Business China

A Brief Analysis of The Advantages and Disadvantages of Registering a HK Company

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With the further integration of economy, more and more enterprises choose to go abroad and expand their business. The registration of Hongkong companies is a convenient way to expand international business. So what are the advantages and disadvantages of registering a Hong Kong company?

The advantages of registering a Hong Kong company

1 to develop transnational business and improve corporate image
With the economic development, business is developing more and more transnational.  Companies registered in Hong Kong often use transnational management to enhance the strength of the enterprise, expand the business area. Registering the Hongkong company is regarded as a quick way for the enterprise to go abroad, expand the international business and enhance the international image of the enterprise.

2 it is easier for international trade, and can avoid tariff barriers
When registered Hong Kong company, it is easier to achieve international trade by cooperate with companies at home. Also, companies registered in Hong Kong can gain the treatment of free-duty by avoiding tariff barrier.

3 Avoid foreign exchange management and facilitate the capital inflows
When registered Hong Kong company, overseas banks can be set up in the name of Hong Kong company, which facilitate company investment and capital utilization in Hong Kong, so that funds can not be restricted.

4 Avoid tariff legally
The registered offshore company of Hongkong can make use of offshore Company's legal policies to enjoy various tax exemption policies and achieve tax avoidance legally.

5 Simplify company management
The registered offshore company of Hongkong do not need to hold shareholders' meetings or board meetings every year, even if they have to, they do not need to hold it on the registration site, and the management procedures are simpler. Investors can then focus on the operation of the company.

6 High confidentiality
The registered offshore Company of Hongkong is highly confidential about the company's information, such as shareholder status, directors' register and so on. The public can consult. Only the trust management company that has legally obtained the import regulatory qualification of the Hongkong company can consult the company's background information, and the laws also prohibit the trust management company from leaking the relevant materials arbitrarily.

The disadvantages of registering a Hong Kong company

1 can not directly operate in the mainland entities, need to rely on domestic companies or open offices can be.

2 can not open FA ticket, only open receipt.

3 Hongkong companies need to write off when no longer operating, otherwise they will be blacklisted in Hongkong.

4 LC, D/P negotiation have discrepancy more easily:
Offshore company is well known for its failure to provide the most commonly used negotiation documents such as FORM A, C/O, and other embassy certification, LC. In this way, registering Hongkong company is easy to have unnecessary risks in LC, D/P and other documents which are required strictly.

5 Can not provide a cancellation form:
In registered Hongkong offshore Company, investors play the role of reexport, therefore, the Hongkong company is unable to provide verification forms.

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