Thinking of registering a company in Hong Kong? You can do it in two ways; (1) purchasing a shelf company, and (2) incorporate a new company. A shelf company is an already incorporated entity that people buy to avoid going through the logistics of registering a new company. Sounds simple? It might look direct but becomes very complex and almost impossible to complete the process.
In this post, we look at these two methods and establish why it is better to register a company from the beginning compared to the shelf entity.
Why people buy shelf companies
- Shorter processing timeframe: Because the shelf company is already registered, all that remains is transferring the ownership. This could take about 2-5 days while the common registration process requires about 10-14 days.
- Opening a bank account could commence within no time: Now that the transfer of the company will be through in only a few days, the process of processing a bank account can start immediately after.
- Having a company with older legislation date builds on trust: Many people want to be associated with companies that have taken longer in the market. They create the impression that they are more established and could attract more clients.
While these benefits might look attractive, the disadvantages make the process very unattractive.
Dangers of buying a shelf company
- Because the company was not registered with your business in mind, it is very difficult to get a perfect match. The company you buy is likely to miss the anticipated outlook. You need an outfit that rhymes well with your desire to enter and grow in the Hong Kong market (check OECD requirements).
- Opening a Hong Kong corporate bank account is a herculean and almost impossible process: While the argument that you will easily transfer everything might sound easy, everything hits a snag when it comes to the bank account. To transfer the bank accounts of the shelf company to the new buyer, banks want to get convincing reasons from all shareholders. Most of the companies will simply decline while others will recommend that you open a new entity. When things reach here, the risk of losses or having a company that cannot trade are too high.
- The names are very limited: Because the company is already incorporated in Hong Kong, you have to get contented with the available names. While you can change the name later, the process is lengthy and risks confusing the clients you will have made.
Registering a new company
Why take all the risks that come with buying a shelf company? The better way to go about it is registering a new company through this agency (just an example). Though the two weeks period might look long, it is better to wait and have the outfit that rhymes with personal aspirations.
Benefits of registering a new company
- The company takes the outlook, name, and structure of your choice
- There is no risk of losing money because your details go directly to the company registry
- You can get an agency to help register the company without having to travel to Hong Kong.
- Incorporating a bank account in Hong Kong will be direct and easy
While a shelf company always looks attractive because of various benefits, everything grinds to a halt as the reality of loss dawns to investors. However, do not get into such risks! Contact a serious agency today to help you understand the Hong Kong market, register the company, and establish as fast as possible.