Good Practice: Holding Formation in Hong-Kong

Good Practice: Holding Formation in Hong-Kong

Are you planning to expand the operations of the business to the Far East? The best method is using a holding company. Unlike a limited liability company, a holding company is good because it acts as a shield for the mother company from risks such as bankruptcy.

Hong Kong is one of the most preferred jurisdictions for holding companies because of the low tax regime, many DTAs with neighboring countries and stable banking system.

Hong Kong’s holding companies formation is outlined in the Companies Ordinance. In this post, we look at the best practices when forming a holding company.

Registering the company on your own

This method involves collecting all the documentation and taking them to the company’s registry in Hong Kong. You will need to prepare these documents for holding formation Hong-Kong.

  • The copies of passports for all shareholders.
  • Proof of address and location for all the shareholders and directors
  • A local office and resident secretary
  • The company’s article of association
  • The memorandum of understanding
  • The registration fee
  • Company name after carrying a comprehensive name search
  • Certificate of incorporation for the mother company

These documents have to be presented to the companies’ registry for consideration. If the registrar finds that more details are required, you will be called upon.

Notably, the process of preparing these details especially for very busy investors can be complicated. Often people find it very difficult to craft winning documents when registering holding companies in Hong Kong. The most appropriate thing to do is register with the help of an agency.

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Using an agency for holding formation Hong Kong

Company agencies are registered firms that are allowed by the Hong Kong companies ordinance to help clients register businesses. Experts run the agencies with the understanding of the Hong Kong economy. This means that you will be using people with vast experience in the target economy. The main benefits of using agencies for holding formation Hong-Kong include:

  • Professionals run the agencies: Agencies are operated by top professionals who have been in the Hong Kong market and understand what is required. Because they have seen applications being declined, they will ensure your papers are the best to get approved faster.
  • They help to cut costs for registering a holding company: Registering a company in Hong Kong is never cheap. If you decide to go it alone, the cost goes up. However, because you do not need to book a flight when using an agency, the process is easy and cheap. In fact, they even cut the cost further because they are allowed to act as company secretary and their offices used as company offices.
  • Agencies have vast knowledge on Hong Kong market and how to exploit various DTAs: The main target of holding formation Hong-Kong is to benefit from great deals that Hong Kong has entered with countries such as China. But it is a monumental task when you go it alone. Using an agency assures you that the company structure will make the company enjoy different DTAs between China and Hong Kong as well as other countries. For example, they will help you to demonstrate tax substance when trading with other parties in China and neighboring countries.

While you can still register your holding company by flying to Hong Kong, the best practice is using an agency. Agencies are run by experts to guarantee you of the best business structure, entry, and enjoying different DTAs between Hong Kong and other countries.

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