Whether a payment is considered “interest” depends on the substance of the transaction. The intrinsic nature of said interest is compensation for not being able to use or the delayed payment of money by another. The interest must be charged against a primary sum of money which must be owed to the person entitled to the interest.

The Income Tax Act does not give a definition for royalties. However, royalties can be defined as a payment for the right to use a patent, copyright and other intellectual property. E.g. payment for every book sold or an artist album sold on VCD.

The types of companies that may be formed and regulated under the new Companies Ordinance in Hong Kong are public and private companies limited by shares; companies limited by guarantee without a share capital, public and private unlimited companies with a share capital.

The following companies shall, in accordance with the provisions of the Auditors and Statutory Audits of Annual and Consolidated Accounts Law2009 submit their financial statements to an Auditor for auditing: every company required by this Law to prepare consolidated financial statements; every public limited-liability company; every private limited-liability company not being a small-sized company.