By Vlad Cuc, specialist in company formation matters
Nominee shareholders in Hong Kong have the same purpose as a nominee director, which is to protect the identity of the true individuals who hold this position in the company. If, for some reason or another, the foreign investor in Hong Kong wishes not to appear on the official Government documents regarding the company, he or she may request a nominee shareholder service in Hong Kong.
Our Hong Kong company formation agents can help you with such a service and help you maintain your private identity as a company’s shareholder in Hong Kong. They can also assist you through the entire process of setting up a company in Hong Kong.
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What are nominee shareholders in Hong Kong?
A nominee shareholder is appointed by the actual shareholder to represent him or her. The appointed individual will provide his or her personal information so that the true shareholder is not obliged to do so. The rights and benefits of the true shareholder are also taken into consideration when appointing a nominee for the position.
The main advantages that can be taken into account when using nominee shareholders in Hong Kong are the following:
- Privacy: a lawyer of privacy is ensured between the beneficial owner and the nominee;
- Confidentiality: the identity of the shareholders is public in Hong Kong. Those who would prefer not to reveal their identities as a shareholder can use this service;
- Ease of transfers: share transfers between the nominee and the beneficial shareholder can be outlined in a manner that suits the latter;
- Ease of doing business: the use of nominee shareholders in Hong Kong does not hinder the company’s functioning or activities, nor does it complicate the management requirements for those who open a company in Hong Kong.
Deciding whether a nominee service in Hong Kong is right for your business can depend on issues such as residency, taxation, availability to travel to Hong Kong in some cases. Our team that assists with setting up a company in Hong Kong can help you with additional information and assist in making this decision.
An important condition that applies to company formation in Hong Kong is worth mentioning in the context of nominee shareholders. The Companies Ordinance Amendment 2018 introduced the Significant Controllers Register, which requires that a Hong Kong registered company maintains updated information on beneficial ownership.
The Register is not the same as having the information made public through the Companies Registry, however, this data has to be open for inspection, as required by the authorities in Hong Kong.
When investors decide to open a company in Hong Kong, the legal requirements state that the company must have at least two shareholders. If you need to appoint a nominee shareholder for this purpose, our company formation representatives in Hong Kong can help you prepare the necessary documents.
How are nominee shareholders appointed?
In order to appoint a nominee shareholder in Hong Kong, the two parties need to conclude and sign a Declaration of Trust and, if necessary, other documents as well. Our experts can help you draw up and conclude the documents.
For this purpose, the documents that need to be provided by the parties are identification documents: passports or Identity Cards, a copy of the company’s Certificate of Incorporation, details about the share capital, and the percentage of the shareholdings.
Such an agreement includes clauses that ensure the rights of the beneficial owner, how the shares are to be transferred, the treatment of dividend distributions, and other important matters.
Our experts who can help you set up a company in Hong Kong will oversee the document preparation process.
What are the duties and rights of Hong Kong nominee shareholders?
The nominee will have voting rights and the power to decide in specific matters as instructed by the beneficial owner.
According to the Companies Ordinance, the rights attached to shares can differ according to the classes of shares. This means that the rights of the nominee shareholder will depend on the class of shares he or she has in the company. At the same time, the type of shares attached to the nominee’s name would be the ones the beneficial owner would have in the company, meaning that the class of shares is not chosen by the nominee, but by the beneficial owner who uses this type of service.
The Companies Ordinance also includes specific provisions for the protection of minority shareholders. Upon request, our team can give you more information on the rights of shareholders, as they are defined in the current law.
As far as the taxes to which nominee shareholders in Hong Kong are subject, there is no tax applicable to dividends paid from profits that were already subject to the profits tax in Hong Kong.
Our team can also assist you with other services, such as those offered by our Hong Kong accountant.
Doing business in Hong Kong
A recent report on the number of companies in Hong Kong reveals that there were approximately 9,960 foreign-affiliated registered companies in June 2024. Other data shows that:
- Most parent companies were based in Mainland China (2,620);
- Japan and the United States also have a significant number of regional offices in Hong Kong: 1,430 and 1,390, respectively;
- 4,730 regional offices out of the total mentioned above were engaged in import/export trade, wholesale and retail.
You can contact our Hong Kong company formation consultants for more details about appointing a nominee shareholder and additional information about the services we can provide for you if you are interested in setting up a company in Hong Kong.