The Advantages of Incorporating a Company
If you plan to open a new business or increase the existing business in Hong Kong, the first step you should take is to incorporate HK Company. An HK Company will have many advantages for your business. It is why the majority of small businesses in Hong Kong incorporate HK Company.
One of the many advantages of incorporating an HK company is that it will allow you to do business in a foreign country free from dealing with the local laws. Incorporate HK company will require you to open a bank account in Hong Kong. Shares of any individual share of the said company have the same status as an estate. Theyare transferable to any eligible member or members of the business in the matter of incorporation. There is no need to go through the red tape of setting up a registered office in a country like China for your company because, in Hong Kong, all you need is a working email address and a mailing address.
When you incorporate HK Company, you will use a ready-made company formation kit with everything you will need. These kits are offered by a variety of sources, including banks and brokerage houses. You can also check the Internet for a wide selection of different kits available. There are certain disadvantages of forming an offshore company in Hong Kong companies.
The main disadvantage of incorporating HK companies is that it takes a lot of time and effort to find a suitable service provider. A service provider in Hong Kong that is right for you will be required to fill out an application form that needs to be returned to the service provider with all the details of your company, including your name, address, and purpose. The service provider then verifies your application, and if it is found to be complete, your company registration will be approved. This whole process will usually take about three months from the submission of your application.
Another disadvantage of company incorporation in Hong Kong is that it will not issue shares to its shareholders until it is registered. In some instances, the shares can be given after this period. Once your company has been registered, you can issue shares to your shareholders. However, these shareholders will not be able to cash in their shares until the company has been around for at least two years from the date of issue of the last ordinary share.
The issuance of new shares and the transfer of old shares is another disadvantage you have to deal with when incorporating HK Company. After your company’s incorporation in Hong Kong, your shareholders will be unable to transfer their old shares with you because they cannot access the new shares. If your company becomes bankrupt, you will also be prevented from selling your shares. You are only left with your paid-in shares. It can be not easy if your company wants to raise more capital to expand its operations or invest in a project.
The last disadvantage of incorporating a company is that you are limited in the number of shares you can issue to your shareholders. If you have many shareholders, it may be difficult for you to obtain the capital you need to expand your business. If your company intends to expand its trade, it would be better for you to limit the number of shares you issue to your shareholders. If your company wants to issue ordinary shares, the limit per annum is the maximum number of shares that can be issued. Your shareholder agreement should specify this number.
Issuance of shares is an important decision that you as a shareholder should make when you incorporate HK Company. It means that you should carefully review the shareholders’ agreement to check for any stipulation that could restrict your ability to issue shares. The best way to do this is to talk with a professional broker. Most brokers have access to all the listed companies on the stock exchange and can quickly review the agreement for you.
Incorporate HK company