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Hong Kong is on the south-east of China and consists of a large number of islands and a part of the Chinese mainland. The principal areas are the island of Hong Kong, Kowloon and the New Territories. The total area is some 412 square miles. The United Kingdom’s 99 year lease on Hong Kong expired in July 1997 and Hong Kong reverted to the sovereignty of the Peoples’ Republic of China. The official languages are English and Chinese, with English often being used in the commercial context and Cantonese being widely spoken. The currency is the Hong Kong dollar, which is linked to the US dollar at the rate of HK$7.8 to US$1. Hong Kong continues to be the leading centre for both finance and commerce in South-East Asia.    Company law is based substantially on the United Kingdom model and is to be found in the Companies Ordinance 1984. The most usual type of company is a private company limited by shares.    The name of a Hong Kong company must be in English, Chinese or in both languages. In the English the word “Limited” must be the last word in the name. A new formation in Hong Kong can take three weeks, but ready-made companies are available.    The standard authorised capital is HK$10,000. There must be a minimum of two shareholders who may be nominees to preserve the anonymity of the ultimate beneficial owner. There is no restriction on the nationality of shareholders.    An Annual General Meeting must be held once in every calendar year, and not more than 15 months may elapse between such meetings. Meetings of the shareholders may take place anywhere that is permitted by the Articles of Incorporation.    Every company must have at least two directors. The directors may be of any nationality, and may be natural persons or corporations. The full particulars of each director appear on the public record, and also appear in the company's Annual Return. Each company must have a resident secretary in Hong Kong, which can be a corporation.    The company must maintain a registered office in Hong Kong, at which the statutory records must be kept. The statutory records include the register of members, directors and secretaries, a register of charges and the minutes of the Annual General Meetings.    Every company must appoint an auditor who must be a member of the Hong Kong society of accountants holding a practising certificate. The auditor must approve financial statements. Private companies do not have to file their accounts, but they must be submitted to the shareholders at the Annual General Meeting.    The Hong Kong Government takes the attitude that Hong Kong is not a tax haven, but is a low tax area. Hong Kong has territorial rather than a residential basis of assessment, so that income or profits arising to a Hong Kong company outside the colony are not subject to Hong Kong tax. The effect is that a Hong Kong company with no Hong Kong income is effectively tax exempt. Additionally, there is no withholding tax on the payment of dividends. It is necessary to apply for an annual business registration certificate.
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