Hong Kong positions itself as a strategic destination with new legislative framework for re-domiciliation of international companies

 

Net Craman Lawyers, a multidisciplinary office with an international focus, specialized in legal advice to companies and individuals in Europe and Asia, through its Director of the Asian Desk, Alvaro de Luis, provides the key points of the Hong Kong Corporate Re-Domiciliation Bill.

 

El Bill (No. 2) of 2024, published in the official gazette last December, introduces a regime that will allow international companies move its registered office to Hong Kong without losing its original legal personality. The first reading of the bill took place on 8 January 2025 in the Legislative Council and it is expected to enter into force after two additional sessions.

 

From a tax perspective, this change is significant since the re-domiciled companies They will be deemed to be incorporated in Hong Kong, making them subject to the local corporate tax, which is known to be very favourable. They will also be protected by the territory's extensive network of tax treaties.

 

The new framework offers a Strategic solution for multinationals seeking to change their jurisdiction for various reasons such as business strategies or risk management. This process, commonly referred to as “cross-border re-domiciliation,” consists precisely of the act by which a company decides to change its domicile abroad without first undergoing a liquidation process or a business reorganization operation such as an international merger or spin-off operation.

 

Neighboring countries such as Singapore already allow this type of change while maintaining legal personality from both the immigration and migration perspective. However, this has not been the case
case in the Hong Kong Special Administrative Region (although there is a mechanism to allow the re-domiciliation of foreign funds in Hong Kong), until now.

 

Under this new legislation, any company incorporated outside Hong Kong will be able to apply to move to Hong Kong provided it meets certain requirements:

 

Companies incorporated outside Hong Kong that change their registered office to Hong Kong will be recognized as "re-domiciled companies" according to the new definition to be incorporated into the Companies Act.

 

The new regime will allow redomiciliation for several types of companies, including limited partnerships, listed companies, general partnerships y limited partnershipsHowever, a change of corporate type will not be permitted during the re-domiciliation process.

 

It is important to note that this regime only contemplates the “immigration of companies”, that is, it allows the transfer of the registered office to Hong Kong, but does not allow the “emigration” or departure of companies from Hong Kong to other jurisdictions.

 

 

This legislative move strengthens Hong Kong's strategic position as an international business hub by facilitating complex administrative processes without creating new legal entities.

 

 

As specific requirements for a foreign company In order for a company to apply for a change of domicile to Hong Kong, it is established that this must be permitted in its original jurisdiction, there must be equivalence between types of companies and it must not prejudice existing legal rights or obligations. In addition, the consent of 75% of the shareholders with voting rights will be required.

 

The redomiciliation of a company must ensure that the rights of potential creditors are not affected, for which a certificate issued by the administrative body is required. It is also essential that the rights of the partners are not harmed either. This requires obtaining the consent of the shareholders in accordance with the provisions of the articles of association or, failing that, according to the company law of the place of origin. Alternatively, it can be approved by means of an agreement with at least 75% of the favorable votes of the shareholders with voting rights.

 

In addition, it is essential to present various documents such as Certificates from the commercial register of the original country, legal opinions and financial statements that support the application and feasibility of the redomiciliation process.

 

Applications for the re-domiciliation of companies must be submitted to the Hong Kong Companies Registry through the corresponding official form. It is necessary to attach the required documents and pay an application fee, which amounts to 6.050 HKD If it is done electronically or 6.725 HKD if presented on paper.

 

Approval of the application is usually issued within approximately two weeks, provided that the documentation is complete and correct. Once the redomiciliation certificate has been issued, the company has a period of 120 days to register its termination in the Companies Register of its original jurisdiction. This procedure must be accredited in Hong Kong; otherwise, the change of address may be voided.

 

The re-domiciliation of a company does not imply the creation of a new legal entity, but rather preserves the original legal personalityThis means that your existing rights, obligations, contracts or legal proceedings will not be affected. From a tax perspective, companies that redomicile to Hong Kong will be considered as incorporated in Hong Kong. They will therefore be subject to local corporate tax, which is generally favourable. In addition, these companies will be able to benefit from the extensive network of tax treaties that Hong Kong offers.