The Hong Kong Financial Services and the Treasury Bureau (FSTB) published, on 3 July, a legislative proposal for an inward company re-domiciliation regime to provide a simple and straightforward route for non-Hong Kong companies to transfer their domicile to Hong Kong.
Currently, a company intending to transfer its domicile to Hong Kong needs to be wound up in its original domicile and establish a new entity in Hong Kong or enter into a court-sanctioned scheme of arrangement to convert into a wholly owned subsidiary of a Hong Kong-incorporated company.
The FSTB proposes to amend the Companies Ordinance (Cap. 622) to introduce an inward re-domiciliation regime. This will be applicable to all the five types of companies that can be formed in Hong Kong – private companies limited by shares, public companies limited by shares, companies limited by guarantee without a share capital, private unlimited companies with a share capital and public unlimited companies with a share capital – or their comparable types in the company's original place of incorporation.
The amendment will ensure that, upon successful completion of the re-domiciliation, the company concerned will retain its identity and have the same rights and obligations as any other incorporated company of its kind in Hong Kong.
To enable the regime to be as inclusive as possible to different types and hierarchies of companies, including holding companies, Hong Kong does not intend to impose an economic substance test on applying companies. This will also ensure parity between local and re-domiciled companies.
The legislation will provide necessary consequential amendments to the Inland Revenue Ordinance to provide certainty to the re-domiciled companies on their tax obligations, and to empower the Inland Revenue Department to address transitional tax matters.
The FSTB said it plans to develop the relevant legislative amendment instrument for submission to the Legislative Council in 2023/2024.
"The proposal to allow non-Hong Kong companies to re-domicile to Hong Kong is another initiative from the Government to attract businesses to the country. When these proposals have been finalised, I expect to see an influx of offshore companies redomiciling to Hong Kong, because it is the gateway to the exciting opportunities that lie within Greater China," said Alan Fong, Managing Director of Sovereign Trust (Hong Kong).
"The government has introduced a number of initiatives over the past 18 months, such as tax concessions for Family Offices and hosting the 2024 edition of the Belt and Road Summit. which not only enhances Hong Kong's reputation as an international finance centre, but a great place to conduct business."
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