How to put funds into a new limited company?

[businessnoob]

Hi all,

I'm in the process of setting up a bank account for a newly incorporated HK limited co (I'm sole director/shareholder).

However as I'm a total business noob, I have no idea how to put initial funds into the company (say HKD 80,000), legally speaking. Should I do some sort of equity injection or a shareholder loan? Or just transfer the money from personal account to company bank account? In any case, what kind of paperwork do I need to go through...?

Sorry if this is such a noob question as this is the first company I've set up, and I have tried googling but no real answers pertaining to HK.

I would talk to an accountant, but at the moment I have no idea about the viability of the business and tight on funds, so I'd like to DIY first until I have a sense whether the business will have viable trade.

Many thanks,
"Joe the Businessnoob"

[shri]

Shareholder loan is always an easy way to go.

Better than equity.

[businessnoob]

Thanks. Could I then just draft a simple agreement between myself and the company, stating xxx amount repayable in x years with no interest? I guess I can try to find a sample loan template online.

[TallT]

This amount should be allocated to your share capital contribution and the remaining amount should be a classified as a loan owing to you from the business.

[shri]

Isn't the usual capital contribution HK$ 1?

[Trebor]

Initial Share Capital can be any amount but yes it's usually around USD 1 / HKD 100 etc etc.

@ OP I assume you understand your Hong Kong company must be audited each year so it is important to get the correct documents in place and book keeping done correctly. I think a simple loan letter stating the loan is interest free and repayable on demand will be sufficient for a small business such as yours.

[big_panda]

I'd do a capital contribution, in exchange for issuing further shares, or you could elect not to issue new shares, if you don't want the additional paper work.

[alexwangmn]

First is to look at what was the registered share capital, if the share is HKD 1, then rest of HKD 79,999 can be allocate as working capital, loan, etc... I've seen companies registered share cap from as little as HKD 1 to HKD 1 Million, so got to look at the company's founding document.

If you are a sole Director / Shareholder, and you are not running a multi-billion dollar business, you can save the effort to draft the loan agreement, auditors wouldn't even bother to look at it as long as you have proper description noted in the financial statement. Having said that, I agreed it is a good practice to keep a formal document for the transaction (um... will you be signing for both Lender and Borrower? That sounds a bit strange...)

As for deposit the initial fund, just dump the cash or wire transfer from your personal bank account, when your company is ready to setup a proper accounting, your accountant will reject the amount from the bank statement into share capital / equity / loan classification.Hope it helps.