F A Q > Hong Kong Companies > Company Formation

• Rules and restriction of company names.
• What is the difference between tailor made and ready made company?
• Is there any risk in buying a ready made company ?
• When can I use the company ordered ?
• What document & material I will get ?
• What is "Green box" ?
• Can I change the company name or share capital of the company bought ?
• What is the difference between authorized share capital and issued share capital ?
• What is nominee shareholder ?
• What is nominee director ?
• How to use company chops ?
• What kind of information is available for public search ? Why ?
• What is the meaning of "unlimited" company ?
• Why people keep on using "unlimited" company ?

• Company name should not be same as those already in company register and can be
  • only English name
  • only Chinese name
    • in HK, Traditional Chinese is the official written language.
      Simplified Chinese is not acceptable.
    • For practical reason, we don't suggest using only Chinese name.
      English name is useful for daily use, including banking transaction.
  • English plus Chinese name
    • In daily use, quoting only English name is enough.
• To check availability of a company name, client can visit this site: [ Companies Registry ICRIS System ]
• For restriction of using certain words, please refer to [ Company Names Guidelines ] from Companies Registry.

Ready made means the company is formed and put in list for purpose of selling. There are already 2 shareholders each holding 1 share. Instead of forming a brand new tailor made company, we arrange to transfer the 2 shares to new shareholders. The company can be used instantly and saves time of at least 7 days.

Other than saving time, sometimes you may need a company with incorporation date several months ago. This helps for management to "ratify" (or "inject") certain business transaction into a company.

No. It is definitely no need to worry about buying a ready-made company from us and taking over any unknown responsibility. We issue letter of guarantee and indemnity to buyer stating that no business has ever been carried out by the company. The original shareholders are the one responsible for all financial liability before the date you bought the company.

You can use the ordered company when you receive our confirmation. This means you can use the company name to enter into any contract. Of course, it takes time to arrange sending the company chop to you. However, you can use the company to start negotiation and document preparation.

Generally, for ready-made company, we can confirm your order once the payment is received. For tailor-made company, it takes 7 days because we need to ensure the approval of company name and this cannot be done until Certificate of Incorporation is received from the government.

For both tailor made and ready made company, you'll receive:

• Certificate of Incorporation
• Business Registration Certificate
• Copies of document filed to Company Registry
• Green Box -
  • Memorandum& Articles
  • Common seal (stainless steel)
  • Signature chop
  • Round chop
  • Share Certificate book
  • Statutory Book

• Memorandum& Articles
• Common seal (stainless steel)
• Signature chop
• Round chop
• Share Certificate book
• Statutory Book

Together with

• Certificate of Incorporation
• Business Registration Certificate
• Copies of document filed to Company Registry

They are the material you will have after a company is formed.

Company name -

Yes. You are free to change the name of a limited company. However name search has to be carried out to ensure the new name is still available. The government fee is around HK$300 (subject to latest government announcement) and it takes around 10 days. Once the name change is approved, a "Certificate of Incorporation on Change of Name " will be issued by the government. Contracts with old company name need not be signed again. However, new name need to be used for all new transactions and therefore new set of company chops need to be made.

Authorized share capital -

Yes. You can increase (or even decrease) the authorized share capital. The standard authorized share capital is HK$10,000 splitting into 10,000 shares. For every HK$1,000 authorized share capital, you need to pay HK$1 duty fee. This means you have to pay HK$1,000 duty fee to increase authorized share capital of HK$1 million. There is no limit on the maximum amount of authorized share capital. After the increase, you can freely allot them to shareholders.

Authorized share capital -

Authorized share capital is the maximum amount of shares that a company is allowed to issue. For example, the ready made company that we are selling comes with HK$10,000 authorized share capital splitting into 10,000 shares. This is the maximum amount of shares that we can sell. However, this does not mean that we can only raise HK$10,000 as share capital. Some people may pay you a premium to buy a share. This depends on how well the new shareholder is valuing your company. Even though he is paying HK$1,000 for a share of your company, HK$999 of it is premium. he is buying only 1 share and entitle to 1 voting right only.

Issued share capital -

Existing shareholders are free to pick new investors. They can "issue" ( or "allot") shares to new investors. The shares can be issued at par or at premium. Only issued share capital is considered paid up capital.

Stamp duty is levied in increasing authorized share capital, but not in issuing (allotting) shares. When old shares (shares already issued) are changing hand, stamp duty also need to paid.

Nominee shareholder is having another person appearing in the government record as the shareholder. The identity of real owner is hidden.

Many often, this is to fulfil the minimum requirement of having 2 sharehodlers. The benefit of the real shareholder can be protected by preparing Declaration of Trust and pre-signed share transfer documents. In case of necessity, the shares can be transferred back to real owner. The real owner is regarded as owning the shares from the very beginning. Not from the date of transfer back.

Nominee director is having another person appearing in the government record as the director. The identity of real business controller is hidden.

Many often, this is to fulfil the minimum requirement of having 2 directors. Documents (Letter of Indemnity etc) will be prepared to protect the interest of both the real business owner and the nominee.

The usual ways of using chops in Hong Kong are:

Signature chop - usually rectangular in shape. Together with signature of an authorized officer, most contract and bank transaction are regarded as valid.

Round chop - usual small in size and no place for signature. This is for daily casual use to acknowledge receipt of document from courier company. This chop is not for serious event.

Common seal - usually stainless steel. Only documents required to be signed in SEAL need to be chopped. Example of such documents including transfer of property.

In China, the official company chop is regarded as valid for contract even without signature. There is a big difference.

Contrary to Limited Liability Company, business owner of Unlimited Company has unlimited legal and financial liability of the business.

If the unlimited company is a Sole Proprietor business, the sole owner takes up all risk.
If the unlimited company is a Partnership business, each and every partner is jointly and severally liable. Generally, this means you may be liable to your partner's action in doing partnership business.

The worst financial consequence of a Limited Company is winding-up of the company. Shareholders have no financial risk other than their investment shares as long as they are acting in good faith. However, the worst financial consequence of Unlimited Company is bankruptcy of business owners.

The main reason is cost.

The use of a Limited Company is a 2-steps process:
1st - Incorporation of a Limited Company. This is just like give birth to a person.
2nd - Application for Business Registration Certificate for the person.

Use of Unlimited Company involves only the 2nd step.

Moreover, the legal and maintenance work is more complex and costly for Limited Company. The government has to protect the interest of public and business participants while granting limited liability "previlege" to business owner. Therefore, more work has to be done in order to increase the transparency and accountability of a Limited Company (Annual Filing and Auditing etc).

There is no difference in doing business as long as business owner is aware of and willing to take up the unlimited liability. In exchange for the simplicity of maintenance and cost, many people is still using Unlimited Company. Of course, generally speaking, unlimited company delivers the impression of a small business. This is inevitable because no one well structured company will tolerate the risk of unlimited liability.