Hong Kong

Hong Kong is one of two special administrative regions (SARs) of the People's Republic of China (PRC), the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbor. With a land mass of 1,104 km2 (426 sq mi) and a population of seven million people, Hong Kong is one of the most densely populated areas in the world. Hong Kong's population is 95 percent ethnic Chinese and 5 percent from other groups. Hong Kong's Han Chinese majority originate mainly from the cities of Guangzhou and Taishan in the neighboring Guangdong province.

Hong Kong became a colony of the British Empire after the First Opium War (1839–42). Originally confined to Hong Kong Island, the colony's boundaries were extended in stages to the Kowloon Peninsula and the New Territories by 1898. It was occupied by Japan during the Pacific War, after which the British resumed control until 1997, when the PRC regained sovereignty. The region espoused minimum government intervention under the ethos of positive non-interventionism during the colonial era. The time period greatly influenced the current culture of Hong Kong, often described as "East meets West", and the educational system, which used to loosely follow the system in England until reforms implemented in 2009.

Under the principle of "one country, two systems", Hong Kong has a different political system from mainland China. Hong Kong's independent judiciary functions under the common law framework. The Basic Law of Hong Kong, its constitutional document, which stipulates that Hong Kong shall have a "high degree of autonomy" in all matters except foreign relations and military defense, governs its political system. Although it has a burgeoning multi-party system, a small-circle electorate controls half of its legislature. An 800-person Election Committee selects the Chief Executive of Hong Kong, the head of government.

Hong Kong is a major international banking centre and it is easy to open multicurrency accounts and to conduct transactions. The bank will need to know the identity of the ultimate beneficial owner of the company and receive a copy of his passport (if it is an individual).

When bank accounts are opened there are no restrictions on or reporting of transactions. There is Money Laundering legislation in Hong Kong which banks and professionals have to observe. The law compels reporting of suspicious transactions only. Hong Kong banks understand trading business very well since this is the lifeblood of the territory and HKCO has little to fear provided its activities are normal.

Hong Kong is a major domicile for offshore companies in the Asia Pacific Region. Hong Kong companies can often be operated as tax free entities since a territorial source definition of profits prevails and a company in Hong Kong may minimize local liability to tax even though management and control are in Hong Kong. However, some care is required in establishing the commercial relationships giving rise to profits in order to ensure that Hong Kong profits tax will not be payable. There are approximately 1,350,000 companies incorporated in Hong Kong by the second half of 2009 and many thousand new companies are registered with the Companies Registrar each year.

Since Hong Kong is a significant trading economy, a Hong Kong company does not share the profile of a company incorporated in some of the popular offshore jurisdictions. In particular, if the com­pany is involved in trading or commercial activities almost anywhere within the Asian Pacific Region, Hong Kong is a natural business base.

The establishment, running and winding up of companies in Hong Kong is governed by the Compa­nies Ordinance. The following are some of the main points affecting newly established companies.

Our Hong Kong office was opened in December 2010.

 

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