to a maximum of 50), appointing a resident company secretary, having a physical registered address, and fulfilling annual compliance obligations.

3. What are the tax obligations for a Hong Kong subsidiary?

Hong Kong subsidiaries are obligated to comply with the tax regulations and rates that apply to all private limited companies in Hong Kong. At present, the corporate tax rate stands at 16.5% on assessable profits (if the taxable profit not exceed 2million HKD, the tax rate will be 8.25%). Nevertheless, there exist several tax incentives and exemptions that can assist in mitigating the overall tax liability.