[ESTABLISHING A BUSINESS ENTITY IN HONG KONG]
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3.3.2 Representative Office An office in Hong Kong set up by a non-Hong Kong company falling short of an establishment of a place of business in Hong Kong is loosely referred to as a “representative office” or “liaison office”. Such a representative office is not meant to transact any business or create any legal obligations, and its activities are normally restricted to the promotion or marketing of overseas businesses and liaison with potential local customers or overseas offices. It is usually set up by foreign enterprises to establish a physical presence in Hong Kong and familiarize itself with the local business environment as the first step of its entry into the Hong Kong market. A non-Hong Kong company that has a representative or liaison office is required to obtain a Business Registration Certificate but is normally not required to be registered as a registered non-Hong Kong company with the Companies Registry unless and until a place of business is established in Hong Kong. Provided that the representative office continues to confine itself to promotional or liaison activities such that no profits are generated in Hong Kong, the Inland Revenue Department may exempt the non-Hong Kong company from filing tax returns. 3.4 Sole Proprietorship Sole proprietorship refers to the operation of a business by a person on his own account. All the rights and liabilities of the business accrue to the sole proprietor. The sole proprietor is personally liable for all the losses of, and all the contracts entered into for the business. The sole proprietor, being the sole owner of the business, will have complete control over its management.
A sole proprietor must apply for business registration within one month from the business commencement date. 3.5 Partnership A partnership, also referred to as a “firm”, is the relation which subsists between persons carrying on a business in common with a view of profit. Nature A partnership is not a legal entity separate from the partners. Partnership property is owned jointly by the partners. Types of Partnership There are mainly 4 types of partnerships in Hong Kong: (a) General partnership (GP); (b) Limited partnership (LP); (c) Limited liability partnership (LLP); and (d) Limited partnership fund (LPF). The rights and liabilities of the partners between themselves depend on the type of partnership and are governed by the partnership agreement (if any), the Partnership Ordinance (Chapter 38 of the Laws of Hong Kong) and general common law. 3.5.1 General Partnership (GP) Constitution GPs can either be formed by express agreements or implied by conduct. There is no limitation on the number, nationality or residence of partners. A body corporate is capable of being a partner. There is no registration requirement for setting up a GP except for business registration. In the absence of a partnership agreement, the Partnership Ordinance applies to govern the dealings and management of the partnership.
ILN Corporate Group – Establishing a Business Entity Series
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