Open an SPV Company in Hong Kong

By Vlad Cuc, specialist in company formation matters 

Investors who open an SPV company in Hong Kong enjoy a simple incorporation procedure and an attractive taxation regime. Our local company formation agents can help you set up a special purpose vehicle company.

What is a special purpose vehicle company?

As its name suggests, a special purpose vehicle company, or SPV in Hong Kong as we will refer to it throughout this article, is a legal entity created to serve a predetermined purpose.

Are there restrictions on the creation of an SPV in Hong Kong?

Company formation in Hong Kong is not restricted in terms of the investor’s nationality, their residency status, or the industry in which the company will be used (or the goals for which a company will be used as a special purpose vehicle).

How is the SPV used?

An SPV company in Hong Kong is commonly used for the purposes listed below by our team:

• Asset separation and protection;
• Isolating risks for the parent company (protecting the parent company from bankruptcy);
• Asset or capital pooling (merging multiple sources of capital for a certain purpose such as startup formation or real estate investments).

What form can the SPV take?

Special purpose vehicles in Hong Kong can take the form of a corporation, partnership or trust. The chosen form must meet these important criteria:

• Must be wholly or partially owned by a qualifying fund (unified fund exemption);
• Can be incorporated, registered or established in or outside Hong Kong;
• Does not engage in trade or activities other than holdings;
• Must not be registered as an excepted private company.

The SPV can be created in order to hold and administer an excepted private company from Hong Kong. The latter is a private company (now 'investee private company') incorporated in or outside Hong Kong that satisfies certain conditions. The SPV should engage only in holding and not in other activities (for example, transacting on behalf of the foreign company).

Our experts invite you to watch a video about the uses of a special purpose vehicle: 

How can I open an SPV company in Hong Kong?

When working with our local team of company incorporation agents, we will go through the following stages:

• Documentation: our team will ask you to provide the documents required for the founders (information on the shareholders and directors, passport copies, other identification details);
• Company name: you will be asked to use an available company name. Our team can perform the company name check;
• Business scope and capital: You provide us with information on the scope of the company and the issued share capital (there is no minimum paid-up capital in Hong Kong; however, the amount of share capital used in practice can be HK$10,000);
• Incorporation document drafting: our team prepares the Articles of Association and the incorporation form (NNC1);
• Filing for registration: once all the documents are in order, we file for registration with the Hong Kong Companies Registry.

How much does it cost to open a company in Hong Kong?

When working with our team, we offer the following for a total one-time setup fee of USD 1,000:

• Preparing the company documents and handling the registration fees;
• First-year secretary services (according to law);
• First-year registered office address in Hong Kong (only the address used for incorporation purposes. Access to virtual office solutions is provided separately);
• First-year electric signboard;
• First-year ultimate beneficial owner registration service.

What are some key aspects for SPV creation in Hong Kong?

The list below includes some of the most important steps when establishing a special purpose vehicle:

1. Incorporate the company: the SPV is incorporated as per the Companies Ordinance and has legal personality; there are no special regulatory regimes for it; however, special permits and licenses may be required according to its structure.
2. Ensure the securitization of the transactions: investors have several options for the purpose of securing the transactions made via the SPV; examples include, but are not limited to, limiting recourse to the SPV to the acquired assets, making sure that the SPV is not part of a corporate group, or restricting counterparties from initiating insolvency proceedings on the SPV (via a contract).
3. Ensuring separate treatment for the SPV: the separate treatment is in relation to the originator, should this become subject to insolvency; because the SPV has its own legal personality, it does not take on the rights and liabilities of its originator – an advantage for those who choose to incorporate in Hong Kong; however, there can be some exceptions to this.
4. Issuing securities: the decision between issuing public or private securities, based on the investor’s requirements, the listing costs, the regulatory and tax requirements, as well as the originator’s target to attract funding (from a wider range of investors in case of public securities).

Contact our company registration specialists in Hong Kong for more details about investment in the city and the choice between the various available structures.