Representative Office, Branch Office, and Subsidiary are the most widely-used options for foreign companies who wish to register their presence in Hong Kong market. Unlike a branch office or subsidiary, a representative office in Hong Kong is actually much simpler in its registration procedure.
This blog will shed light on key features and registration procedures for a Hong Kong representative office!
What is a Hong Kong representative office?
A representative office in Hong Kong is a common registration option for non-Hong Kong incorporated companies to have a place of administrative office in Hong Kong.
A representative office is considered to be an effective vehicle for any foreign investor to test the business environment, at the same time examine the potential of doing business before penetrating. Representative office in Hong Kong and many other places usually lies under the restriction for only conducting specific activities.
Features of a Hong Kong representative office
Below are the key features of a Hong Kong representative office:
- Legal status
A representative office has no independent legal standing in Hong Kong. It is typically treated as a temporary setup of foreign companies. For this reason, if the representative office located in Hong Kong of a foreign parent company has any costs or debts arising, it is that particular parent company that will take full responsibility for all the actions, including debts and liabilities incurred by its representative office.
- Scope of activities
A representative office is actually a liaison office and it is prohibited from participating in any profit-making activities within Hong Kong. Some examples of profit-generating activities are as the followings:
- Engaging in business
- Raising invoices in trading activities
- Entering into any contracts
- Offering consultancy service with a fee
- Undertaking the goods transshipment
- Making deals or negotiations on behalf of the company
Typically, a representative office in Hong Kong would be limited to only engaging in promotion, liaison, or market research-related activities on behalf of the foreign parent company.
Any representative office with the desire of joining any transactions, that office must be transformed into other business structures that allow legal status for doing business like a branch office or a subsidiary in Hong Kong. Noticeably, a subsidiary as a private limited company in Hong Kong is considered the most common type of business entity for foreign entrepreneurs.
- Naming
Like a branch office, it is obligatory that Hong Kong representative office must remain the name to be the same as its foreign parent company.
- Officer appointment
Hong Kong typically needs the presence of one manager who relocates from its parent company to the representative office. In addition, the representative office can also appoint support members who are local residents of Hong Kong.
- Registration procedure
Representative offices in Hong Kong are much simpler than that of a branch offices or a subsidiary in Hong Kong. Generally, there is no requirement for registering the Hong Kong representative office with the Companies Registry. Also, the minimum capital requirement is not required.
- Compliance requirements
Hong Kong representative offices are not allowed to conduct profits-related transactions; therefore, they will not be responsible for maintaining filing records– i.e., filing tax returns with IRD – as what a subsidiary in Hong Kong (private limited company) needs to do.
Note, however, that the representative office may be required to file an annual tax return with “NIL” filing, and must apply for a Business Registration Certificate with IRD.
In what follows, we will delve into documents and procedures for registering a Representative Office in Hong Kong.
How to register a representative office in Hong Kong
Who can register?
Any business owner who satisfies two following conditions will be eligible to register a representative office in Hong Kong:
- Own a non-Hong Kong incorporated company; and
- Have a place of business in Hong Kong
What documents are required?
Below are the basic documents for the registration procedure for a representative office:
- Application form
- The registered name and the address of the non-Hong Kong company (translation to applicable languages – English or Chinese, or both – may be required)
- A place of business address in Hong Kong
- Particulars of the Manager or Chief Officer of the representative office
How does it proceed?
It is compulsory for every representative office in Hong Kong to obtain a Business Registration Certificate with the Inland Revenue Department (IRD). The application should be made within 1 month from the date of business commencement.
Once the application has been approved, the representative office can receive the Business Registration Certificate on the following day. However, it must be collected in person and always be available at the office premise in Hong Kong.
If there is any change in relation to the registered particulars, the representative office must send a notification to inform such changes to the Inland Revenue Department (IRD) within 1 month of the change.
Depending on the Certificate validity period – one year or three years, the renewal of the Certificate by the representative office must be made 1 month before the expiry date.
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In summary
- A representative office is one of the popular registration options for foreign companies in Hong Kong. It is a good option for testing the market before penetration.
- Representative offices in Hong Kong can only conduct restricted activities like promotion, liaison office or market, and research. It has no legal status and cannot engage in any business activity which earns profits.
- Setting up representative offices in Hong Kong is easier than that of a branch office or a subsidiary. Reasons for this include no minimum capital requirement, no filing or accounting requirement, no need to register with the Companies Registry, etc.
- Required documents for the registration of a Hong Kong representative office include an application form, particulars of the chief officer, place of business in HK, and identity proof for the non-Hong Kong company.
There are two other options for overseas investors to establish their presence in Hong Kong: branch office and subsidiary. It’s advised that you should make a comparison of the pros and cons of each and select the best-suited business structure for your foreign company.
