Entity types summary
Businesses have a range of entity types to consider when entering the Hong Kong market. Setting up a company in this region usually entails a moderate capital investment.
It can take several months to complete all the necessary procedures before the business runs. The available investment options include entities designed for limited liability companies, sole proprietorships, partnerships, and foreign company offices.
Explore the various company types in-depth within the Type of Company in Hong Kong guide, a recommended resource for a detailed understanding of each category.
However, if you're looking for a quick and practical comparison of foreign business entity types, our guide delves into two specific aspects:
Entity types comparison
To assist you in identifying the investment entity that aligns best with your goals, we have compiled a comprehensive overview of the primary business entity types available in Hong Kong.
This guide table outlines each entity's core purpose and highlights their most significant pros and cons.
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3 Types of Enterprises Summary |
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Options |
Common purpose |
Pros |
Cons |
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Private limited company |
To conduct its business operations independently means that the company's assets, debts, and earnings remain distinct from those of its shareholders and directors. |
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Public limited company |
The main objective of a public limited company is to earn profits. |
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Company limited by guarantee |
Charities, societies, clubs, and non-profit organizations primarily chose this entity to generate funds for humanitarian causes. |
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It is the most flexible business entity. A sole proprietor is usually responsible for carrying all the company's risks and liabilities. |
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General |
Each partner is held responsible for the debts and liabilities of the company to continue operating the business to distribute earnings.
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Limited |
Limited partners have their liability confined to the extent of their capital contribution to the partnership, which means they are not permitted to participate in the business's decision-making process. |
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Investment structures comparison
The most common types of businesses that foreign investors set up are:
- Subsidiary.
- Branch Offices.
- Representative Offices.
If one of these categories aligns with your investment goals, evaluating each based on its distinct practical aspects is crucial. These factors encompass variations in structure, legal responsibilities, compliance with statutory regulations, the timeline for establishment, permissible business activities, and more. Here's a condensed comparative overview of these elements for the more prevalent business types.
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Comparison: Subsidiary vs. Branch Office vs. Representative Office in Hong Kong |
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Separate legal entity |
Yes |
No |
No |
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Liability |
Limited Liability |
Extend to the parent company |
Extend to the parent company |
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Entity Name |
Can be the same or different from the parent company |
Must be the same as the parent company |
Must be the same as the parent company |
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Allowed Activities |
Can be the same or different from the parent company |
Must be the same as the parent company |
Can only conduct market research or coordinate activities. Not allowed to conduct business activities that yield profit. |
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Ownership |
Can be 100% foreign or locally owned |
An extension of the parent company only |
A temporary administrative arrangement |
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Maximum number of members |
Yes, maximum 50 (for private company) |
Not applicable |
Not applicable |
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Key Officer Appointment |
A local Hong Kong resident or body corporate is required to be appointed as a company secretary |
A local Hong Kong resident or corporate body is required to be appointed as an authorized representative |
A local Hong Kong resident is required to be appointed as a chief officer |
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Timeframe for registration |
4-7 working days |
14 working days |
1-2 working days |
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Audit requirements |
Mandatory |
Depends on the audit requirements of the parent company |
Depends on the audit requirements of the parent company |
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Profits Tax Obligation |
Applicable for Hong Kong-sourced profits |
Applicable for Hong Kong-sourced profits |
Not applicable as it cannot conduct any profit-generating activities |
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Filing of annual return |
Yes |
Yes |
No |
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Annual filing |
Must file an audited report of the Hong Kong subsidiary with the IRD |
Must file branch office’s and the parent company’s accounts or audited reports with the IRD, if the jurisdiction of the Headquarter has such requirements. |
Not applicable |
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Cons |
Compliance requirements are comparatively high |
Compliance requirements are comparatively high |
Cannot generate revenue and thus can only be used as a temporary vehicle |
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Suitable for |
Businesses that plan to expand their operation and generate profits, local or foreign |
Businesses that plan to expand their operation and generate profits, local or foreign |
Businesses that plan to set up temporary structures to conduct market research and act as liaison office |
