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In Order To Open Company In Hk, You Need To Be Familiar To The Rules On Share Capital

Good to know if you are looking at opening a business in Hong Kong as a foreigner for the first time.

Commission refers to the amount of money or the price paid to a person in recognition of his duties. Usually, so happens that a person performs a job in a good manner, especially Open Company In HK at the department of sales and marketing. As a result, a sum of money is awarded to him. The criterion for the determination of the value of the sum is in accordance with the set market value or a pre-determined percentage of the revenue earned. This process encourages the sales department to perform well in order to gain commissions.

The following is the description about what different regulations imposed on the allotment of commissions while using the share capital of the company before considering to open a business in Hong Kong as a Foreigner.

Exclusion of Commissions, Discounts and Allowances

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  • Except as permitted by the section 148, a company can under no condition apply its shares or share capital in the payment of some sort of commission, discount or allowance, directly or indirectly, provided that the person is:
  • Signing a contract for or is agreeing to subscribe, either without any condition or under some sort of conditions, for shares in the company
  • Already procuring or is agreeing to procure subscriptions, either without any condition or under some sort of conditions, for shares in the company.
  • It is not a matter of importance that how the shares of a company or its share capitals are applied in the investment, whether they are being utilized in the purchase of property which the company buys or in the contract price which the company is forming for its benefit.
  • The laws in this section do not in any form affect the payment of the brokerage, or the money which is charged on the company for buying out goods, by the company which buys out the things of interest.

Legalised Commissions

  • The company may pay commissions to its workers when the below mentioned conditions are satisfied for a person, that is:
  • Signing a contract for or is agreeing to subscribe, either without any condition or under some sort of conditions, for shares in the company
  • Already procuring or is agreeing to procure subscriptions, either without any condition or under some sort of conditions, for shares in the company.
  • The conditions are that:
  • The payment of commissions is not under the table and that the company already agrees to pay the commission in its articles.
  • The commission which is to be paid or which is agreed upon both the parties does not exceed the limit of 10 percent of the price on which the shares were issued and the amount of commission must also not exceed the rate which has been authorized and approved by the articles beforehand.
  • If the shares are kept private and are not offered to the public, then the company has an obligation to deliver the registrar a registration notice in detail, which discusses the amount and the rate at which the commissions are being issued. The number of shares that the concerned persons have agreed for a commission to absolutely subscribe.
  • Also, the company has to disclose the information about the number of shares that the said person wants to subscribe for in accordance with the advertisement through circulars or notices, which has been done by the company.
  • A vendor to the company or the promoter of the shares which are invested in the company or the person who is receiving payment in money or shares from a company may apply any part of the money which is received in this manner in the payment of any and all the commissions which is permitted by the section and the company is free to pay it directly too.
  • The failure to keep up the conditions which are described above can and will count as an offence on part of the company itself and the people working in it. Hence, every member is liable to a fine at level 4 as mentioned in the constitution.

Application of the Share Capital in Writing Off Certain Expenses and Commissions

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If opening a business in Hong Kong as a foreigner it would be good to know that a company is entitled to apply its share capital in reducing its monetary burden. The constitution allows the company to do so. In this manner, the company can free itself from past debts and can make a better performance once free of all the debts. The following are the situations in which the company can apply its debts according to the law:

  • The preliminary expanses of the company. These are the expenses which were faced while starting the company. The money obtained for the cause of opening the company can be in the form of bank loan. Hence, once the company gathers enough shares, it can write off its loans with the help of those shares.
  • Any commission which has been paid under the section 148 or under the section 46 of the older ordinance which was applicable to the companies. The terms for the commission which the company has to pay are already described in the above part of the document. The commissions are only paid to the people who have been mentioned in the company articles.
  • The company can easily invest its shares in any other expenses that are faced by the company, as well as in the issue of any shares by the company. Once a company has been founded, the decision-making board of the company can invest its shares according to its needs, while keeping in mind the limitations and restrictions applied by the law. Hence, the share of the company can be used in issuance of new shares.