Summary
From May 23, 2025, companies may transfer their domicile to Hong Kong under a new regime which will allow them to preserve their legal identity and will not interrupt business operations. To qualify, companies must meet several criteria, including financial history, members’ consent, and solvency. Benefits of re-domiciling include reduced regulatory costs, access to an attractive tax system, and operating in a free economy with no restrictions on capital flow.
Introduction
Hong Kong has introduced a re-domiciling regime, effective May 23, 2025, making it possible for non-Hong Kong incorporated companies to transfer their domicile to Hong Kong while maintaining their legal identity and business continuity. This development aligns Hong Kong with other jurisdictions like Bermuda, the British Virgin Islands, Canada, the Cayman Islands, Guernsey, Jersey, New Zealand, Singapore, and certain U.S. states (e.g., Delaware). This article provides an overview of the new regime.
Re-domiciling
Re-domiciling (also known as migration or continuance) is a process for a company to switch its domicile of incorporation from one jurisdiction to another without disrupting its corporate existence. The company remains the same legal entity, ensuring uninterrupted business operations.
Importance of the Re-domiciling Regime
Previously, a company could not change its domicile to Hong Kong but instead faced complicated and costly alternatives such as (a) incorporating a new Hong Kong company and transferring its assets to the new company, or (b) undergoing a court‑sanctioned scheme of arrangement to convert into a wholly-owned subsidiary of a Hong Kong-incorporated company. These indirect options disrupt the company’s operations and involve complicated procedures and significant legal costs. In contrast, the new regime is direct, simpler, and cheaper.
Key Requirements for Re-domiciling to Hong Kong
To re-domicile to Hong Kong, a non-Hong Kong company must satisfy certain criteria, including:
1. Permitted by applicant’s current place of incorporation: The laws of the applicant’s current place of incorporation must permit re-domiciling to another jurisdiction. Currently, the jurisdictions that permit outward re-domiciling include the British Virgin Islands, Canada, the Cayman Islands, Guernsey, Jersey, and New Zealand. Note that in Bermuda, re-domiciling to Hong Kong is currently permissible only if approved by the Minister of Finance of Bermuda, as it is not yet whitelisted.
2. Comparable company type: The company type of the applicant under the laws of its current place of incorporation must be the same or substantially the same as the type under which the applicant proposes to register in Hong Kong, being (a) a private or public company limited by shares, or (b) a private or public unlimited company with a share capital.
3. Financial history: The applicant’s first financial year-end since its incorporation must have passed.
4. Members’ consent: If required by the laws of the applicant’s current place of incorporation, members’ consent for re-domiciling to Hong Kong must be obtained accordingly. If not so required, the applicant must obtain members’ approval by a majority of at least 75%.
5. Solvency: The applicant must be able to pay its debts when they fall due for the period of 12 months from the application date and must not be in liquidation or subject to ongoing or pending liquidation proceedings.
6. Creditors’ protection: The application must be made in good faith and not intended to defraud existing creditors.
7. Integrity: The applicant must not be used for any fraudulent or unlawful purpose or for a purpose contrary to public interest.
8. No economic substance test: Unlike some jurisdictions, there is no economic substance test to be satisfied.
9. Deregistration: The applicant must complete deregistration in its existing place of incorporation within 120 days after the re-domiciliation date. Failure to do so will result in revocation, effective on the date on which the revocation order is published in the Gazette.
Other Important Considerations
1. Company name: An applicant can retain its existing name (whereas normally a company must not have the same name as another existing company).
2. Directors and members: There is no residency requirement for directors, and companies can be wholly foreign owned (so the applicant is not required to change its members or directors for the re-domiciling application).
3. Timing: The applicant will generally be registered as a re-domiciled company as quickly as two weeks from the date of application, if all required documents are in order.
4. One-way: Currently, the regime does not allow outward re-domiciling (i.e., of a Hong Kong-incorporated company to another jurisdiction).
5. Stamp duty: No Hong Kong stamp duty arises on re-domiciling, though any subsequent transfer of shares in a re-domiciled company will be subject to Hong Kong stamp duty.
Effect of Re-domiciling
Re-domiciling does not affect a company’s history, brand, goodwill, assets, rights, obligations, liabilities, or existing contracts.
Effective from the date of re-domiciliation, the company will be regarded as a Hong Kong-incorporated company and must comply with the Companies Ordinance of Hong Kong.
Advantages of Re-domiciling to Hong Kong
1. Common law system: Hong Kong’s common law system shares similarities with many of the jurisdictions that have an outward re-domiciling regime, offering a familiar and predictable legal environment for companies to continue their business operations in Hong Kong.
2. Regulatory costs reduced: Companies in the insurance and banking sectors may benefit from lower regulatory and compliance costs by being regulated as Hong Kong incorporated companies. Companies that are regulated entities should approach their current regulators and obtain an advance assessment on the feasibility of re domiciling to Hong Kong before they make a re-domiciling application.
3. Attractive tax system: Re-domiciled companies can benefit from Hong Kong’s simple tax regime, low tax rates, and double taxation relief with 51 jurisdictions. Hong Kong’s profits tax is based on locally derived profits and not on domicile or residence. There is no capital gains tax, withholding tax on dividends and interest, or value-added tax.
4. Free economy: Hong Kong is consistently ranked as one of the world’s freest economies, with no restrictions on capital or currency movement. Re-domiciled companies can leverage the free trade agreements and investment agreements entered into by Hong Kong with other economies.
Conclusion
Re-domiciling is a significant decision. Companies should seek professional advice and carefully consider the legal, corporate, tax, accounting, and other implications of re domiciling for their business operations, members, creditors, and employees. Morrison Foerster is ready to assist you in assessing and navigating the re-domiciling process and ensuring a smooth transition to Hong Kong.
[View source.]
