Skip to main content

Business Information for Hong Kong and Shanghai

Hong Kong - legal environment

Under the one country, two systems arrangement, Hong Kong has a separate legal system from that of Mainland China. It has its own legislative framework and a judiciary independent of the government.*

Hong Kong's legal environment provides a strong foundation for its free market, competitive economy.The court system ensures the enforcement of contracts and effective resolution of disputes. Bankruptcy proceedings are dealt with effectively. There are minimal legal procedures to register a company or to set up a business.

*Hong Kong Country Profile. 2012

Business Laws and Regulations for Hong Kong

Hong Kong Companies Ordinance provided by the Department of Justice, Hong Kong SAR Government.

Hong Kong e-Legislation provided by the Hong Kong Department of Justice, Hong Kong SAR Government

Doing Business Law Library from the World Bank is a collection of free online business laws and regulations. It lets you create a report of all business laws or choose from a range of laws for an economic region or a specific economy. Select Hong Kong from the list of economies

 

Business structures

"Business in Hong Kong can be conducted through limited companies, limited partnerships or by individuals acting as sole traders. " To incorporate a company or to set up a business can be done through the appropriate Hong Kong government departments.

Types of businesses in Hong Kong:

  • Public limited companies. Can offer shares to the general public on the stock exchange. "Limited" means that shareholders potential losses are limited to their share holdings only.
  • Private limited companies. Are not allowed to trade shares on the stock exchange. "Limited" means that shareholders potential losses are limited to their share holdings only.
  • Limited partnerships. Two or more partners can form a business. In a Limited partnership" there must be one partner who has unlimited liability for the partnerships' debts while the other partners' exposure to debt is limited to their initial investment in the partnership.
  • Sole trader. Is a single owner who sets up a business and must pay profit tax on that business. The owner is liable for all debts incurred by his/her business.

Setting up a business in Hong Kong from the Hong Kong Trade & Development Centre provides more detailed information about the legal structures of companies in Hong Kong.

Companies Registry's Cyber Search Centre is  a searchable registry for all companies registered in Hong Kong.

Taxation

Hong Kong has a very simple system of taxation with low rates making it easy to conduct business.

There is no capital gains tax, no tax on dividends, estate duty or inheritance tax, no payroll tax, no VAT tax and no tax on profits derived from outside of Hong Kong. Some indirect taxes such as vehicle registration fees and duties on tobacco and liquour are in place.

The government receives revenue from the following sources:

More information about Hong Kong's taxation system can be found in the following web sites:

Legal framework for encouraging free enterprise

Trade regulations*

Hong Kong has an open door policy on trade and does not charge tariffs on exporting or importing goods. Import and export licencing is kept to a minimum.

Labour laws*

Hong Kong's labour legislation is in line with those of international laws and it has implemented many conventions from the ILO (International Labor Organization). It has legislated policies to facilitate the entry of highly skilled financial professionals. A statutory mimimum wage was introduced in May 2011.

Taxation*

Hong Kong has a clear and simple taxation system.

Foreign investment*

Foreign investment is strongly encouraged. All industry sectors with some exceptions are open to foreign investment and it is not uncommon to have 100% foreign investment in an industry. There is no discrimination between foreign and domestic investors.

Corporate governance*

Hong Kong has in place high standards to ensue effective corporate governance. A Draft Code on Corporate Governance Practices and Corporate Governance Report issued by the government in 2004 has become the standard for corporate governance in Hong Kong.

Independent Commission Against Corruption (ICAC)

Hong Kong is one of the cleanest places in the world to do business. ICAC uses law enforcement, community education and prevention to fight corruption.

Corruption Perceptions Index  From the International Transparency Organisation. Measures perceived level of public sector corruption.

*From the  Hong Kong Country Profile. (2012).

Worldwide Governance Indicators

Hong Kong scores highly on the Worldwide Governance Indicators scale from the World Bank which is a measure of:

  • voice and accountability
  • government effectiveness
  • regulatory quality
  • rule of law
  • control of corruption

An incorporated company?

What is an incorporated company?

An incorporated company is one that is legally declared to be separate from its owners.

This means that that owners of the company, its directors and shareholders aren't exposed to a company's losses or liabilities except for their original investment in the company.*

*Websters new world finance and investment dictionary. (2003)

Recent Business Reforms

Business Reforms from the World Bank, lists recent regulatory and legal reforms that have been put in place in the HK economy making it easier to do business.

Selected internet and Library resources for Law