Hong Kong’s Proposed Company Re-domiciliation Regime: Public Consultation
According to the legislative proposal:
- In the Companies Ordinance (Cap. 622) (CO), an inward re-domiciliation regime will be introduced, which will apply to the five types of companies allowed to be formed in Hong Kong under the CO, including (1) private companies limited by shares; (2) public companies limited by shares; (3) limited by guarantee companies without a share capital; (4) private unlimited companies with share capital; and (5) public unlimited companies with a share capital; as well as companies which are comparable to the five types of companies mentioned in their original place of incorporation;
- It will be ensured that, once the re-domiciliation has been completed, companies will retain their identity, i.e., no new legal entity will be formed during the process;
- The companies applying for re-domiciliation will not have to undergo an economic substance test;
- Property, rights, obligations, and liabilities would not be affected by the re-domiciliation process, as well as the relevant legal and contractual processes of companies applying for re- domiciliation (including any tax obligations they may owe to the originating jurisdiction);
- It will be necessary to make consequential amendments to the Inland Revenue Ordinance to ensure that tax obligations for re-domiciled companies are clarified, enabling the Inland Revenue Department to handle transitional tax issues like fair value deductions for trading stock, bad debts, impairment losses on financial assets, depreciation, etc., in such a manner that elements that occurred before re-domiciliation can be taken into account for tax assessment afterwards; and
- Assign the Registrar of Companies the responsibility of administering and approving cases of company re-domiciliation, considering factors like integrity, member and creditor protection, and solvency.
On 31 May 2023, the public consultation will come to an end. Based on the responses to the consultation, in 2023/2024 the Legislative Council will consider the relevant amendment instrument submitted.
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