Doing Business in Hong Kong
Belinda Wong
Belinda Wong is currently director of
Leader Corporate Services Limited. She
is the author of Hong Kong Company
Secretary’s Practice Manual and Hong
Kong Company Secretary Checklist.
She is a fellow member of the Hong
Kong Institute of Directors, associate
member of the Hong Kong Institute
of Chartered Secretaries as well as the
Hong Kong Securities and Investment
Institute. She holds a master’s degree
in business administration (University
of Strathclyde, UK) and a bachelor’s
degree in social sciences (Chinese
University of Hong Kong). She can be
reached at belinda@lecorp.hk
© Business Expert Press 978-1-94819-819-6 (2019)
www.businessexpertpress.com
Abstract: This article provides a road map for conduct-
ing business in Hong Kong with an emphasis on the legal
and tax compliance requirements as well as a glimpse of
social life.
Keywords: companies ordinance, cyberport, Hong
Kong Science and Technology Park, Hong Kong Special
Administrative Region, Hong Kong Stock Exchange,
International Financial Centre
Geographical Location
Hong Kong (HK) is a small city located at the southern
tip of the Guangdong Province (GD) of China, with a
population of just over 7 million. It is a special adminis-
trative region (SAR) of China. People can visit ­Shenzhen
and GD by train, bus, private car, ferry, and other modes
of transportation. The Guangzhou–Shenzhen–Hong
Kong Express Rail Link having become fully operational,
the physical distance between HK and Mainland China
has become even shorter. The Hong Kong Z ­ huhai M
­ acau
Bridge has now been opened for traffic. This bridge
shortens the travel time between HK and Zhuhai/­
Macau significantly. These new transportation facilities
enable citizens to travel from one city to the next within
an hour. There should be more human interactions to
improve mutual understanding and eliminate cultural
differences.
HK is an international city with an airport located on
the Lantau Islands. People can fly out of HK and land in
most other Asian cities within 4 hours. Communication
facilities can be easily arranged, with diverse choices of-
fered by a number of telecommunication companies.
HK as an International Financial Center
As of July 2018, over 1.4 million companies were incor-
porated under the Companies Ordinance (Cap 622) (CO)
and over 10,000 foreign companies registered as non-HK
companies. Some of these non-HK companies are used
for listing in the Stock Exchanges of Hong Kong Limited
(HKEx). HK has been among the top five international
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 Doing Business in Hong Kong
financial centers for the past decade. Com-
panies from more than 20 jurisdictions can
seek listing in HK.
To enable HK to remain competitive,
HKEx has introduced the following new
rules in the year 2018:
■■ Companies with weighted voting rights
granted to their senior executives who are
considered crucial to the business growth
of their companies can be listed in HK.
The weighted voting right is capped at
10 times. No further issue of this type of
shares is allowed after listing. The author-
ity of the corporate governance committee
of these companies is enhanced to ensure
that the interests of minority sharehold-
ers are safeguarded.
■■ Biotechnology companies with no revenue
but whose core products are regulated or
to be regulated by regulatory authorities
in the US/UK/other countries can seek
listing.
■■ Greater China companies can also have
secondary listing in HK.
■■ A delisting arrangement is now in place
for those listed companies whose shares
have been suspended for trading for 18
months or more.
The new listing regime attracts quite a
number of innovative and biotech compa-
nies going for listing. This will definitely
help HK remain a leading international fi-
nancial center.
The Chinese Gold & Silver Exchange So-
ciety (CGSE) has also boosted HK as one of
the leading players in the precious metal
market. HKEx has acquired the London
Metal Exchange and also registered a sub-
sidiary in Qianhai, Shenzhen. Since CGSE
has a foothold in Qianhai, it is expected
that there should be some synergies be-
tween the Qianhai subsidiaries of HKEx
and CGSE. More metal trading products are
expected to be in the market in the future.
On the other hand, the Securities and
Futures Commission has introduced the
open-ended fund companies with a view to
2 © Business Expert Press 978-1-94819-819-6 (2019)
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expanding the asset management industry.
More choices are available to the industry.
Opportunities
Belt and Road Initiative (Initiative)
The Belt and Road Initiative was first pro-
posed by President Xi Jinpeng in October
2013 in Indonesia to enhance the connec-
tivity and cooperation among the countries
in the land-based Silk Road Economic Belt
and the oceangoing Maritime Silk Road. Up
to now, more and more countries and ju-
risdictions have signed governmental co-
operation agreements to participate in this
Initiative. The Government of the Hong
Kong Special Administrative Region (HK-
SAR) also sees this as an engine of growth
and development. HK can have a leading
role in the financing of infrastructure proj-
ects besides capitalizing on the professional
knowledge of the talent pool, including
expertise in designing and building infra-
structure. HKSAR has stepped up commu-
nication with the central authorities for a
deeper understanding of the policy direc-
tion and implementation of this Initiative.
Coordination with enterprises and cham-
bers of commerce in HK to explore busi-
ness opportunities is ongoing.
Various government departments and
statutory bodies are pushing hard on this Ini-
tiative. The Hong Kong Monetary A ­ uthority
Infrastructure Financing Facilitation Office
was set up with a mandate to facilitate in-
frastructure investments and other types
of investments. This is a platform for the
exchange of information and marketing as
well as development of products. So far,
seminars, summits, and discussions have
been held among interested parties with a
view to advancing some of the projects.
The Hong Kong Trade Development
Council (HKTDC) has also echoed the HK-
SAR’s efforts and has been holding Belt and
Road Summits, during which free advisory
service and business matchings are also ar-
ranged for the participants. A HKTDC Belt
and Road Portal is set up to provide infor-
mation to the general public.
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 Doing Business in Hong Kong
Greater Bay Area
Greater Bay Area is the scheme to link up 11
cities in the GD region, of which 2 are SAR
(Macau and HK) and 9 are cities, namely,
Shenzhen, Guangzhou, Zhuhai, Foshan,
­Jiangmen, Zhaoqing, Huizhou, Dongguan,
and Zhongshan. These cities are in different
stages of development, with HK, S­ henzhen,
and Guangzhou in the top tier, as part of a
national plan in which each city builds up
its own niches while working with other cit-
ies to enhance the whole region’s economic
strength and competitiveness.
This scheme was included in Premier Li
Keqiang’s work report in 2017. Since then,
there have been meetings among the sen-
ior officials of these cities to work out an
implementation plan to allow the residents
and goods to move more freely within the
region. HK aims to further cement its pos-
ition as an international financial center
and innovation hub to create more busi-
ness and job openings not only for locals
but also for expatriates.
ASEAN
In 2017, HK entered into a free trade agree-
ment and an investment agreement with
ASEAN (Association of S­outheast Asian
­Nations), which has 10 member ­countries:
Brunei, Cambodia, Indonesia, Laos, M
­ alaysia,
Myanmar, Philippines, ­Singapore, ­Thailand,
and Vietnam.
ASEAN is HK’s second largest trading
partner, after the Mainland of China. As
many doors have been opened and tariffs
lowered, interest in expanding business
with and investing in these countries is
likely to be stirred.
Legal Requirements
Incorporation
One of the reasons why HK has so many
companies is its simple corporate legal re-
quirements. HK follows the common law
legal system. Management of a company
is in the hands of the board of directors.
The rights and obligations of its members
are defined in the CO and the articles of
© Business Expert Press 978-1-94819-819-6 (2019)
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association of the company. Most busi-
nesses are conducted through private com-
panies limited with share capital. This
type of companies requires only one direc-
tor, being a natural person, and one share-
holder who can also be the director. The
shareholder can be a corporation. A min-
imum of one share has to be issued on in-
corporation, and it can be denominated in
any currency. No minimum paid-up capital
or working capital is needed. The company
can be funded through director or share-
holder loan. There is no residency require-
ment for the director and/or shareholder.
There is a need to appoint a company
secretary and for the maintenance of a reg-
istered office address. If the sole director is
also the sole shareholder, the company sec-
retary must be another individual or cor-
poration not solely controlled by the same
person. These services can be provided by
a trust or company service provider (TCSP)
for a fee. On March 1, 2018, all TCSPs must
register with the Registry of the TCSP.
Names and addresses of the TCSP can be
found on the website of this Registry. Any-
one carrying on a TCSP business without a
license is in breach of the laws, and legal
proceedings are a possibility.
HK has always been known for its high
rental costs. However, unless a company
wishes to rent Grade A office space and
unless its director and staff live in luxuri-
ous residential areas, rental costs could
be found to be reasonable. There are lots
of coworking spaces available to meet the
budgets of small- to medium- sized compa-
nies and startups.
Nominee director or shareholder is not a
popular arrangement in HK. Effective from
March 1, 2018, any person with a share-
holding of more than 25 percent or entitled
to more than 25 percent profits or who has
controlling power over the appointment or
removal of the board of directors will be
deemed to be a controller, and his or her
personal particulars have to be entered into
the Significant Controllers Register. This
register is available for inspection only by
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