For businesses eyeing expansion into new markets, Asia is a compelling destination with promise and potential. Singapore and Hong Kong, in particular, are top contenders among places for incorporating a business. If you are choosing between Singapore and Hong Kong as your next business destination, this article will guide you in making that decision.
Why many companies prefer Singapore and Hong Kong to start international business?
Singapore has become a magnet for multinational corporations, with Bloomberg Intelligence reporting 4,200 companies establishing their headquarters in the country in 2023. Among these, industry giants like Microsoft, Google, FedEx, and Rolls-Royce chose Singapore for their headquarters.
The nation also presents thriving industries such as manufacturing, medical devices, pharmaceutical and biomedical sectors. Coupled with its global talent competitiveness and strategic location as a gateway to Southeast Asia, Singapore may offer a conducive environment for growth in various sectors.
On the other hand, Hong Kong’s strengths, as outlined by the Census and Statistics Department, lie in four key industries: Financial services, tourism, trading and logistics, and professional and producer services.
The region’s talent admission schemes have also attracted around 90,000 skilled individuals from overseas in 2023, contributing to its rich and diverse talent reservoir. As a major financial hub and vital entry point to mainland China, Hong Kong is another option for businesses considering company incorporation abroad.
Let’s now look at the key differences in the process of incorporating a business in Singapore and Hong Kong.
1. Incorporation time frame
For starters, the time it takes to officially register your business is a critical factor to consider. This will directly impact the speed at which your company can kickstart its operations, enter the market, and start generating revenue. Some jurisdictions offer expedited processes and efficient electronic filing systems that enable quick setups while others may have more complex procedures that take longer to navigate.
Take Singapore, for instance, where the company incorporation process with the Accounting and Corporate Regulatory Authority (ACRA) is relatively efficient and straightforward. With the necessary paperwork in order, anticipate a minimum three-day time frame for your company’s incorporation in Singapore.
On the other hand, the company incorporation process in Hong Kong may take up to a week. This is done via the Companies Registry. Be sure to submit all required documentation and ensure its accuracy to speed up the process and avoid unnecessary delays.
2. Share capital
When incorporating a business, share capital might be an aspect that jurisdictions look at closely. Share capital refers to the total value of capital contributed by shareholders in exchange for shares issued by a company.
In Singapore, companies can issue shares without immediate full payment, and the share capital is segmented into paid-up and unpaid categories. Paid-up capital signifies funds fully paid by shareholders for the issued shares, with a minimum requirement of SG$1 during the company incorporation process.
Conversely, Hong Kong adopts a more flexible approach with no minimum share capital requirement for business registration. The common practice, however, involves issuing at least one ordinary share when incorporating a company in Hong Kong.
3. Directorship and company secretary
As part of the formation and incorporation of a company, Singapore and Hong Kong requires a minimum of one director with no maximum limit. Here, the director is integral to overseeing company management and guiding its direction on significant matters.
There are, however, some differences in the residency criteria. In Singapore, the requirement is typically for at least one company director who qualifies as an ordinary resident. This includes individuals holding Singapore Citizenship, Singapore Permanent Residency, Employment Pass, or EntrePass. As such, you will need to take into account the costs associated with hiring a director based in the country. This may include not just their salary but also benefits and, if applicable, possible relocation packages.
In Hong Kong, directors need not be residing in the region, providing flexibility for companies whose leadership may consist entirely of foreigners. While this can be cost-effective, you may still consider the potential need for local expertise to navigate Hong Kong’s regulatory landscape in the long haul.
Apart from having a director, a company secretary must be appointed to ensure adherence to financial and legal obligations. Both Singapore and Hong Kong require qualified local professionals, either natural persons or corporate entities. Bear in mind that in both regions, the sole director of a company is not allowed to take on the additional role of the company secretary.
4. Fees involved
Finally, it is essential to understand the fees associated with the formation and incorporation of a company in either Singapore or Hong Kong. According to ACRA, incorporating a business in Singapore will comprise a name approval fee of SG$15 and a company registration fee of SG$300, totalling SG$315.
Starting from 1 April 2024, the total government fee for company incorporation in Hong Kong will be HK$3,920. This comprises an application fee of HK$1,720 and a revised business registration fee of HK$2,200, reflecting an increase of HK$200 as announced in the Hong Kong Budget 2024-25. To support new incorporations, the government will waive the HK$150 levy for two years.
Incorporating with assurance
Overall, opting for either Singapore or Hong Kong offers exciting opportunities if you are considering venturing into overseas markets. However, it is crucial to familiarise yourself with the various jurisdiction-specific requirements to ensure a smooth and compliant company incorporation.
Healy Consultants Group provides a wide range of corporate services across the world. Email or WhatsApp us now to find out more about our services.