What we do
Corporate & Commercial
Charltons has extensive experience of providing strategic tailored advice on the key areas of Hong Kong commercial law transactions, including manufacturing, outsourcing, sales, agency, distribution, franchising, marketing, logistics, licensing, employment, joint ventures and shareholder agreements.
Effective and enforceable commercial contracts are essential to the success of all businesses. The challenge is to properly document relationships with suppliers, customers and other business counterparts while keeping control of costs.
We work closely with clients throughout the life cycle of their businesses and provide insightful Hong Kong commercial law and Hong Kong corporate law advice at critical times of growth and disputes. We focus on the commercial reality underpinning business transactions to provide astute advice that works in real life situations. We will anticipate the issues that need to be addressed and work with clients to solve problems, take advantage of opportunities and control risks.
Our commercial team comprises multi-cultural and multi-lingual lawyers with experience of assisting clients with broad international presence and relationships. We can coordinate multi-jurisdictional legal advice in commercial transactions, offering a single point of contact and integrated legal solutions to the client.
We are particularly strong in China-related commercial transactions. For companies who do business or are planning to do business in China we can provide advice on important issues such as the protection of confidential information, intellectual property protection and enforcement; technology transfers, regulatory matters related to market access and barriers, registration and licensing requirements, and establishing and operating foreign invested enterprises.
Charltons has experience in all areas of Hong Kong commercial law and Hong Kong corporate law. Charltons also has vast experience in China-related commercial transactions.
Doing Business in Hong Kong
Hong Kong is one of the major international financial and commercial centres whose unique position within Mainland China’s “one country two systems” has seen it develop as the gateway to China for international capital seeking to share in China’s extraordinary growth story, and more recently, as the gateway to the rest of the world for Chinese capital.
Establishing Business Operations in Hong Kong
The most common forms of setting up business operations involve setting up a Hong Kong private company with limited liability (often as a wholly-owned subsidiary of an offshore company) and setting up a Hong Kong branch office of an offshore company.
HONG KONG PRIVATE COMPANIES
Where a company is established, this will generally be a Hong Kong private limited company since the ongoing disclosure obligations are less onerous than for public companies. To qualify as a private company:
(i) there must be a restriction on the shareholders’ right to transfer their shares;
(ii) the number of shareholders cannot exceed 50 (not including the company’s employees and former employees who were shareholders of the company during their employment with the company); and
(iii) the company’s articles must prohibit it from making any invitation to the public to subscribe for its shares or debenture.
In addition, a private company must not be a company limited by guarantee. To incorporate, the following incorporation documents must be submitted to the Hong Kong Registrar of Companies together with the registration fee and business registration fee:
(a) Articles of association of the company;
(b) Form NNC1 – Incorporation Form (Company Limited by Shares); and
(c) Form IRBR1 – Notice to Business Registration Office.
When the company is registered, the Hong Kong Companies Registrar will issue a certificate of incorporation that certifies its incorporation and limited liability status. A private company must have at least one director and a company secretary (who cannot be the same person as a sole director). Importantly, a private company other than a private company that is a member of a group of companies of which a listed company is a member, must have at least one director who is a natural person.
The company name must also include the word limited. A registration fee is payable to the Companies Registry and a business registration fee is payable to the Inland Revenue Department.
SETTING UP A BRANCH
A branch exists when an offshore company establishes a place of business in Hong Kong. An offshore company which establishes a place of business in Hong Kong is required to register as a “non-Hong Kong company” under part 16 of the Companies Ordinance (Cap. 622) (the “Companies Ordinance”).
For the purposes of Part 16 of the Companies Ordinance, a “place of business” includes a share transfer office or share registration office, but it does not include a local representative office established, with the approval of the Hong Kong Monetary Authority, by a Hong Kong licensed bank. A place of business will normally exist if premises are occupied in Hong Kong on a relatively permanent basis from which officers or employees carry on business for the non-Hong Kong company. A non-Hong Kong company which appoints an agent in Hong Kong, but has no office or other place of business of its own in Hong Kong, will not generally be deemed to have an established place of business in Hong Kong.
Registration requires delivery of the following documents and information to the Registrar of Companies within one month of the establishment of the place of business in Hong Kong:
(a) a certified copy of the non-Hong Kong company’s constitutional documents (charter, statutes or memorandum and articles of the company or other instrument constituting or defining the company);
(b) certified copy of the non-Hong Kong company’s certificate of incorporation (where it is not the practice under the law of the place where the non-Hong Kong company purports to be incorporated to issue a certificate of incorporation, the non-Hong Kong company may tender other evidence of incorporation that the Registrar of Companies deems sufficient);
(c) Form NN1 (Application for Registration as Registered Non-Hong Kong Company);
(d) a certified copy of the non-Hong Kong company’s latest published accounts in the form required by the law of the place of incorporation of the non-Hong Kong company or, if there is no such requirement, in the form in which they are submitted to its members. The non-Hong Kong company would not need to comply with this requirement if:
(i) The company is not required to publish its accounts or to deliver copies of its accounts to any person in whose office they may be inspected as of right by members of the public by:
- the law of the place of its incorporation;
- the law of any other jurisdictions where the company is registered as a company; or
- the rules of any stock exchange or similar regulatory bodies in any of those jurisdictions.
(ii) the company has been incorporated for less than 18 months prior to the date of delivery of the Form NN1 and the accounts of the company that are required to be published have not been made up;
(e) Form NM1 (Mortgage or charge details) together with a certified copy of the instrument by which the charge is created or evidenced if the company has created a charge on its property situated in Hong Kong or acquired a property situated in Hong Kong subject to an existing charge; and
(f) Form IRBR2 (Notice to Business Registration Office).
A registration fee is payable to the Hong Kong Companies Registry and a business registration fee is payable to the Inland Revenue Department. A certificate of registration of the non-Hong Kong company will be issued by the Hong Kong Registrar of Companies and a business registration certificate will be issued by the Hong Kong Inland Revenue Department when the registration requirements have been satisfied. Normally the certificate of registration will be issued within 10 working days.
Charltons has experience in all areas of Hong Kong commercial law and Hong Kong corporate law. Charltons also has vast experience in China-related commercial transactions.