The Hong Kong Market Entry Playbook: Premises and Bank Accounts

Hong Kong has a long history of being a business-friendly location to set up both as a regional business hub and to access the sophisticated local market. In the next of a series of articles exploring the attraction of Hong Kong as a regional and international business centre, Pádraig Walsh of Tanner De Witt shares thoughts on other practical issues on starting business in Hong Kong.

Business premises

Choices: Hong Kong offers the usual range of choices between leased premises, serviced offices and co-working spaces.

Office tenancy: A permanent office may be more suitable depending on factors such as the type of business and the regularity of clients’ visits. Rental will be highest in buildings with top quality amenities located in the Central area of Hong Kong. The length of the lease varies, but is usually for an initial period of three years. The lease will include provisions in respect of the period of tenancy, the monthly rent, payment period, deposit, facilities, renewal, and termination.

Costs: The commercial property market in Hong Kong is quite landlord dominant, and negotiation of lease terms can be challenging for prospective tenants. Apart from rent and the initial security deposit, other office rental costs typically include:

(a) One-off payment to property agent;

(b) Management service charges to cover air-conditioning, security, common areas cleaning and other building services; and

(c) Government rates.

Process: After agreeing with the landlord on the principal terms of the lease, the landlord will issue a Letter of Offer. This has to be counter-signed and returned by the tenant within a specified period with a security deposit (usually two to three months’ rental plus management service charge and government rates). Once the lease is signed, the agreement must be submitted to the Stamp Office of the Inland Revenue Department for payment of stamp duty within 30 days after the date of execution of the agreement. Usually, the landlord and tenant share the stamp duty equally.

Serviced offices or co-working space: Some businesses prefer to start with a serviced office or co-working space. These facilities are available across Hong Kong, and allow for use of premises that can be scaled or reduced according to the needs of the business, and usually include access to a range of business support services.

Opening a business bank account

Account opening: Opening a business bank account in Hong Kong is straightforward and transparent. Before opening a business account, the applicant must complete the business registration and company incorporation. The process and documents required to open an account vary, depending on the type of business and the choice of bank. Complications can arise if the applicant has not understood or fulfilled the requirements of the bank, or has delayed in the submission of necessary documents or information.

Documents: Common documents needed to open a business account include:

(a) proof of identity of the principal directors and beneficial owners;

(b) proof of business address in Hong Kong;

(c) business formation documents; and

(d) business plan and proof of existing business activities.

Due diligence: Most of the banks in Hong Kong follow strict due diligence and know your customer procedure. This can include a requirement that the account signatories and principal directors to be physically present at the bank in Hong Kong for opening the account.

Pádraig Walsh

* This article is an expanded version of our contribution to the iTech Law global publication “Startup Legal Playbook”, which can be accessed on this link.

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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication. This article was last updated on 25 March 2024.