Company types
Four types of companies may re-domicile to Hong Kong, namely:
- private companies limited by shares
- public companies limited by shares
- private unlimited companies with a share capital
- public unlimited companies with a share capital.
The companies will not be allowed to change their company types through the re-domiciliation.
Eligibility
There will be no economic substance tests. That essentially means that even small companies can re-domicile to Hong Kong. However, the applicants must comply with certain legal, financial and integrity and other documentary requirements, such as:
- As at the application date, the applicant’s first financial year end since its incorporation has passed.
- The company type to be applied for re-domiciliation is the same or substantially the same as the applicant’s type of company in its original domicile.
- The re-domiciled company will not be used for unlawful purpose or purposes contrary to public interest.
- If neither the law of the original domicile or the application’s constitutional documents requires members’ consent, an applicant should obtain such consent by a resolution duly passed by at least 75% of eligible members.
- The applicant is able to pay its debts as they fall due during the 12 months after the application date.
- The applicant is to provide its financial statements as at a date no more than 12 months prior to the application date (and such financial statements are to be audited only if the auditing is legally required in its original domicile).
- The application is made in good faith and not intended to defraud existing creditors of the applicant.
- The applicant is not in liquidation. No receiver or manager is in possession of any of its properties. No compromise or arrangement between it and another person is being administered.
- A legal opinion of a legal practitioner who practices the law of the original domicile is required to confirm the proposed re-domiciliation is allowed under the law of the original domicile. A legal opinion is also to cover the applicant such as its due registration in the original domicile, company type, members’ consent and solvency.
- A statement of the director as set out in the re-domiciliation form regarding the company’s incorporation/registration and solvency, permission, members’ consent and intent for the proposed re-domiciliation.
Insurers and authorised institutions which re-domicile to Hong Kong will be regulated and supervised as if they were locally incorporated. Foreign insurers and financial institutions seeking to re-domicile will be required to approach their respective regulators in Hong Kong before making the re-domiciliation application, such that assessment on their capacity in fulfilling the Hong Kong regulatory requirements can be conducted in advance.
Application process
The applicant must submit a completed and signed re-domiciliation form, provide all supporting documents (as outlined above and as requested by the Companies Registry) and pay the application fee. The Companies Registry will process applications within two weeks if all requirements are met. Upon successful application, the company will be registered in the Companies Register and made available for public inspection and the Registrar of Companies will issue a certificate of re-domiciliation. The re-domiciliation takes effect on the date of issuance of the certificate of re-domiciliation.
Effects of re-domiciliation
A re-domiciled company will have the same rights as any local incorporated company of the same kind in Hong Kong under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and shall comply with all the relevant Companies Ordinance requirements. It will preserve its legal identity, properties, rights, obligations and liabilities. The contracts and legal processes applicable to it before the re-domiciliation process will not be affected because no new legal entity is created through such process.
Upon issuance of the certificate of re-domiciliation, the company will have 120 days (or such longer period if extension is granted upon application) to provide evidence of its de-registration from its original domicile to the Companies Registry of Hong Kong.
Tax arrangements
Any company will be charged to Hong Kong profits tax on its profits arising in or derived from Hong Kong from a trade, profession or business carried on in Hong Kong, regardless of its domicile. Therefore, clarification of the tax residency of a re-domiciled company is not necessary.
To avoid double taxation, unilateral tax credits will be provided for re-domiciled companies in respect of tax payable on profits derived in Hong Kong after re-domiciliation where similar profits have already been taxed in an unrealised form by the company’s original domicile upon its exit.
Also, for the purpose of providing certainty for the tax assessment after re-domiciliation, arrangements will be put in place to address transitional tax issues such as fair deduction for trading stock, specified types of expenditures and depreciation allowances.
