Hong Kong progresses inward company re-domiciliation regime

The Hong Kong Companies (Amendment) (No. 2) Bill 2024, which provides for a company re-domiciliation regime that will enable non-Hong Kong-incorporated companies to re-domicile to Hong Kong, was introduced into the Legislative Council for first reading on 8 January.

The Bill will enable companies to re-domicile in Hong Kong while maintaining their existing legal identities as a body corporate, ensuring business continuity without the need to go through complicated and costly judicial procedures associated with either winding up in the original domicile and incorporating a new body corporate in Hong Kong, or entering into a court-sanctioned scheme of arrangement to convert into a wholly-owned subsidiary of a Hong Kong incorporated company.

The redomiciled company will also be able to benefit from Hong Kong’s open and efficient company governance regime, simple taxation system, world class professional services and better access to vibrant economies of Mainland and Asian region.

The re-domiciliation process does not involve the creation of a new legal entity and therefore preserves the companies’ assets, intellectual property, contracts and corporate history.

Hong Kong’s proposed inward re-domiciliation regime applies to four types of companies that can be formed in Hong Kong or comparable overseas incorporation types:

• Private companies limited by shares.
• Public companies limited by shares.
• Private unlimited companies with a share capital.
• Public unlimited companies with a share capital.

The type of company under the law of its original domicile must be the same or substantially the same as the proposed type in the Hong Kong re-domiciliation application.

Once re-domiciled in Hong Kong, the company will have the same rights as similar locally incorporated companies in Hong Kong and must comply with the requirements under the Companies Ordinance (Cap. 622).

To ensure the integrity of re-domiciled companies, applicants are required to submit information in respect of general background, integrity, member and creditor protection, and solvency, prior to approval. They must also submit a legal opinion confirming that the proposed re-domiciliation is allowed under the law of its original domicile.

The re-domiciled company must de-register from its original domicile within 120 days of the issuance of the certificate of re-domiciliation in Hong Kong. Documents evidencing the deregistration must be submitted to Registrar of Companies and failure to comply with the deregistration requirement will result in revocation of the re-domiciliation registration.

“The proposal will address the existing market demand for a simple and accessible re-domiciliation mechanism for companies to transfer their domicile to Hong Kong in light of the increasing compliance costs in offshore jurisdictions,” said a government spokesperson.

The Hong Kong government conducted a public consultation and consulted the Legislative Council Panel on Financial Affairs in 2023.