1. Managing Hong Kong Companies
Presenter: Hugo Muller

2. About Us

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

4. 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)

5. 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

6. 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.

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

8. 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.

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

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

11. 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.

12. 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.

13. 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.

14. 3. Practical Matters on Managing a HKC
Our experiences

15. 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;

16. 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;

17. 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.

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

19. 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)

20. Any Questions? Hugo Muller hm@ilf-asia.com
Crystal Century Tower Suite 7-i
567 Weihai Road, Jing An District
Shanghai P.R.C.
Tel: +86 (0)
Fax: +86 (0)