How to move your Hong Kong company to Singapore?

Events in Hong Kong are not getting better so the danger is that sometime in the near future, things may deteriorate to the point that the People's Liberation Army is called in. Hong Kong's position will be irreversibly damaged if and when that occurs. There is likely to be a panic in the business community and a rush to the exits. It is prudent for you to plan ahead for that eventuality. We can help.

Hong Kong is not "Business-friendly" Anymore

Since summer 2019, the news from Hong Kong has turned from grim to ominous. On October 4, 2019 Carrie Lam, Hong Kong’s chief executive, invoked emergency powers, triggering yet another wave of violent protests. This was yet another cycle in the vicious vortex that is inexorably drowning all hopes of Hong Kong returning to its former status as a foreigner-friendly financial center. There’s no indication that the crisis will end, even as Ms. Lam agreed to one of the protesters’ demands and scrapped the extradition bill that started the protests. The roots of the protests lie deeper than the extradition bill; they are an outcry against China’s failure to abide by the “one country, two systems” commitments it made when it took over control of Hong Kong from Britain.

The promulgation of emergency measures has realized the worst fears of the protestors, who see it as another step in China's gradual erosion of the civil liberties that have distinguished Hong Kong from the rest of China. But the political elite of Hong Kong views these measures as essential to combat the growing lawlessness. Thus, the gulf widens. As the Chinese economy has risen to become one of the world's largest economies, the importance of Hong Kong to China has diminished. While China would like to maintain a semblance of the "one country, two systems" framework it promised the world in 1997, if push comes to shove, China will now not hesitate to send in the People's Liberation Army to impose a "one country, one system" on Hong Kong. That will be a serious blow to Hong Kong’s long-term competitiveness and its status as a destination of choice for foreign firms.

The impact on the economy is evident. Retail sales in Hong Kong suffered their biggest drop on record in September 2019; bank ATMs ran out of cash; Hong Kong investors moved nearly USD 3 billion to Singapore; and Hong Kong's status as the financial capital of the Pacific Rim lies in ruin. If the government imposes foreign exchange controls as part of its emergency powers, the collapse will be sudden and complete.

If you are a foreigner who is responsible for a Hong Kong based business, it is incumbent upon you to develop contingency plans for an orderly move out of Hong Kong.

Horribly violent incidents took place in various districts in Hong Kong last night. The extreme acts of the masked rioters were shocking and the level of vandalism was unprecedented. Everyone is worried, anxious and even in fear. The government will curb violence with utmost determination."

Carrie Lam, CEO of Hong Kong

Singapore is the Most Rational Alternative

It’s escalating to the point that we are now reconsidering our advice to customers. The concern is with these antigovernment protests you don’t know where the tipping point is, when it’s going to erupt.

Tammy Krings, CEO of ATG

Relocating Your Business From Hong Kong to Singapore

The one country that stands to benefit the most from Hong Kong’s troubles is the only other east Asian, self-governing, Chinese-majority, financial, commercial and shipping hubSingapore. Hong Kong and Singapore have had much in common: low-touch regulation, efficient bureaucracies, British common law legal systems, low corruption, high ranking for ease of doing business (Singapore ranks second and Hong Kong ranks fourth in the World Bank’s rankings of 190 countries), deep integration with global economy, low crime and rule of law. But this similarity has ended now as anarchy spreads in the streets of Hong Kong, businesses are forced to close unexpectedly, mass transit is suspended, and the smell of tear gas and petrol permeates the air.

A longer-term displacement of institutional financial activity from Hong Kong to Singapore has begun. Singapore already leads Hong Kong in asset-management services, with $3.4 trillion under management compared to Hong Kong's $3.1 trillion at the end of 2018. For Chinese who have historically parked their capital in Hong Kong, now it may appear to be too easily within China’s reach. This slowdown will have a ripple effect throughout the economy leading to an exodus of firms. Cautious firms are well along with these plans. A survey conducted before the recent rise in violence showed that nearly a quarter of the firms were considering moving out of Hong Kong. Furthermore, nine out of ten firms were looking to Singapore as their preferred jurisdiction for relocation. Singapore is the obvious rational choice for any business considering a move out of Hong Kong. Over the last two decades, the two countries have enjoyed a healthy competition in the race to become Asia's top financial center. They share many similarities and until recently were ranked very close to each other in various global surveys for ease of business. The key challenge for Singapore will be to replicate Hong Kong's deep economic and financial integration with the world's second-largest economy. Given the close relationship Singapore's government has maintained with China's political elite, this is a surmountable challenge. Even before the crisis, Singapore outshined Hong Kong in a head-to-head comparison:

  • It remains one of the most business-friendly countries in the world; in the World Bank's 2019 rankings for ease of doing business, Singapore took second place while Hong Kong was placed fourth.
  • Singapore grants generous tax incentives and tax breaks for the several years of a new business.
  • Both countries have very similar headline corporate tax rates. Singapore provides a vast network of Double Tax Avoidance treaties.

Under the current situation, the decision to relocate firms from Hong Kong to Singapore is the proverbial no-brainer. What started as a trickle in June has already become a torrent and is expected to pick up pace further still. According to Goldman Sachs, in August 2019 up to $4 Billion had already been moved from Hong Kong to Singapore as a result of the turmoil and the pace is picking up.

As you evaluate and plan your move, you should consider the following factors. Our proposed strategy addresses each of these factors.

  • Banking relationship: Assess the process by which you will be able to establish new banking relationships in Singapore and then transfer your banking assets from Hong Kong to Singapore.
  • Assets: Evaluate the tangible and intangible assets of your business and examine the process by which you can transfer them to Singapore.
  • Client relationships: You will have to introduce your clients to your new business entity. Assess the process and branding issues that may arise.
  • Vendor relationships: Similarly, you will have to introduce your new business entity to your suppliers and vendor.
  • Contracts: Any long-term contracts that are difficult to renegotiate will have to be reassigned to the Singapore business structure.
  • Staff: Will some of your staff have to relocate to Singapore?
  • Office: Will you need new office location in Singapore?
  • Equipment: If you have physical plant and equipment, will that have to be moved to Singapore or can you sell the assets in Hong Kong and acquire new ones in Singapore?
  • Equity holdings: Any equity holdings in public or private companies will have to be moved over.
  • Other Assets: Other assets such as Intellectual Property, art, etc. may have to be moved to Singapore.

Possible Business Structures

This section outlines three basic strategies that can be deployed to move your Hong Kong-based business to Singapore. In this section, the strategies and their pros and cons are outlined. Note that for ease of explanation, the term HKCo is used for the existing Hong Kong registered company, the term SingCo is used for a new Singapore registered company and the term ParentCo is used for a parent or holding company (the registration jurisdiction of ParentCo varies in the options below).

A step-by-step guide for implementing your preferred strategy is provided in the next section. will execute all documentation necessary for the Singapore end of the transactions in each option. We will also liaise with your Hong Kong corporate services provider to provide guidance on the necessary tasks required in Hong Kong.

Multiple Hong Kong Companies
Note that if your current business structure consists of multiple companies that are registered in Hong Kong, the general framework described here can be applied to all of them. However, depending on the nuances of your specific situation, some changes to the approach may be made to meet your objectives.

Option 1: Establish a Singapore Parent Company

Under this approach, you will establish a new Singapore company (ParentCo) that will become the parent company of your Hong Kong company (HKCo). You will set up another Singapore company (SingCo) that will become the eventual operating company for your business in the long-term after the transfer has fully executed. Initially, all equity of SingCo will be owned by ParentCo but eventually the shareholding structure of SingCo can be symmetric to that of HKCo before the transfer. After the corporate structure is established, you will initiate an orderly transfer of business activities (customer contracts, supplier relationships, assets, etc.) from HKCo to SingCo.

HKCo will provide the appropriate authorizations to the SingCo to act on behalf of the HKCo in case there is a sudden breakdown in Hong Kong which prevents orderly corporate actions by HKCo. This authorization will act as a back stop if there are any catastrophic developments in Hong Kong and enable ParentCo and SingCo to deal with third-parties on behalf of HKCo. This option provides you with a robust legal framework while you work through the transfer issues; even if some delays occur in any steps, you are legally protected. Nevertheless, the process of transferring business activities from HKCo to SingCo should be executed expeditiously; but it does not have to be conducted in a panic-driven approach.

SingCo will also be able to sponsor work visas for any staff or owners who may wish to migrate to Singapore.

Once HKCo has transferred the business over to SingCo and all its liabilities have been addressed in Hong Kong, the books of HKCo can be closed and a no objection certificate will be obtained from the Commissioner of Inland Revenue in Hong Kong. After that, HKCo will file for its de-registration. Once this process has successfully completed, ParentCo can either continue to operate as a holding company (there are several advantages of a Singapore holding company) with SingCo as its subsidiary, or ParentCo can be closed and SingCo can be left as a standalone operating company. In the latter option, the shareholding structure of SingCo will be changed to reflect the original structure of HKCo i.e. before the transfer process was initiated.

Option 2: Establish a Hong Kong Parent Company

This approach is similar to option 1 above, but with the following differences:

  • ParentCo is established in Hong Kong and not in Singapore.
  • After the business has been successfully transferred from HKCo to SingCo, SingCo is converted to a stand alone entity i.e. its shareholding structure is symmetric to the original structure of HKCo.
  • Both ParentCo and HKCo are de-registered in Hong Kong.

The benefit of this approach is that it may be easier to obtain work visas to Singapore since such visas are easier to obtain for a subsidiary of a foreign company.

Option 3: Make Current Hong Kong Company a Parent Company

Under this approach, a new ParentCo is not established. Instead, the HKCo (your current Hong Kong company) becomes the parent of a new SingCo. In other words ParentCo and HKCo are the same company. The rest of the process proceeds as described above for Option 1. After the transfer, the shareholding structure of SingCo is changed to be symmetric to that of HKCo prior to the transfer.

The benefit of this structure is that it is simpler. However, this structure will require close interface with your HKCo and if there is a breakdown of affairs in Hong Kong, this structure may pose some execution challenges.

Option 4: Inward Re-domiciliation from Hong Kong to Singapore

Just as a person can change the country of their citizenship, a corporate entity can also change the jurisdiction where it is registration. The procedure by which a company transfers its ‘domicile’ (or place of incorporation) while maintaining the same legal identity is called corporate re-domiciliation.  Not all countries allow re-domiciliation but Singapore's 2017 amendment to its Companies Act introduced an inward re-domiciliation regime in Singapore. The regime came into effect on October 11, 2017 and Singapore now allows foreign corporate entities to transfer their registration to Singapore. There are minimum requirements and solvency criteria that must be met by the company. ACRA has specified well-defined procedures for such a transfer.

Such a re-domiciliation from Hong Kong to Singapore would be a good option for companies looking to move from Hong Kong to Singapore. Unfortunately, as of the writing of this article, Hong Kong does not permit outgoing re-domiciliation. The Hong Kong Institute of Chartered Secretaries has issued a position paper calling for changes to the Hong Kong's re-domiciliation regime to permit such outbound transfer. If such changes to the law are approved, we will offer this option to our clients but until that time, a re-domicialiation from Hong Kong to Singapore remains an unviable strategy.

Step-by-step Relocation Process

Below we outline the steps that would be undertaken to execute the relocation for Option 1, 2, or 3. The basic sequence of steps in each of these options will be very similar but the specific details will vary. The description below uses Option 1 as illustration.

  1. Setup the new companies as necessary; see our Singapore company registration guide for the necessary information on this. For Option 1 this would involve the setup of SingCo and ParentCo as new Singapore companies.
  2. Change the shareholding structure of HKCo to make it a subsidiary of ParentCo.
  3. Once the basic structure required by the option is in place, execute the formal inter-company agreements (including transfer authorization, Power of Attorney, and Signature Authority) so that the actual transfer of assets can commence.
  4. Apply for any work visas to Singapore as appropriate in your situation.
  5. Begin to resolve the liabilities of your HKCo, as appropriate, either by settling them in Hong Kong or by transferring them to SingCo. Similarly, begin the transfer of your business assets from HKCo to SingCo as appropriate in your situation. These can include:
    • Client contracts and relationships
    • Supplier contracts and relationships
    • IP assets
    • Financial assets e.g. stocks and cash
    • Equity holdings
    • Property, Plant, and Equipment
    • Inventory
  6. Once you have successfully addressed all liabilities and assets of HKCo, close its books and obtain a no objection certificate from the Commissioner of Inland Revenue in Hong Kong. After that, HKCo will file for de-registration from the Hong Kong's Companies Registry.
  7. Finally, if you decide to close ParentCo then execute the necessary paperwork for that in Singapore and convert SingCo to a standalone operating company.

    Act now, Time is of the Essence

    Political movements can reach an inflection point suddenly. Events in Hong Kong are not getting better so the danger is that sometime in the near future, things may deteriorate to the point that the People's Liberation Army is called in. Hong Kong's position will be irreversibly damaged if and when that occurs. There is likely to be a panic in the business community and a rush to the exits. It is prudent for you to plan ahead for that eventuality. We can help. can be your one-stop Singapore partner to help you plan and execute the move. We have a dedicated team of professionals who have deep familiarity and expertise with the issues involved in transferring your company from Hong Kong to Singapore. We can review your specific situation and advise you on the right strategic option. If after that consultation, you decide to work with us, we will execute all transactions for the Singapore side of the move. We will also work with your Hong Kong service provider to guide them on all transactions related to your existing Hong Kong entity.

    Next Steps

    Headquartered in Singapore, empowers global entrepreneurs with information and tools necessary to discover Singapore as a destination for launching or relocating their startup venture and offers a complete range of company incorporation, immigration, accounting, tax filing, and compliance services in Singapore.

    Contact us if you are thinking of moving your business from Hong Kong to Singapore.