Is Hong Kong Still Safe for Business After the National Security Law? What the Data Shows

Hong Kong remains home to thousands of international companies after the National Security Law took effect in 2020. Whether Hong Kong is still safe for your business depends on what your company does, where it trades, and which legal obligations apply to its activities.

The latest figures provide useful context. Hong Kong’s Companies Registry reported more than 1.6 million local and re-domiciled companies on its register at the end of June 2026. In a separate survey, 74% of American Chamber of Commerce respondents said the National Security Law had not negatively affected their operations.

Both findings matter. Neither can tell you whether a proposed trading company, research business, or holding structure will encounter a particular legal issue.

For founders evaluating Hong Kong in 2026, the more useful approach is to examine the business environment alongside the activities their proposed company will undertake.

How Has the National Security Law Changed Hong Kong’s Business Environment?

Hong Kong’s National Security Law came into effect on June 30, 2020. The Hong Kong government states that the legislation aims to safeguard national security and restore stability following the unrest of 2019.

The legislation establishes four principal categories of national security offences:

• Secession.
• Subversion of state power.
• Terrorist activities.
• Collusion with foreign or external forces to endanger national security.

The legislation did not repeal Hong Kong’s Companies Ordinance or its commercial law framework. Businesses can continue to incorporate, enter into contracts, and conduct commercial activities under the applicable rules.

Companies and individuals must also consider the national security framework when their activities fall within its scope.

Article 23 Added Further National Security Legislation in 2024

On March 23, 2024, Hong Kong enacted the Safeguarding National Security Ordinance, commonly called the SNSO or Article 23 legislation.

The ordinance addresses offences including treason, sedition, espionage, unlawful disclosure of state secrets, and external interference endangering national security.

The Hong Kong government maintains that the legislation protects stability and helps businesses invest and operate.

The UK and US governments have expressed concerns about the breadth of certain provisions and their potential effects on businesses, individuals, and cross-border activities.

These are different official assessments of the legislation. A company planning a specific project needs advice based on its activities and the laws that may apply.

Regulatory Developments Continued into 2026

The UK government updated its Overseas Business Risk: Hong Kong guidance on July 9, 2026.

That guidance identifies further subsidiary legislation under the national security framework in May 2025, March 2026, and June 2026. According to the UK government, business communities continue to report uncertainty about the potential long-term effects.

Companies relying on a legal review prepared several years ago may need to revisit it before entering new contracts or commencing sensitive activities.

What Does Hong Kong’s Company Registration Data Show?

Hong Kong’s Companies Registry published its first-half 2026 statistics on July 17, 2026.

The figures show continued company registration activity. They also describe several different populations of businesses that readers should keep separate.

Sources: Hong Kong Companies Registry, first-half 2026 statistics; InvestHK and Census and Statistics Department, 2025 Annual Survey.

Registered Companies Are Not the Same as Foreign Investors

The figure of 1,609,720 represents the relevant registered company population at the end of June 2026. It includes companies incorporated in earlier years.

The separate figure of 16,014 registered non-Hong Kong companies refers to entities incorporated in another jurisdiction that have registered a place of business in Hong Kong.

Consider two founders. The first establishes a new Hong Kong Limited Company. The second operates an overseas company that registers a Hong Kong branch.

The two structures fall into different registration categories, even though both founders may conduct international business in Hong Kong.

For a closer look at the local company structure, read our Hong Kong Private Limited Company guide.

More Companies Reported Parent Companies Outside Hong Kong in 2025

InvestHK and the Census and Statistics Department identified 11,070 companies with parent companies outside Hong Kong in their 2025 Annual Survey. The figure includes companies whose parents are based in Mainland China.

The reported total increased by 11% compared with 2024. These companies employed approximately 509,000 people.

The largest parent-company locations were:

• Mainland China: 3,090 companies.
• United States: 1,550 companies.
• Japan: 1,550 companies.
• United Kingdom: 770 companies.
• Singapore: 590 companies.

The survey also provides a useful breakdown by business activity.

Import and export trade, wholesale, and retail accounted for 5,100 companies. Financing and banking accounted for 2,390, while professional, business, and education services accounted for 1,770.

Foreign-affiliated businesses therefore continue to operate across several commercial sectors in Hong Kong.

These figures measure reported company presence. They cannot establish how many legal concerns individual companies have encountered or whether a particular law caused changes in investment.

What Do Foreign Businesses Say About the National Security Law?

The American Chamber of Commerce in Hong Kong released its 2026 Business Sentiment Survey on February 2, 2026.

AmCham conducted the survey between November 2025 and January 2026. It invited senior representatives of more than 450 corporate members and reported a response rate of 25%.

How Should Investors Interpret the 74% Finding?

AmCham’s 74% finding describes the operating experience reported by its survey respondents.

The Chamber also noted concerns about indirect effects, including how overseas businesses perceive Hong Kong.

Companies that already left Hong Kong may be absent from the survey population. The results also cannot represent every locally owned business or overseas founder.

Read the findings as evidence about participating companies at a particular time. A founder assessing a new business still needs to examine its own transactions, staff responsibilities, and legal exposure.

US-China Relations Continue to Affect Corporate Planning

AmCham found that 59% of respondents regarded US-China relations as their foremost business challenge.

The survey also reported that 82% of companies had adjusted or reconsidered their three-year planning in response to the international trade climate.

Businesses serving US customers, importing technology, or relying on international payment providers may need to assess the rules applicable in several jurisdictions.

Hong Kong company registration alone does not resolve those questions.

Which Legal and Operational Risks Should Foreign Companies Review?

A company’s exposure depends on the work it performs and the parties involved. The legal review for a trading company may differ considerably from the review for a research business handling sensitive information.

1. Sensitive Information and State Secrets

The Safeguarding National Security Ordinance addresses unlawful disclosure of state secrets and espionage, among other offences.

In its Investment Climate Statement published on June 5, 2026, the US government expressed concerns about the scope of several provisions and their potential effects on business activities.

Research firms, consultants, media organisations, and data service providers should examine the information involved in their proposed projects.

Suppose a consulting firm is asked to investigate a sensitive technology sector. Before accepting the engagement, its management should establish what information the team will collect, how it will obtain that information, and who will receive the results.

Where national security provisions may be relevant, qualified Hong Kong legal counsel should review the proposed work.

2. Corporate Data and Electronic Devices

The UK government’s July 2026 guidance records changes to the Article 43 implementation rules on March 23, 2026. The changes expanded certain investigative powers in national security matters.

Companies should account for these provisions when preparing staff to travel with confidential business information or electronic devices.

Review internal access controls, customer confidentiality obligations, and procedures for responding to lawful requests from authorities.

For multinational businesses, the review may also need to cover data protection obligations imposed by customers or other jurisdictions.

3. Sanctions and Export Restrictions

International companies need to examine applicable sanctions according to their counterparties, products, payment arrangements, and countries of operation.

One recent development deserves attention when using older Hong Kong business guides.

On July 14, 2026, the US Office of Foreign Assets Control announced changes to its Hong Kong-related sanctions program following the expiration of the national emergency declared under Executive Order 13936.

OFAC clarified that the expiration did not repeal the Hong Kong Autonomy Act or the Hong Kong Human Rights and Democracy Act.

The agency also updated the treatment of certain designations according to their remaining legal authorities.

If your company plans to import restricted technology, supply customers in several countries, or transact with potentially sanctioned parties, check the relevant restrictions before signing contracts.

A sanctions checklist prepared before July 2026 may need updating.

4. Commercial Disputes and National Security Proceedings

Hong Kong continues to maintain its separate common law system for commercial and civil matters.

The UK government’s July 2026 business risk guidance states that civil, commercial, and criminal cases unrelated to national security continue under common law principles and international standards.

The same guidance identifies procedural changes affecting national security proceedings.

When negotiating a Hong Kong contract, review the governing law, dispute resolution provisions, and any regulatory obligations associated with the proposed transaction.

Where the activities could involve national security legislation, seek advice from a qualified professional familiar with Hong Kong law.

A Practical Risk Review for Different Business Models

Founders can use the following framework to prepare questions for legal counsel and corporate services providers.

This is a practical due diligence framework, not an official Hong Kong government classification of business risk.

Example: An Overseas Trading Company

Consider an Indonesian business owner establishing a Hong Kong Limited Company to contract with manufacturers in Mainland China.

The founder should identify who will sign purchase agreements, where goods will be delivered, and which entity will receive customer payments.

Relevant export restrictions and counterparty checks may need to be completed before the first transaction.

If the business expects to use Hong Kong’s trade arrangements with Mainland China, our guide to CEPA and Hong Kong’s tariff-free access to Mainland China explains the applicable origin and eligibility considerations.

Incorporation alone does not establish eligibility for preferential trade treatment.

Preparing for Hong Kong Company Registration After Your Risk Review

Once you understand the proposed activities and relevant legal questions, you can prepare the incorporation structure.

Define the Hong Kong Entity’s Commercial Role

Decide whether the company will sign contracts, receive payments, own shares, or conduct its own commercial operations.

If it belongs to an existing international business, document the functions and relationships of the relevant entities.

A Hong Kong company does not automatically eliminate tax or regulatory obligations arising from activities in another country.

Prepare for Corporate Banking Due Diligence

Banks may request information about beneficial ownership, sources of funds, customers, and expected transactions.

Incorporation and corporate bank account approval are separate processes.

Foreign founders should prepare business descriptions that match their contracts and proposed transaction flows.

Our guide to registering a Hong Kong company from abroad explains incorporation documents and banking considerations for nonresident founders.

Arrange Statutory Corporate Compliance

National security legislation does not replace the Companies Ordinance or the company’s ongoing filing obligations.

Foreign founders still need to arrange a company secretary, an eligible registered office, relevant corporate records, and statutory returns.

For the administrative requirements, see:

• Company Secretary and Designated Representative in Hong Kong.
• Hong Kong Company Name Rules and Registered Address Requirements.

If you are also considering another jurisdiction, our Hong Kong vs Singapore company registration guide covers corporate structures, registration costs, and tax considerations separately.

Making Your Next Hong Kong Business Decision

Company registration statistics and the AmCham survey document ongoing commercial activity in Hong Kong following the introduction of national security legislation.

Government risk advisories identify additional matters that businesses may need to review, particularly when their operations involve sensitive information or multiple jurisdictions.

Before paying for incorporation, establish what your Hong Kong company will do, which parties it will trade with, and whether its proposed activities require specialist legal advice.

Once your operating model and corporate structure are ready, vOffice Hong Kong Company Registration can assist with incorporation and related administrative arrangements according to the selected package.