B.String Business Consulting Ltd.

international Management cONSULTING

   Limited Companies

      ·Advantages
       ·Setup requirement
     ·Setup procedure and required time
      ·Setup cost
      ·Maintenance requirement & cost
      ·Comparison with BVI companies
      ·Bank account opening
      ·Closing a company - method & cost
      ·Company / business / share transfer - how to & the cost

  
   Advantages

  People form company to achieve different purpose, such as tax planning, risk diversification, investment, market entry    etc.  We will discuss these further in separate sessions [ Consulting ] & [ F A Q ].

  Generally, Hong Kong companies are being used because of following advantages:

     ·With British legal system as background which is well adopted.
     ·With English and Chinese as bilingual legal language.
     ·With very low tax rate.
     ·Tax exempt for income not incurred in Hong Kong (offshore income).
     ·With very stable social and political environment.
     ·With very active and freedom in financial activities. No restriction in fund transfer to and from most part of the world.
     ·Close to and with excellent relationship with Mainland China.
     ·With huge supply of high quality manpower.
     ·Being international center of information exchange and transportation hub.
     ·Save legal and government fee when transfer of asset is effected by transfer of shares of a company holding the           asset,  rather than transfer of the title of the asset directly.

   Setup requirement

     ·Minimum 1 shareholder.
     ·Minimum 1director.
     ·Directors & shareholders can be same person.
     ·No nationality restriction for shareholders and directors.
     ·Corporate shareholder and director is allowed.
     ·Minimum subscribed share capital is HK$1.
     ·Registered address in Hong Kong.
     ·One Company Secretary and should either be Hong Kong resident or Hong Kong limited company.
     ·Company name should not be same as those already in company register and can be
         ·only English
         ·only Chinese
         ·English plus Chinese (but in daily use, quoting one of them is enough)
         ·For detail about company name registration, please refer to [ F A Q ].

   Setup procedure and required time

    1.Tailor made company

    2.Ready made company

   Setup Cost

  ·contact : info@stringbc.com

   Maintenance requirement & cost

Some of the key maintenance requirement of a Hong Kong limited company are:

  ·Duty to Business Registration Office (BRO)
        1. Renew business registration.

  ·Duty to Company Registry (CR)
        1. File annual return once a year even though there is no change during the year in the shareholding, director or             other information of the company.
        2. During the year, file to the CR of any changes in the shareholding, directors etc, that need to be filed according
            to the Companies Ordinance. The information need to be filed and ready for public search in order to protect the             interest of the company and the public.

  ·Duty to Inland Revenue Department (IRD)
         1. File tax return to the IRD once a year (Normally auditor's reported should be submitted together with tax returns).
         2. Maintain proper accounting books and records to produce financial statements for tax return filing for 7 years.

         3. Common misunderstanding
          ·Even a non-active company need to file tax return. It is the IRD to assess whether a company need to pay
                 tax or no need to file tax return.              
          ·Proper books and records need to be maintained in order to support any financial statements. IRD may ask                  how your accounting system works and how you keep your records. If it is not properly handled, IRD may be                  suspicious of the figures in financial statements. In certain situation, penalty or / and estimated assessment
                 will be levied.

    Hong Kong company - annual maintenance cost

   Comparison with B V I companies

Generally, Hong Kong company is more suitable for doing business while BVI company is more suitable for asset holding. However as situation of client varies case-by-case, professional advice should be sought before making decision. Below comparison is highlight of certain areas and help client to consider using which type of company.

  1. Setup requirement
  2. Purpose and Benefit
  3. Cost in formation, maintenance and cancellation

   Closing a company - method & cost

There are several methods to close a limited company. However, they are not free for the choice of shareholders and directors. Specific conditions need to   be met for the applicability of different method:

De-registration

This is the least costly way to bring a Hong Kong limited company to an end. The fee is HK$2,000
  (including government fee of HK$420+HK$350 =  HK$770) but some criteria applies:

   ·ceased business
   ·no outsider liability
   ·no outstanding liability to government, both in money and in document filing, e.g. tax return
   ·director to guarantee meeting criteria and keep record for future purpose

Winding up

  There are different types of winding-up:

     Members voluntary winding-up

          Condition:

            ·Consent of and initiated by all members
            ·Financially solvent

          Fee: from HK$20,000 (including government and disbursement of around HK$12,000)

     Creditors voluntary winding-up

          Condition:

            ·Approved and initiated by directors
            ·Financially in-solvent
            ·Not via court proceeding
            ·Liquidator appointed by directors or by creditors

          Fee: from HK$20,000 (including government and disbursement of around HK$12,000)

     Creditor Compulsory winding-up

          Condition:

           ·Initiated by creditors
           ·Financially in-solvent
           ·Court proceeding
           ·Provisional / Liquidator appointed by court

          Fee: Application fee payable to court around HK$10,000 plus service fee at discussion.

   Company / business / share transfer - how to & the cost

Being a shareholder of a limited company, you can transfer your business in 2 different ways:

     ·Transfer the shares of the limited company;
     ·Transfer the business operating by the limited company.

Transfer of shares is always the simplest method and in most cases, the lowest in cost. For example, being a shareholder of HSBC (the Hongkong Bank and listed in Hong Kong Stock Exchange), you transfer your shares easily without the need of caring what HSBC is actually doing. The only thing you need to do is knowing the value of the HSBC you are transferring, because the stamp duty is based on this.

For a private limited company, you need to prove to the stamp office how much the shares is worthing. Usually, this can be done by the transfer agreement between buyer and seller, the audited financial statements or / and with a recent management account.

Stamp duty is charged at HK$1 per HK$1,000 of share value.

Transfer of share is a deal between shareholders.

Transfer of business is more complicated because your company will remain under your ownership. The transfer does not concern you as a shareholder. It is a transaction between your limited company and another company.

As situation differs very much in each specific case, it is advisable to contact us for detail suggestion. However, it is worthwhile to highlight that transfer of business need to comply with the law "Chapter 49 - Transfer of Business Ordinace" in order to protect the interest of both buyer and seller.