When considering opening a company in Hong Kong you may be learn you have the choice of buying a shelf company. Sometimes this is misunderstood as a “shell company” but that is not a case. Shelf companies are companies that a third party service provider, such as an accountant or serviced office, has pre-setup and NOT USED at all. They are holding the company and waiting for a client (such as you the reader today) comes along and chooses this company name from a list. A shell company, I won’t cover in this post. It is a more derogatory term used for a business that has the sole purpose of cheating people and not keeping any assets in it. Those who get cheated try to sue or make claims to the company but cannot get much (or anything at all) because the company was setup as a “shell” to con people.
The advantages of use a shelf company:
1. Shelf Companies Have Short Processing Time
2. Maybe You Got A Business Deal Faster Than Expected
3. Express Bank Account Opening
4. Has An Older Registration Date – May Look More Established
5. Cost To Open a Shelf Company Is the Same As a New One
A Shelf Company With Existing Bank Account
People buy and sell companies all the time. Of course that existing bank account needs to keep operational. Current customers are paying into this bank account and you have automatic deposits from your merchant account, Amazon, and other places.
It is a rather complex transfer. If you want such an option, we do have a short list of a few companies that have stopped doing their operations and want to deregister. As we go through the deregistration process, if you contact us while we have one of these companies in process, we can switch over the ownership to you.
We’ll work close with you and the old owner to switch over the bank account director signatures and other delicate transfer matters. You should also be aware that we need to screen the old company for any liabilities and outstanding debts or legacy matters. This is all part of the process.
The shelf company transfer is straight forward, but please allow 1 to 2 months for the bank account to transfer over 100%. If you can come to Hong Kong for the banking that will be best, as we need to get your signature and other items.
Avoid Scams – Make Sure You Buy From a Trusted Agency
This can be a bit of a specialized project. Buying and then transferring over a shelf company from the agency to you and your partner’s name and ownership. In some ways, it is the same process as buying any company. A scammer could transfer you a company that may be “broken” or have previous history. There can also be other kinds of scams that could happen in this sensitive transaction. I would urge you to only buy a shelf company from an agency you know and trust.
But for the completeness of this article, I mentioned before some people asking me if they can buy a limited company from me. So I mentioned in previous posts that I sold my company in Hong Kong and decided to structure it as an asset sale. That means I transferred the IP and assets over, paid out the liabilities, and then closed the company. Some friends wanted to buy this limited company from me as it had a few years of history and transactions. I preferred not to do that and instead close the limited.
I just felt transferring to someone else for the sole reason of them to apply to bank accounts would be risky. I did have some liabilities in the company that I assumed. But maybe the buyer might find new liabilities later if new creditors wanted to try to claim that entity. And maybe there are other issues unexpected, it can get messy quick.
Make 100% Sure There Are No Liabilities In the Shelf Company’s Name
If you don’t buy a shelf company from a trusted agency, you risk there being previous activity in the company before you take it over.
Previous activities can be:
1. Bank Debt
2. Credit card balances
3. Contracts signed on behalf of the company that come up in the future.
You May Need To File Your Annual Return Soon
Because this shelf company previously registered, the annual filing date may be coming up soon. When you are reviewing which shelf company to buy, you should also pay attention to when the next annual return (form AR1) is due as well as any other filings. Ideally if it has almost as much time as if you opened a new company – you almost can’t lose here! But more than likely you will get more time to file with a new company than buying a shelf company.
Remember, you’re buying a shelf company for speed now to get the company setup while you’re visiting Hong Kong. That way you can immediately get the bank account application and interview done upon arrival. If you plan more in advance and have more time in the setup process, you can win more time from filing your annual return later. Rushing something is almost never as good as taking the full amount of time to process it.
For more details, please contact us by calling 86-13530066130 and 86-755-82143410, or email to 2355725105@qq.com.