subject: Learning About Hong Kong Subsidiary Registration [print this page] Registering a Subsidiary Hong Kong company is a popular choice today. It offers many ways to enhance business and increase company profits. Here are answers to a few common questions about this type of business venture.
What is a subsidiary?
A subsidiary is a company that is controlled by another company. The controlling company is often referred to as the parent company or the holding company. The holding company must own the majority of voting shares in the company that it controls. This can be as little as 51 percent.
What are the advantages of owning a subsidiary?
There are several advantages to owning a subsidiary company. It is a separate entity from the parent company. If one company has troubles, it may not affect the other. For example, the parent company may be involved in tax delinquencies or litigation. They may be under all types of investigation. This will not affect the subsidiary. This also works the other way around. Problems of the subsidiary will not usually affect the parent company.
What are the advantages of registering a Hong Kong subsidiary?
In addition to the above mentioned benefits, there are several advantages to setting up a subsidiary company in Hong Kong.
1. It can be owned entirely by foreign interest. For example, as owner you will not be required to live in Hong Kong. This means that you will not have to apply for a visa or any other thing associated with relocation.
2. Although though your Hong Kong company is foreign owned, you will still pay Hong Kong taxes. Corporate taxes there are among the lowest in the world. This can mean a large increase in company profits, simply for the reason of location.
3. You will have access to many of the markets in mainland China. Some of these will not be available to many foreign interests.
Are there any special requirements for subsidiary registration in Hong Kong?
Some of the requirements to for a subsidiary registration of a Hong Kong company are different than those of a normal corporation. For example, you must have company secretary that is a resident of Hong Kong. You must also appoint a Hong Kong auditor that is certified. You must have share capital, but there is no set amount required. Share capital is money that a company earns from selling its stock.
Is it the same as a branch office?
Many people may believe that subsidiary and branch office are the same thing. This is not the case. A branch office is a legal entity. However, a branch is more like an extension of the parent company. A branch office must be registered in the Companies Registry of Hong Kong. A subsidiary also must be registered. A branch office will enjoy the same corporate tax rates as other Hong Kong companies.
A major difference is the way that a branch office is treated. It will not be separate from the parent company. For example, if one has legal problems, they both have legal problems. Any other such difficulties will extend to parent company and branch office.
A branch office must also have the same name as the parent company. It will take about two weeks to register, where as a Hong Kong subsidiary registration may take less than one week.
