1. Why foreign companies should open Representative Office in Hong Kong?
Foreign firms who want to study the business environment in Hong Kong and the surrounding regions before making major investments and establishing a company in Hong Kong might consider opening a Representative Office (RO) first. A Representative Office is classified as a promotion and liaison office, and it must limit its operations to that. Representative Offices have no legal standing and are unable to engage in any profit-generating activity.
2. What you should know about Representative Office in Hong Kong?
- A Representative Office has no legal status or recognition, and the parent business is liable for all of the Representative Office’s activities.
- In most cases, the Representative Office’s name must be the same as the foreign parent company’s. If the name is already in use in Hong Kong, the foreign business must choose a new name for the Hong Kong Representative Office.
- A Representative Office functions as a cost center and is limited to liaison, promotional work, and market research. It is prohibited from engaging in commercial profit-generating activities such as doing business, finalizing contracts, offering fee-based consulting, transporting products, or negotiating letters of credit. It will need to modify its business structure to that of a subsidiary company or a branch office if it intends to engage in any transaction that generates a legal obligation.
- A Representative Office is a temporary administrative office that helps a foreign firm evaluate the business climate and determine whether doing business in Hong Kong is viable.
- There is no requirement for registered capital to open a Representative Office. Representative Offices are non-profit organizations that are not required to file tax returns with the Internal Revenue Service. However, Representative Offices must apply with the Inland Revenue Department for a Business Registration Certificate.
- Typically, a Representative Office will choose a staff member from its overseas parent business to run the office and relocate to Hong Kong. It’s also possible that local employees may be hired as support personnel.
- Note: Any documents not in English or Chinese must be translated into English or Chinese through official channels before submission.
3. How to open a Representative Office in Hong Kong?
Representative Offices in Hong Kong are not required to register with the Companies Registry. However, within one month of its start date, the company must file for a Business Registration Certificate with the Inland Revenue Department. During registration, the following papers are required:
- Completion of an application form that has been mandated
- In Hong Kong, proof of identity for the RO’s chief officer is required.
A corporate bank account can be created with any of Hong Kong’s major banks once the Representative Office has obtained the Business Registration Certificate from the Inland Revenue Department.