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| Setting Up Hong Kong Company as a Special Purpose Vehicle to Invest Wuhan |
Wuhan, the capital of Hubei province,is the most populous city in central China. In 2015 it has a population of 10.60 million residing in three distinct districts (Hankou, Hanyang, and Wuchang), commonly known as “The Three Towns of Wuhan”. The city is recognized as the political, economic, financial, cultural, educational, and transportation centre of central China.
While Wuhan has for decades been a traditional base for manufacturing, it has also become one of the areas promoting modern industrial change. Wuhan consists of three national development zones, four scientific and technologic development parks, over 350 research institutes, 1,656 hi-tech enterprises, numerous enterprise incubators and investments from 230 Fortune Global 500 firms – enabling the city to offer globally competitive strengths in most business fields. By combining traditional industries such as automobile manufacturing, the starting point of China's economic liberalization, with new hi-tech industries in places like the Optics Valley, Wuhan is positioning itself as one of the most progressive business cities in all of Asia.
For more information about Wuhan, please
visit https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/international-business/csg-china-research-report-on-investment-environment-of-wuhan-en-2013.pdf
Foreign company can set Up Hong Kong company as a special purpose vehicle to invest in Wuhan China
Hong Kong is one of the quickest locations to Incorporate a business. Although a HK company is not a legal entity in Mainland China (MainlandChina and Hong Kong, See Wiki 1 country, 2 systems), lots of foreign investors, especially investors from Europe and North America still chose to setting up a Hong Kong company as SPV to invest China.
The reason why they are doing it as follow:
1. Tax benefits
Foreign companies entering China should register a Hong Kong Special Purpose Vehicles (HKSPV), then set up a wholly-owned foreign enterprise (WOFE) in China. The WOFE makes money in China, then sends it back to the Hong Kong company. While transfers cost about five percent, it’s much cheaper than paying China’s 25 percent income tax. The tax rate on money not earned in Hong Kong is zero percent. Profits earned in Hong Kong are taxed 16.5 percent. Startups are also eligible for VAT refunds. All funds can be managed easily and moved back and forth between the WOFE and HKSPV with no currency controls.2. Intellectual property
Many foreign startups simply work in China under the radar, without legally registering their company anywhere. This is a risky move for many reasons, and a major one is the lack of protection for intellectual property. Trademarks, copyrights, patents, design patents, and domain names all should be filed and held by the Hong Kong company. China uses a first-to-file system, and prior use is not considered. With a HKSPV/WOFE registered, startups can transfer funds out of China using licensing agreements.3. New streamlined rules for WOFEs
As of March this year, China made it easier for startups to get off the ground by streamlining and reducing many of the requirements necessary for company registration. The requirement for a minimum amount of registered capital has been eliminated, as have capital verification reports. Annual audits have been replaced by a system that lets the company send in its own financial reports. Blacklock noted this likely means more holding companies and hi-tech companies coming into China. While the easing of the law is beneficial to startups4. Cheap and easy
Registering a HKSPV costs between US$200 and US$300. Remittance of funds is easier than if a foreigner were to start a joint venture in China. Exits are also much simpler, as a company can be sold or closed in just one day in Hong Kong, but it takes six months to a year in China.5. Limited liability
Because the HKSPV is a limited liability company, the liability of each shareholder is limited to the capital they have invested. The Hong Kong company is also liable for the subscribed registered capital for the mainland company. This is important if lawsuits ever arise. The alternative is to run a joint-venture in China, which requires at least half the company be owned by a local partner. WOFEs offer more control and less potential for disputes.Hong Kong, Asia’s most popular city for international business has a simple, predictable and low tax system. The city only imposes three direct taxes, and filing taxes is straightforward. For the past 19 years Hong Kong has been ranked as the ‘World’s Freest Economy’ by the Heritage Foundation/Wall Street Journal. Hong Kong’s enduring appeal is built on political stability, the rule of law, free market principles, free flow of information, and English as the language of business. Hong Kong is ideally located for growing companies that want to do business with Mainland China and Asia.
Advantages of Hong Kong Company
Free to choose company name
Less restriction on business scope
Low tax environment encourage business development
Low register capital and no requirement on the minimum amount of a company’s paid-up capital
Gateway to China
Easily to set up international credit and get financial credit
No restrictions on investments inward or outward, No foreign exchange controls and No barriers to trade
Good reputation
Requirements of Hong Kong Company Formation
If the shareholder is a corporation, need to provide Business Registration certificate copy.
Company Secretary must be ordinarily reside in Hong Kong or Hong Kong Limited Company, like UWS, to handle on-going statutory compliance matters.
Registered address of the Company must be located in Hong Kong
There shall be at least one shareholder and natural director over 18 years old, Shareholder and director can be the same person and can be of any nationality
Processing Times of Hong Kong Company Formation• Online applications for Hong Kong Company Incorporation can normally be processed within a day
Paper applications will take 5 working days to get the Certificate of Incorporation and Business Registration Certificate.
Required Information for Hong Kong Company Formation
Proposed company name (please provide at least 2-3 choices). Company Name must be unique and can be in English or Chinese or both.
Passport copy and residential address (in English) of shareholders and assigned Director.
Amount of share capital, and percentage of shareholdings; if there is more than one shareholder. HK$10,000 divided into 10,000 shares of HK$1 each is the most common and Minimum subscribed share capital is HK$1
Hong Kong Company Formation Procedures:
Step 1
Client engages the services of Uni-World Services.
Full information required is sent to us by fax or email.
Step 2
Payment receipt of company formation service fees to be submitted.
Step 3
Necessary documents and forms will be sent to client for shareholder’s and director’s signature.
Step 4
Upon the receipt of the signed documents, the application for the Certificate of Incorporation (CI) and Business Registration Certificate (BR) will be submitted to the Company Registry of Hong Kong. (The Certificate of Incorporation will be issued within 5 working days.)
Step 5
The order for making company seal & chop will be placed.
Step 6
Open bank account
The official establishment of the company is finally completed.
Hong Kong Company Secretarial Service
Under the Companies Ordinance (Cap. 32) of the Laws of Hong Kong, a limited company incorporated in Hong Kong should appoint a company secretary, to perform the legal liability of the company, which includes declaration of relevant organisation structure, changes of shareholders and directors to the Companies Registry, as well as contemplation of the agenda of company meetings for Board of Directors, preparation of annual general meetings of shareholders and provision of professional advisory service and advice on relevant statutory ordinances.
Our Services Include:
Preparing and keeping statutory records, such as register of shareholders and register of directors, etc.
Arranging and attending meetings of directors and shareholders, and preparing minutes of meetings
Preparing and submitting statutory documents, including annual return form
Preparing and submitting application for business registration certificate
Assisting in opening bank account
Assisting in applying for Hong Kong work visa
Deregistering the company and suspending applications for activities
Providing relevant advice on company liquidation and bankruptcy
Hong Kong Company Bank Accounts
After incorporating company, you may consider to open bank account or not depending on your company’s actual circumstances.
Local Accounts Documents Required:
Director(s)’s Passport, address proof
Business Registration Certificate
Certificate of Incorporation
Statutory record
Common Seal and stamp
Shareholder(s)’s passport and address proof
Relevant business proof are *Essential*
• Business Plan and/or Product Brochure
• Buyer and Supplier’s contract
• Shipping documents e.g. Packing List, Commercial Invoice and Bills of Lading etc.
• Company Business Card
Director(s) should go to the bank in person to sign the bank documents:
Hong Kong banks generally require the directors (at least 2 if more than 2) to visit the bank in person to open an account. Account signatories or a company director (if from Mainland China you must hold a Chinese passport or travel permit) should bring company documents and related materials as mentioned above to open an account in Hong Kong or Macau.
UWS Banking Services:
Communicate with you in preparing documents required
Review all supportive documents
Understand your business mode
Submit required documents to banker and arranging bank meeting.
Advice on answering bank interview questions shortly before your meeting with bank.
Accompany you to bank for opening bank account.
Follow up with bank closely.
We are experts in Hong Kong company registration, and will get your Hong Kong company up and running with the minimum of hassle for you. You do not even need to be in Hong Kong for us to do this for you
lease visit: http://www.tommyconsulting.com/CorporateFormation.html
Email: tomlee@tommyconsulting.com, Skype: tomleeli
WhatSapp/Wechat/Cell Phone: +86 18926401128
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