Do you want to open and run a company in Hong Kong? There are two ways of doing it; (i) buying a shelf company and (ii) open a new company. Shelf Company, that’s right; not Shell Company as some people often confuse.
Shelf companies are opened by third parties who later sell to clients not willing to go through the process of registering a company. In this ultimate guide: Hong Kong shelf company, you get everything you need to know to make the right decision whether it is the best way to go or simply open a new limited liability company.
Why do people buy shelf companies?
The processing time for buying shelf companies is shorter
This is the main point of going for a shelf company. Just review the provided list of companies, business scope, incorporation date, and pick the right one for you. The selling agency will simply transfer the ownership to you.
Unlike the common registration process that takes up to 10 days, this will only take about 2 business days. Often, many prefer this because they have a deal that came about faster than anticipated or have limited time in Hong Kong.
Bank account opening is very fast and easy
To open a bank account, it is a requirement that the company gets registered first. If you follow the common registration process, this means after about 10 days of company registration. However, getting a shelf company will make it easy because you can head to the bank and open an offshore account right away. Getting a bank account is the most crucial thing to many shelf company buyers.
By having an older legislation date, the company will look more established
A company with an older registration date is thought to be well established, experienced in operations, and ultimately a better party to do business with. Because most shelf companies are about one year old or even older, you are sure of making better impression and attracting more customers.
While the outlined benefits of buying a shelf company makes it very attractive, it is not without disadvantages. Here are the main limitations of buying a shelf company that make opening a new company a better idea.
The process of transferring bank accounts is very complex
After buying the limited liability company, you do not want the current list of shareholders to be part of it or required to sign anything. Banks have made this very complex to protect clients’ money and interest at all times.
To do this, you need to visit the bank together with the shareholders to complete the transaction which is not always easy. The bank will also want to know more about the new director which is no simpler than opening a new company.
Limited name choices
After making a request to buy a shelf company, you are given a list of companies available for sale. Because none of them was registered with your brand in mind you are forced to select what is available rather than what is ideal for your business. Some people prefer registering new companies with the names of choice while others follow the process of changing the name.
The transaction of transferring a shelf company can be marred with scam. Reports have been given to agencies that have transferred companies with history, debts, and poor records that can bring about a very big burden to you. It is because of this that you must be very careful with the agency you select and scrutinize the company of choice as deeply as possible.
From the Ultimate Guide: Hong Kong Shelf Company, it is clear that the complexity and risks of buying a shelf company are very high. Besides, the cost is almost the same and an investor would be better off opening a new company than buying a shelf one.