Company Incorporation – The Basics

One of the most significant benefits of company incorporation in Hong Kong is that it can enjoy a dual-layer of protection for the shareholders. As opposed to the UK situation, there is only one security layer (the limited liability element) for the shareholders. In the event of the company’s liquidation or bankruptcy, all its shareholders will receive a proportion of its assets. In Hong Kong, this happens under the Companies Act.

Consequently, they have more excellent protection than their domestic counterparts. There are several other benefits of company incorporation HK. For example, under the Companies Act, there is a more straightforward process of company registration. It makes it easier for overseas entrepreneurs and companies to establish a business in the local market. Moreover, the statutory company rules mean a more straightforward way of settling, including share certificates, and revising the company’s Articles of Association.

Issuance of shares under the Articles of Association of a company is more comfortable than the distribution of claims under the UK and US laws. There is also a simplified registration process for issuing shares under the Articles of Association of a company. Moreover, a more manageable rate of corporation tax is charged in Hong Kong. These factors make the company’s incorporation in Hong Kong more attractive.

Issuance of shares under the Companies Act is usually done through a company secretary. There is an eligibility criterion for the application of the company secretary. The applicant must have a minimum net worth or wealth., a new Companies Act regulation was introduced in 2002. It is this regulation that plays a crucial role in the issuing of new shares to the company and the distribution of dividends.

According to the Companies Act, the company secretary can issue new shares to the shareholders. After approval by the Board of Directors, the issue of shares is effected through a warrant. The warrants are either registered with the Companies Registry or are otherwise executed on behalf of the company

The second is the set limit on the number of shares that can be purchased during the maturity period. The company may also issue additional shares, but the maximum number of such units is fixed. The maturity date is typically a year to one year and a half.

The shareholders need to determine the validity of the company by checking the statutory information. If the company is a natural disaster, the set limit on the number of units issued will be affected. Similarly, if the company has acquired another company without the shareholders’ approval, there will be a problem. The shareholders must consider all these before issuing shares. An increase in the published share limit or a decrease in the number of units is not acceptable.

Issuance of shares requires the company to open a bank account. Most new businesses prefer to have this done by a consultant to ensure its legality and that all the legal procedures are followed. However, in some cases, a company incorporation agent may act as the company’s consultant. In such cases, it becomes essential for the shareholders to provide the necessary information to the agent.

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