Hong Kong’s long awaited inward re-domiciliation regime was gazetted on 20 December 2024 and introduced to the Legislative Council on 8 January 2025. Once enacted, the Companies (Amendment) (No. 2) Bill 2024 will enable non-Hong Kong incorporated companies to relocate their domicile to Hong Kong, while maintaining their legal identity and business continuity.
The scope
The proposed regime, which allows for inward re-domiciliation only, provides a mechanism for non-Hong Kong incorporated companies to re-domicile to Hong Kong if they are:
- Private companies limited by shares;
- Public companies limited by shares;
- Private unlimited companies with a share capital; and
- Public unlimited companies with a share capital.
Companies limited by guarantee without a share capital and other types of companies not specified in the Companies Ordinance (CO) are excluded.
Eligibility
Hong Kong’s proposed re-domiciliation regime is more flexible than comparative jurisdictions such as Singapore as it:
- Does not impose an economic substance test for foreign companies to be eligible (e.g., in terms of the total value of assets, amount of revenue or number of employees); and
- Is not limited to companies limited by shares.
Applicants must comply with the following requirements to re-domicile to Hong Kong:
- The law of the applicant’s original place of incorporation must allow for outward re-domiciliation to other jurisdictions, and the company type under the law of the original domicile must be the same or substantially the same as the intended company type.
- The applicant must have been incorporated for at least one financial year at the date of application.
- There must be no intention to use the re-domiciled company for unlawful purposes, or engaging in activities that are against the public interest, or that would endanger national security in Hong Kong.
- The applicant will be solvent (i.e. able to pay its debts within the period of 12 months beginning on the application date), and is not in liquidation or being wound up, and no such proceeding is ongoing or pending.
- The re-domiciliation application must be made in good faith and not be intended to defraud the company’s existing creditors. The shareholders must consent to the re-domiciliation either as required under the law of the original domicile, or the applicant’s constitutional documents; or by a resolution duly passed by at least 75% of the eligible shareholders.
Legal effect
Under Hong Kong law, a re-domiciled company will be regarded as a company incorporated in Hong Kong with effect from its re-domiciliation date. The re-domiciled company would have the same rights and obligations as any other Hong Kong incorporated company of its kind and be required to comply with relevant requirements under the CO.
No new legal entity is created by the re-domiciliation, meaning that the re-domiciled company will retain its original legal identity as a body corporate, and thereby its continuity as a legal entity. It will not affect the property, rights, obligations and liabilities, nor contractual or legal processes (including any legal proceedings by or against the foreign company), of the re-domiciled company.
Takeaway
Business groups looking to re-domicile to Hong Kong should plan ahead for a seamless transition with minimal disruption to business operations, seeking professional support to fully understand the legal and tax implications for the company and its business, directors and employees.
Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Howard Wu (Shanghai) at howard.wu@bakermckenzie.com
