Managing Hong Kong Companies Presenter: Hugo Muller

About Us

Bonnard Lawson – Swiss/European Switzerland (Headquarters): Geneva Lausanne Nyon France – Paris Luxembourg Other: UAE – Dubai

Bonnard Lawson – Asia Foreign registered law firm in Shanghai and Hong Kong Multinational team Spoken languages: English, Hebrew, Dutch, French, Portuguese and Chinese (Mandarin/Cantonese/ Shanghainese)

Bonnard Lawson – Asia Specialise in: M&A and JVs Market entry legal feasibility study Cross border compliance Corporate structuring and restructuring Dispute resolution Labour law Commercial contracts IP registration

Outline One Country – Two Systems; Hong Kong’s Legal Environment. Using a HKC in your structure and the advantages. Practical Matters on Managing a HKC.

1. One Country – Two systems Hong Kong’s Legal Environment

Hong Kong’s Legal Environment Outstanding international legal and business reputation, which is noted for its transparency. Part of China, but enjoys a great amount of autonomy under the One Country – Two Systems arrangement. Independence of justice. Equal treatment of nationals and foreigners. English and Cantonese as the language of justice. Based on English Common Law and the rule of law is fundamentally established. Highly educated and highly trained legal practitioners.

2. Using a HKC in a China structure and the advantages From a Holding and Trading perspective

Chinese Manufacturers Basic Usage Structure Parent/Group Holding Chinese Entity Overseas Customers Trading Chinese Manufacturers Other China Hong Kong

General Advantages Recognized international financial center with real business. Favorable tax regime without tax haven status. Gateway into China; language, culture, location, One Country, Two Systems.

Holding Advantages Rule of Law: HK vs. China; HK is more flexible. More favorable in dispute resolutions between partners; Free issuance of shares, without approval; Price differentiation between shares issued to different shareholders; Possible issuance of different classes of shares; More flexibility when exiting; Possible tax benefits if substance-requirements are met. Easier to set up a Chinese entity with a HKC; e.g. no official translations or notarizations required.

Trading Advantages Internationally recognized and well-established trading infrastructure. Territorial Source Principle of Taxation; No double taxation risks. Possibility to file for off-shore status. If tax applies, still relatively low rate. – Two Tier Tax per April 2018.

3. Practical Matters on Managing a HKC Our experiences

General Incorporation Requirements Know Your Client: Identify Ultimate Beneficial Owner (“UBO”); Identify Persons with Significant Control (“PSCs”) Shareholders; Directors; Origin of investment capital; Group corporate structure;

Company Secretary: A Position, Enshrined in HK Law Ongoing Obligations: Annual HKC registration renewal; Annual renewal of Business Registration Certificate (“BRC”); Notify in case of specific changes related to HKC, e.g.: Address change of a director; Passport change of a director; The HKC providing a pledge, a mortgage or a guarantee; Capital contribution to the HKC;

Bank Account HK, in general, and the banks in HK, do not want a Tax Haven reputation. Opening bank account: Usually a few weeks, but may drag out for months. Caution! In case of a so-called Business Review, your bank account may be suspended for multiple months. Opening a second bank account can help mitigate risks.

Accounting and Tax Draw up audited accounts every financial year Profits Tax Return (“PTR”) Offshore claim (Does not automatically apply)

New Regulations 1 March 2018 – Two new regulations to get HK in line with FATF Register of Significant Controller: Each applicable company must keep a register of its significant controllers Licensing Regime for Trust & Companies Service Providers (TCSPs)

Any Questions? Hugo Muller hm@ilf-asia.com Crystal Century Tower Suite 7-i 567 Weihai Road, Jing An District 200041 Shanghai P.R.C. Tel: +86 (0)21 6321 8838 Fax: +86 (0)21 6321 8891 www.ilf.ch/en/