Holding Company in Hong Kong: Definition and Structure

Establishing a holding company in Hong Kong is a popular choice due to their tax advantages, business-friendly regulations, and strategic location, attracting both overseas, Mainland Chinese and local enterprises to invest. If you are considering setting up a holding company in Hong Kong, this guide will cover everything you need to know. We will explain what a holding company is, its definition, structures, key functions, the requirements for incorporation, and the registration process, giving you valuable insights into expanding your business in Hong Kong.

What Is A Holding Company? Definition & Explanation

The holding company definition refers to a business entity that owns and controls other companies, known as subsidiaries, but typically does not engage in its own commercial operations, manufacturing, or service delivery. Instead, it exists to manage investments, oversee operations, and provide strategic directions for its subsidiaries. Understanding the holding company definition is essential for businesses seeking a more structured approach to managing their assets and subsidiaries.

Structures of Holding Companies in Hong Kong

In Hong Kong, there are types of companies that can be formed under the Companies Ordinance (Cap. 622), in which private company limited by shares is the most common holding company structure. It offers limited liability protection and a separate legal identity, making it a popular choice for businesses managing investments and subsidiaries.

There are key elements in the structure of a holding company in Hong Kong:

• Shareholders: A minimum of one shareholder is required, who can be an individual or a corporate entity. There are no restrictions on foreign ownership, allowing for full control by international entities.
• Directors: A minimum of one director is required to manage the company's operations. This role can be filled by a shareholder, but a sole director cannot also serve as the company secretary.
• Company Secretary: Appointing a company secretary is mandatory. This role must be filled by a Hong Kong resident if an individual or a corporation with a registered office in Hong Kong is a corporate entity.
• Registered Office: The company must maintain a registered office address within Hong Kong to receive official communications and documents.
• Share Capital: There is no minimum capital requirement for establishing a holding company in Hong Kong. The authorised share capital can be set at any amount deemed appropriate by the shareholders.

Benefits of Setting Up A Holding Company in Hong Kong

Hong Kong offers a number of advantages for businesses looking to set up a holding company, making it an ideal jurisdiction for global operations.

1. Tax Regime

Hong Kong’s tax system provides a favorable environment for holding companies. Under its territorial tax principle, only profits generated within Hong Kong are subject to taxation, while income earned overseas is generally exempt. Additionally, Hong Kong maintains a competitive corporate tax rate, with 8.25% applied to profits up to HKD 2 million and 16.5% for profits exceeding that threshold. These advantages minimise the tax burden on global income and maximise profitability.

2. Easy Access to China

Hong Kong’s strategic location and cultural ties with China make it an ideal gateway to the market. The shared language and cultural familiarity also simplify business integration. Additionally, The Closer Economic Partnership Arrangement (CEPA) further enhances economic ties, offering preferential market access and trade facilitation, making Hong Kong especially beneficial for holding companies to manage regional investments and expand into China.

3. Double Taxation Avoidance Agreements (DTAs)

Hong Kong has signed DTAs with over 40 countries, including major economies such as China, the United States, the United Kingdom, and Vietnam. These agreements prevent businesses from being taxed twice on the same income. In other words, a Hong Kong holding company is taxed only once on a given income, rather than facing additional taxation from foreign jurisdictions. This allows overseas companies to confidently expand their business in Hong Kong.

4. Simple Setup

Registering a holding company in Hong Kong is a fast and straightforward process, with minimal restrictions on foreign ownership. Applications can be submitted electronically or in print, and approval is typically completed within a few days, making the setup process highly efficient.

Requirements of Setting Up A Holding Company in Hong Kong

Before establishing a holding company in Hong Kong, you must meet the following requirements to form a compliant holding company structure:

• At least one shareholder and one director (both must be over 18 years old)
• A physical address in Hong Kong is required as the company’s official registered office
• A company secretary who is a Hong Kong resident or a corporate entity with a registered office in Hong Kong
• No minimum capital requirement

Additionally, in Hong Kong, holding companies must submit an annual return (Form NAR1) to the Companies Registry within 42 days after the company’s return date.

How to Set Up A Holding Company in Hong Kong?

Now that you understand what a holding company is and its basic requirements, you may be wondering how to establish one. Holding Company Hong Kong registration follows the same steps as a regular company, which include:

Step 1: Choose a Business Structure and Company Name

Choose the type of holding company based on its purpose: Company Limited by Shares or Company Limited by Guarantee. Next, select a company name in either English or Traditional Chinese, but mixing both languages is not allowed. If in English, it must end with “Limited”, and if in Chinese, with “有限公司”. The name must also be unique and not identical to any existing registered company.

Step 2: Prepare Incorporation Documents

When setting up a holding company in Hong Kong, the following documents must be submitted to the Companies Registry. You can find and download the required documents from the official website.

• An Incorporation Form: The required form depends on the company type: NNC1 for limited companies and NNC1G for limited companies by guarantee
• Articles of Association: The document outlines the legal regulations and management structure of the company
• Form IRBR1: A notification to the Business Registration Office for business registration purposes

Step 3: Register with The Hong Kong Companies Registry

Submit all the required documents and registration fee to The Hong Kong Companies Registry for setting up a holding company. The registration fee of a company limited by shares will be HKD$ 1,545 for the electronic form and HKD$ 1,720 for the paper version. For the latest updates, please refer to the website of the Companies Registry.

Step 4: Collect Certificates

If the application is approved, the Certificate of Incorporation and Business Registration Certificate will be issued either in electronic form or hard copy form, depending on the application methods.

TEC Provides the Ideal Workspace for Your Holding Company

To summarise the answer to "what is a holding company?", it is a business entity that owns and controls other companies without directly engaging in commercial operations. Setting up a holding company in Hong Kong offers numerous advantages, including tax efficiency and a flexible holding company structure.

Beyond choosing the right structure, a registered office address is essential for incorporation and legal compliance. For holding company startups, a Virtual Office is often the most cost-effective option, providing a legal business address while minimising overhead costs. As your business grows, a Private Office then offers a dedicated workspace with greater privacy and flexibility to support operational expansion and team collaboration.

If you are seeking a location for your Hong Kong holding company, TEC provides a variety of premiere solutions including Virtual Offices and Private Offices. Our Virtual Offices offer services including mail handling, call answering, and access to Meeting Rooms on demand. This flexible solution is ideal for holding company startups looking to minimise costs while maintaining a professional presence.

FAQs

Hong Kong offers tax efficiency, a business-friendly regulatory environment, a strategic location, and a simple company registration process, making it an attractive choice for holding companies.

To establish a holding company in Hong Kong must have at least one shareholder, one director, and one company secretary. A registered office address in Hong Kong is also required.

Yes, there are no nationality restrictions for the shareholders or directors of the company.

Holding company registration in Hong Kong is fast and efficient, typically taking 1-3 working days, depending on the registration method. Online applications can be approved within one working day, while paper applications generally take up to four working days for certificate issuance.