When addressing the subject to open a bank account for a foreign company the following should be taken into account.
The bank compliance teams are trained to open accounts for companies registered in multiples jurisdictions, the perceived quality of the jurisdiction will first have to be determined.
A company registered in BVI or in Belize will face difficulties, less to say, to open a bank account in Asia.
Contrarily Seychelles companies and Samoa companies are well perceived, and regularly used as part of a structuration, with Singapore and Hong Kong banks.
The concept is to present to the potential bank a company from a jurisdiction they know and accept well. A bank could be very comfortable to open for a UK company and reluctant to do the same for a Seychelles company or vice versa.
Targeting the right bank is the work of Corporate Services Providers, preparing the compliance report and aligning interests is a job requiring up-to-date information about the risk appetite of Financial Institutions.
Why opening a foreign bank account for a company?
Whatever the jurisdictions of either the company or the bank the business logic is the most important.
There are multiples reasons to open a bank account for a foreign company:
- Accessing particular currency, i.e RMB is required when working with the People’s Republic of China
- Allowing the company to invest in stocks and financial investments locally
- Risks diversification, as under the current economic environment having all your eggs in one basket is dangerous.
- Easing payments and reducing transfer delays
Considerations by the banks
The banks in Hong Kong will consider the following factors prior to open a bank account for a foreign company:
- the nationality of the beneficial owner
- the country of residence of the beneficial owner
- the locations of the clients
- the locations of the suppliers
- the expected turnover
Working with a well-known Corporate Services Provider presenting the compliance report to the bank is crucial. To open a bank account in Asia, it should be handled by professionals.
In a very attractive and competitive environment Private Banking in Hong Kong is a solution for International Entrepreneurs willing to diversify their risks.
First let’s address the elephant in the room, private banking isn’t personal banking and the difference is just a question of amount, USD 1 million and more and you access private banking, anything less and you should remain in your country of residence.
Services of Private Banking Hong Kong are given by local banks and international banks, the city offers a very important choice of banks, the teams are well trained, the investment opportunities numerous and the overall business environment is favorable.
Advantages of Private Banking in Hong Kong
- Ease to invest on mainland Chinese stocks
- Access to multiples IPO’s
- Higher returns expectation, the portfolios are more aggressive as most of the clients are high demanding
Disadvantages of Private banking Hong Kong
- Confidentiality training to the team is less efficient than in Switzerland or Luxembourg, culturally the confidentiality doesn’t have the same importance in Asia.
- Higher returns also mean higher risks, Chinese mentality towards betting is well demonstrated in the Casino attendance with 90 % of Chinese visitors
- Bank compliance is less trained on wealth acquisition outside of China so might ask questions of a lower level than expected
Introduction to Private banking Hong Kong is usually made through wealth managers, lawyers, tax advisors and Corporate services Companies with the support of an adequate compliance report
In order to transfer funds to an individual or a company the Hong Kong banks details should be completed as follow.
Account holder name: Example limited
Account holder address: 33 F. imaginary building, 99 example road, district, Hong Kong
(Hong Kong doesn’t have postal code)
The account number in Hong Kong is composed of 9 to 12 digits, the first 3 being the branch code.
account number in Hong Kong should look like this : 123-456789-111
SWIFT code: Hong Kong doesn’t’ use IBAN
Hong Kong bank details are easy to complete, the SWIFT code can’t be found by googling the Financial intuition name and location.
There is no reason to provide your Hong Kong bank details, except of course on an invoice, you should protect your information and be aware of potential scams.
A Hong Kong non-profit organisation also presented as a caritative company in Hong Kong obey to the following rules:
- Must be established for charitable purpose and for public benefit
- The charitable purposes being classified in four distinct areas, charitable nature for the benefit of the Hong Kong community, advancement of a religion, advancement of education and last but not least relief of poverty.
- It should be recognized by the Hong Kong Inland Revenue Department, the department will not consider as charitable purpose: encouragement of a particular sport, provision of playing field or scholarship for a particular industry or company, attainment of a political object.
In order to benefit from a tax exemption, the caritative company in Hong Kong should submit to the IRD an application with list of activities planned for the next 12 months as well as the draft incorporation statutory returns and the draft articles of association.
This long process, up to six months before COVID 19 disturbances, should satisfy the IRD with the below criteria:
- Precise and clear entity’s objectives
- Limiting the application of funds to its stated objectives
- Prohibiting distribution of funds/assets amongst its members
- Prohibiting directors from receiving remuneration and avoiding any conflicts of interests
- Specify another charity for the remaining assets if the caritative company in Hong Kong engage with a dissolution
It’s crucial for the Hong Kong non-profit organisation to not receive any donation before the section 88 tax exemption status has been granted.
The process to setup a caritative company in Hong Kong.
- Using a limited by guarantee company with at least two members, two directors, one company secretary and later on one auditor but first
- Prepare custom drafting of articles of association
- Obtain the IRD approval then register the limited by guarantee company, requesting the dispense of the world limited is also an option.