BVI companies have always carried a reputational risk for being vessels for money laundering, which lead to the introduction of laws meant to prevent and counter their prevalence. Unfortunately, this has increased regulatory scrutiny on compliant BVI companies, increasing their administrative burdens as a result, including the requirement to maintain operational activities such as staff, office space, and local spending. Moreover, the poor reputation of BVI companies have led some banks around the world to outright reject applications from such companies to avoid being implicated in any potential legal disputes.
If this is a situation your company is facing, you may want to consider moving your financial and contractual assets to a new offshore company in Hong Kong.
Why Hong Kong?
Hong Kong is highly regarded as a financial hub that does not tax foreign-sourced profits, while maintaining a highly developed legal, regulatory and financial framework resistant to money-laundering schemes. This allows entrepreneurs to easily start and maintain offshore companies without being required to conduct activities of economic substance in Hong Kong, making Asia’s World City an attractive alternative to BVI offshore companies.
Consider also the company maintenance fees in both BVI and Hong Kong. Though similar in total annual fees, a Hong Kong company’s fees also include fees for mandatory auditing and accounting, while the BVI packages cover mainly the government fee, annual return filing, and secretary / office address.
Company Maintenance Fees (Annual average in USD)
| BVI Company (<50,000 shares) | Hong Kong Limited Company | |
| Government Fee | 1,100 – 1,500 package (includes registered agent, office, Economic Substance Reporting, and annual filings) | 280 |
| Annual Return Filing | 13 | |
| Registered Office/Agent/Secretary | 255–385 | |
| Audit & Accounting | Optional | 510–770 |
| Estimated All-In Annual Total | 1,100–1,500 | 1,150–1,300 |
Start an offshore company and bank account in Hong Kong
Incorporating a new company in Hong Kong is a straightforward process that can be completed remotely as quickly as two business days. A business bank account can also be opened remotely and relatively quickly, depending on the bank and assuming all the required documents, fees, and deposit amounts are ready. Once you have an entity and bank account established in Hong Kong, you’re ready to transfer your finances and assets over.
Bank Transfers
International Wire Transfers
Wire transfers remain the most traditional and widely used way to move funds internationally. To execute a wire transfer to your Hong Kong company’s account, you will need the recipient account’s full bank details, including account number, bank name, and SWIFT/BIC code.
Banks usually use the SWIFT network to send funds securely across borders incurring multiple fees, including charges from the sending bank, intermediary banks, and sometimes the receiving bank. Fees range from HKD 50 up to HKD 300 or more per transaction depending on your bank and transfer size, while transfer times can range from 1 to 4 business days, sometimes longer if regulatory checks apply.
International Money Transfer Platforms
Alternatively, international money transfer platforms like Wise offer more cost-effective and faster options of transfer. Wise allows you to send Hong Kong Dollars online from offshore bank accounts to a Hong Kong bank account fees as low as 0.1% on large transfers and exchange rates locked for up to 48 hours, and a shorter average transfer time of 24 hours compared to the days it usually takes international wire transfers. This method is especially attractive for business transfers seeking low cost and predictability.
Bitcoin
Some companies may consider transferring value using cryptocurrencies like Bitcoin. Hong Kong has made inroads in recent years to legalise and regulate the cryptocurrency industry, including efforts to make it easier and safer to store cryptocurrencies in government-licensed accounts.
This process can be faster than bank wiring, but requires some technical knowledge of the platforms and compliance with anti-money laundering laws in sending and receiving jurisdictions for large transfers. Conversion fees and potential capital gains taxes may apply depending on the jurisdiction, making it less straightforward than traditional methods.
How to Transfer Contracts
Transferring ownership of contracts and agreements between entities in different jurisdictions is a process called novation, and in the context of asset transfers, should be relatively straightforward since both entities belong to the same owners. Transfer your contracts with the following steps:
- Identify eligible contracts
Review all existing agreements to determine which can be legally assigned to the Hong Kong company, as some contracts have anti-assignment clauses, meaning you will need written consent from the other parties involved in the contract before it can be transferred.
- Draft a novation agreement
A novation agreement will detail the transfer terms, identify the specific contracts to be transferred , and outline the responsibilities for all parties involved.
- Notify and secure approval from other parties
Communicate early with your contract’s counterparties and provide them with the draft assignment agreement to maintain transparency and allay any concerns throughout the process.
Complete the transfer
Once all necessary consents are in hand, execute the novation agreement. Representatives of old and new entities, as well as the contract parties, should sign the relevant documents to legally effect the transfer.
Update records and inform stakeholders
After the transfer is complete, notify all relevant service providers, partners, or authorities about the change of contract party to ensure smooth operational continuity.
Wrapping up the BVI company
Once you’ve transferred all your assets, you still have the company shell to deal with. A clean end to the BVI company would involve deregistering the company, where all debts are settled, an application is made and liquidation is final.
Most companies that need to resort to asset transfers however likely have liabilities that are difficult to resolve, meaning that these companies will often wrap up by simply letting the company expire when they miss their annual renewal payments. After a 90-day notice period, companies that do not renew their business certificates will be struck off the registrar and dissolved all at once. Any liabilities or risks that remain could still follow the former directors and shareholders, and any remaining assets will get passed to the state.
| Deregistering | Letting Company Expire | |
| Process | Formal winding-up process where debts are settled, assets are distributed, and an application is made to deregister. | No action taken by owners. Annual fees are not paid. Registrar strikes off and dissolves after notice period. |
| Speed | Immediate upon completion of liquidation and filing. | Strike off and dissolution occur together after a 90-day notice period. |
| Liabilities | Dealt with before dissolution. Directors and shareholders are released from future liabilities. | Potentially unresolved liabilities or risks. Assets are passed to the state (bona vacantia). |
Conclusion
Asset transfers can be tricky if you aren’t familiar with the laws involved from a foreign jurisdiction, all the more so when you are transferring between two completely different regions. As such, the processes are best handled with professional legal guidance to ensure you stay compliant and minimize the risk of disputes down the line with authorities from either jurisdiction. If you have questions about your situation you’d like answers to, Yau and Wong are ready to help!
