Presentation on theme: "Formation of APAN Legal Entity in Hong Kong P T Ho APAN Council Meeting 25 January 2008."— Presentation transcript:
Formation of APAN Legal Entity in Hong Kong P T Ho APAN Council Meeting 25 January 2008
Proposed Option APAN incorporated and registered as a Public Limited Company by Guarantee in Hong Kong Under Companies Ordinance (Chapter 32 of Laws of Hong Kong) Obtain a Business Registration Certificate from HKSAR Business Registration Office
Hong Kong is a Good Choice Hong Kong’s reputation in terms of Rule of law Freedom & Equality Openness Corruption-free Efficiency Low tax rate Currency peg US$1 = HK$7.8
Limited Company by Guarantee Registered office MUST be situated in Hong Kong. It is the legal address for notices and proceedings and can be different from the business office. Any legal person can be a member. The liability of members is limited. When the company has to be wound up, each member will need to contribute an amount for payment of the debts, liabilities and other expenses and charges of winding up, say HK$100 (US$13).
Limited Company by Guarantee (Cont.) At least 2 directors in the Board. All directors should be individuals, i.e. no corporate director. No restrictions on the nationality, domicile and residences of the members and directors. (Company) Secretary –if an individual, should ordinarily reside in Hong Kong; –if corporate secretary, its registered office or place of business should be in Hong Kong. A director can be a member and a secretary at the same time.
Governance Hierarchy The (Annual General Meeting) AGM is the highest body of a company. AGM must be held at least once a year and must not be held more than 15 months since the last AGM. The executive body of a company is its board of directors. The Board is responsible for the daily running of the company and implementing the decisions in the AGM. The Companies Registry of HKSAR Government has published Non-statutory Guidelines on Directors’ Duties to outline the general principles for a director in the performance of his functions and exercise of his powers. ( http://www.cr.gov.hk/en/publications/docs/director_guide_e.pdf ) The company secretary of a Company is responsible to ensure compliance with ongoing legal returns, accounts, audit and other requirements.
Governance Hierarchy Basic Organisational Structure AGM (Members’ Meeting) Board of Directors (Council Meeting) CommitteesWorking Groups Secretariat & Offices Company Secretary Auditors
Incorporation Procedures APAN can engage a legal adviser to help in the process: 1.Choose a name for the company, can be in English, in Chinese or both. 2.Designate an official registered address situated in Hong Kong for registration. 3.Decide the number of members proposed to be registered. 4.Designate founding members and directors (at least 2). 5.Appoint a company secretary to ensure compliance with ongoing legal returns, accounts, audit and other requirements. 6.Prepare the Memorandum and Articles of Association (M&A) of the company, specifying the objects of the Company and the number of members proposed to be registered (point 2 above).
Incorporation Procedures (cont.) 7.Submit necessary paperwork and fee to the Registrar of Companies: a. A copy of Memorandum and Articles of Association of the company signed by subscriber(s) (at least 1 subscriber) b. “Statement of Compliance on Incorporation of a Company” 8.Collect the Certificate of Incorporation (normally issued in about 3 weeks after the date of submission) 9.Obtain a Business Registration Certificate from the Business Registration Office within a month in order to engage in the company’s activities. 10.Open a business account with a bank. 11.Commence operation and prepare financial statements for audit by an independent auditor annually in accordance with HK Financial Reporting Standards issued by the HK Institute of Certified Public Accountants and the HK Companies Ordinance. 12.Submit annual returns to the Companies Registry each year.
Set-up Cost and Annual Fee Set-up StageEstimated CostUS Dollar Equivalent Incorporation & Registration fee 25 or less members >25 to 100 members every 50 members from 101’s Maximum HK$170 HK$340 HK$20 HK$1,025 US$20 US$40 US$2.6 US$132 Legal service fee*HK$30,000-50,000US$ 3,800-6,400 Business Registration CertificateHK$2,600US$340 Annual Return registration feeHK$105US$14 Annual Recurring FeeEstimated CostUS Dollar Equivalent Annual Return registration feeHK$105US$14 Business Registration CertificateHK$2,600US$340 Audit fee*HK$15,000-30,000US$2,000-$4,000 Corporate Company Secretary feeHK$10,000-15,000US$1,300-$2,000 * Fee can be reduced if honorary legal adviser and auditor can be appointed. A total set-up fee at the level of about US$2,000-3,000 and annual fee at the level of about US$1,800-2,500 can be explored.
Time-line ProcessesTime needed Confirm company name, registered address, no. of members, founding members and board directors Start Engage (honorary) legal adviser2 to 4 weeks Appoint (honorary) Company Secretary Prepare M & A and Form NC1A for submission2 weeks Collect Certificate of Incorporation3 weeks Apply Business Registration Certificate2 weeks Estimated time needed for the process: 8 – 10 weeks
Taxation Simple and low tax rate –Only income and profits derived directly from Hong Kong are subject to tax. –Current corporate profits tax rate is 17.5%. –No tax on capital gains, dividends or interest. Tax Exemption –a “non-profit-making” company limited by guarantee may still apply to the Chief Executive of HKSAR for tax exemption under Section 87 of the Inland Revenue Ordinance –Basic requirement is that all members, board or council members are not entitled to any remuneration or compensation for services rendered to the organization. –A legal or accountancy firm can be engaged to provide consultation and processing service.
For Discussion, if Decided to Go Forward Company Name (what) Registered address (where) No. of members to registered (how many) Engagement of legal advisor (how much) Appointment of Secretary (who) Founding Members (who) Board directors (who) Subscribers (who) New M & A (what: review APAN by-laws)