Company incorporation has evolved; it's big business, particularly in regions such as Asia where the climate favours and encourages businesses to set up and / or register subsidiaries. To compete on a global scale company incorporation agents are fast becoming a one stop shop, not only registering businesses, but continuing to provide company secretarial, local directors, registered office and ongoing compliance and reporting support. In this roundtable, Hawksford aims to delve deeper into the evolution of company incorporation providers and has invited four financial service experts to give us their view point on what they are experiencing in Asia, the Caribbean and Jersey.
Meet the Panellists
Leanne Ho, Managing Director, Hawksford, Hong
Kong
Leanne heads the day-to-day operations at Hawksford Hong Kong. She
has over 20 years of experience in senior corporate, operations,
management and advisory roles in a variety of industries in Hong
Kong, United Kingdom, Singapore and Malaysia ranging from fashion
retailing, food manufacturing, travel, investment holding and
property development.
Andrew Miller, Partner & Head of Global Wealth
Structuring, Walkers, Cayman Islands
Andrew Miller is based in Walkers' Cayman Islands office and is
head of the firm's Global Wealth Structuring Group. Andrew is
also a member of the Steering Committee which drives the strategy
of Walkers' Global Latin American Group. He specialises in all
aspects of non-contentious British Virgin Islands and Cayman
Islands trust, international wealth structuring and related
regulatory work for private individuals and financial institutions,
bringing a wealth structuring angle to his responses in this
roundtable feature.
Daniel O'Connor, Partner, Carey Olsen,
Jersey
Daniel specialises in the structuring and formation of investment
funds, real estate finance and general corporate work. He has
extensive transactional experience establishing, restructuring,
financing and winding-up a wide range of offshore structures.
Daniel is instructed by both global financial institutions and
specialist asset managers and works with many of Jersey's
leading fund services providers.
Jessica Liew, Client Services Manager, Precursor
Assurance PAC, Singapore
Jessica leads the client servicing team at Precursor, a
professional services firm that provides a full suite of corporate
and advisory solutions and services. She focusses on how to improve
the client's experience and assists with their compliance
needs.
How would you define company incorporation today and why is this important?
Jessica Liew – Precursor
Incorporation is the legal process used to form a company or a
corporate entity. A corporation is a separate legal entity from its
owners, with its own rights and obligations.
The fundamental legal purpose of incorporation has become increasingly crucial and important to curb business risks and frauds.
If any individual wants to start a business to earn a living, they must go through this legal process.
Leanne Ho - Hawksford
Over the years, many corporate service providers have evolved from
a mere executioner into a corporate compliance advisor and business
planner for clients.
Daniel O'Connor – Carey Olsen
Incorporating a company in Jersey is a regulated activity which can
only be carried out by a regulated corporate services provider with
staff and offices in Jersey. The process is fast (often completed
on a "same day" basis) and simple for the client when it
is carried out by an experienced service provider. An application
to the Jersey Financial Services Commission must be made for each
new company, as there are no "shelf companies" in Jersey.
Accordingly, company incorporation is not a commoditised service,
and it is important that the service provider understands the wider
structure and role that will be played by the Jersey company.
Andrew Miller – Walkers
Almost any reasonably sophisticated international wealth holding
structure will involve one or more companies, either as a holding
company or sometimes, for instance, a PTC. With such sophisticated
structures the service provider should almost invariably be not
just a formation agent but also a licensed fiduciary provider with
all the necessary skills, experience and other such
capabilities.
To what extent do you think that company incorporation is a fiercely competitive arena?
Leanne Ho - Hawksford
Most corporate service providers compete strongly on fees and speed
of incorporation. However, this does not necessarily guarantee that
a client will be given the advice and service that is right for the
administration and development of their company thereafter. As a
legal entity, the company and its directors must comply with the
regulatory requirements of the jurisdiction. It is extremely
important for a client to ensure that a corporate service provider
is carefully chosen based on both their service and their knowledge
when it comes to meeting ongoing obligations.
Jessica Liew – Precursor
Company registration has become far more competitive with the
growing prevalence of internet search engines and social media
platforms as business clients now have the means to make
comparisons on price and service via the internet.
It is essential that companies strengthen their digital and online marketing in order to stay connected to their client's information space.
Daniel O'Connor – Carey Olsen
Company establishment and administration is highly competitive in
Jersey, with a large number of sophisticated service providers of
varying sizes. A new Jersey company can be established for the
purpose of (i) being managed and controlled (and so tax resident)
in another jurisdiction, in which case the corporate service
provider may only supply a Jersey registered office; (ii) tax
resident in Jersey, in which case the corporate service provider
will usually supply or source Jersey resident directors and may
supply accounting or other services; or (iii) regulated in Jersey,
in which case the corporate service provider will usually also
supply a suite of compliance services. Some clients require service
providers with large teams, a high level of sophistication and very
fast response times, while others are more cost sensitive.
Andrew Miller – Walkers
It has been competitive in terms of the mass volume and less
sophisticated end of the market, where price is king. However, to
the extent that it has not already, the bottom is likely to drop
out of that end of the market as clients look for increased quality
and reliability.
What have been the top trends in company formations in the last year and what are the leading industries that are setting up subsidiaries in your region?
Leanne Ho - Hawksford
In Singapore, the leading industries setting up subsidiaries in the
last year have been trading, financial services, management
consulting and IT. We are also seeing a growing trend in the
fintech market, with many companies looking to establish themselves
in this arena, supported by accelerators and venture capitalists.
Even Singapore authorities are jumping on the bandwagon; the
Monetary Authority of Singapore has just signed Memorandums of
Understanding (MOUs) with the five polytechnics in Singapore to
review and enhance the curricula, with the view to equipping their
graduates with skill sets that will prepare them for the new
fintech related jobs.
In Hong Kong and China, we have noticed an increased growth in the ecommerce platform for various industries including retail, travel, education, and financial.
Jessica Liew – Precursor
There is a preference for foreign companies/ investors to set up
local private limited companies (under individual shareholdings) in
Singapore due to tax savings and governmental assistances.
According to the latest Singapore Foreign Direct Investment Report, the numbers of investment holding companies incorporated and started operations have increased from 200 in 2010 to 400 investment holdings.1
It is interesting to note that many of these companies are investment holdings that were subsidiaries of parent companies based overseas. This provides valuable insight that one of the draw factors is the business-friendly policies that Singapore adopts.
With Singapore's government actively promoting innovation, technologies and start-ups, many investment holdings come in as Angel Investors and Venture Capitalists as well.
Daniel O'Connor – Carey Olsen
Each quarter of 2015 saw some of the highest figures for new Jersey
company incorporations which have been recorded in the last decade,
with the last quarter of the year setting a new record.
Jersey has long been recognised as a responsible international finance centre, with a regime that has been independently endorsed by international assessors and acknowledged experts. Jersey has continued its policy of international co-operation in the areas of the prevention of money-laundering and terrorist financing and the investigation of financial crime. Jersey remains compliant with international standards and global initiatives, including the introduction of FATCA, CRS and a confidential central register of directors.
Jersey companies are used for a wide range of purposes from real estate holding vehicles to fund structures across a broad range of asset classes.
Andrew Miller – Walkers
Our clients are all High Net Worth or, increasingly, Ultra High Net
Worth, and range from successful entrepreneurs to Middle Eastern
royalty, and everything in between.
The key continuing trend is a focus on quality, both in terms of the jurisdiction and the service provider. This is driven by the need to provide ever more sophisticated advice in an increasingly complex global environment, usually with the client or his advisors, the fiduciary and offshore and onshore counsel all working together.
Where do the leading investors in your region predominantly come from and has there been a shift in trends in recent years?
Leanne Ho - Hawksford
We see a good mix of investors coming to Singapore and Hong Kong
from the UK, USA, Australia and Southeast Asia. In recent years,
there has been an increase of investors' presence from Mainland
China as well.
Jessica Liew – Precursor
According to the Singapore Statistics Board, the stock of foreign
direct investment (FDI) in Singapore amounted to $1,024.6 billion
as of the end of 2014. The top investors at this time consisted of
the United States ($153.0 billion), Japan ($109.3 billion), the
British Virgin Islands ($87.0 billion), the Cayman Islands ($77.7
billion) and the Netherlands ($69.5 billion).
In recent years, we have observed the emergence of investors from other Asia Pacific countries such as China, India, Indonesia and Vietnam.
By relocating to Singapore, multinational corporations (MNCs) have the added benefit of reaching out to the Southeast Asian regions, both in terms of recruitment and widening their areas for distribution.
Daniel O'Connor – Carey Olsen
Traditionally, most Jersey companies have been established for UK
clients, but over recent years there has been an ever-increasing
volume of clients from other jurisdictions, including other
European countries, Asia, the United States (especially for fund
vehicles and private equity holding vehicles) and the Middle East
(for investment and funds vehicles and for private wealth
structuring).
Andrew Miller – Walkers
Not being a volume business, it can be difficult to discern trends,
but most of the new business now is coming from regions such as
Asia, Latin America, the Middle East and Russia. However, we still
receive plenty of business from generational wealth clients with
existing structures from North America and non-domicile UK.
What role do Company Secretaries and incorporation providers play in registering a company?
Leanne Ho - Hawksford
For the most part, company secretaries or company formation agents
are the first party a business owner will approach for advice on
how to set up their business as a legal entity. Providing these
clients with relevant and accurate advice will help them build a
compliant and strong fundamental structure, supporting the future
growth of their business.
In Hong Kong, the appointment of a local person/ corporation as a company secretary for a business is mandatory. Similarly, in Singapore, a firm must have a company secretary who is aware of the local requirements/laws. They are statutory watchdogs who ensure the annual filing with the Companies Registry is complete. The role is now evolving, and often includes more business advisory services.
Jessica Liew – Precursor
Outsourcing business solutions are increasingly popular. In the
past, a company needed to hire a full time company secretary to
keep the company updated of compliance requirements but now this
function is often outsourced.
The role of these providers is crucial as they help companies to keep track of compliance requirements and therefore avoid any potential breech of laws when a company does business in the country. Good service providers will also advise the clients on how to scale their businesses.
Andrew Miller – Walkers
For my UHNW clients, these roles should merely be a part of
providing sophisticated structuring and fiduciary services.
Daniel O'Connor – Carey Olsen
Company secretaries play a key role because incorporating a Jersey
company is a regulated activity and there is usually a need for
on-going services. The client needs a service provider that is
commercial in their approach and understands the proposed structure
and its purpose. This will ensure that all regulatory requirements
are complied with and the incorporation process goes smoothly, as
well as to provide a tailored service that meets the client's
expectations throughout the life of the company.
If a company from the UK wants to register a subsidiary in your region, how would they need to go about it?
Leanne Ho - Hawksford
Incorporation of a LLC subsidiary in Hong Kong is generally a
straight forward process. There is no minimum capital or
appointment of a local resident director requirement for a Hong
Kong company. The only mandatory requirement is that a Hong Kong
company must appoint a local individual or corporation as the
company secretary and this is where it is important for an overseas
company to ensure that a reputable service provider is engaged to
provide the company secretarial services. This ensures the client
is proactively updated with all relevant corporate regulatory
requirements and so will not incur any unnecessary penalty for
non-compliance issues.
Jessica Liew – Precursor
Subsidiary registration for the most part involves liaising with
the Singapore authorities and the company would need to appoint a
nominee corporate secretary and a local director. Frequently, a
provider will be engaged in the preparation of the necessary
regulatory requirements and paperwork. Once the subsidiary is set
up, the company can start its business operations in Singapore.
Andrew Miller – Walkers
We recommend that clients contact either a reputable law firm
and/or licensed trust company.
Daniel O'Connor – Carey Olsen
The best place to begin is by contacting a reputable corporate
service provider and Jersey law firm, who have appropriate
experience in the sector in which the company will operate.
Together, they will guide the client though the process to include
compliance and regulatory issues. Once the company is established,
the corporate service provider will usually arrange for the opening
of any bank accounts for the company, the holding of board meetings
to approve transactions and the signing of documents.
What does a company look for when establishing an agent to support them to incorporate a company in a new region?
Leanne Ho - Hawksford
Corporate services in Asia have evolved over the years. Where
previously the agents were there to take instructions and act
accordingly, now they have to be savvy and understand clients'
requirements as a whole to better advise them. Other than costs, a
company should also take into account the responsiveness of the
agent in dealing with requests or enquiries and the quality of
advice and service provided.
Jessica Liew – Precursor
Business clients will look at various factors when choosing an
agent to help them with the incorporation process. If the provider
is able to offer clients a one-stop business solution, the added
efficiency would certainly entice them. The support required by a
business will vary at each stage of the incorporation process and a
reputable provider will be able to provide the required guidance
and advice throughout.
Daniel O'Connor – Carey Olsen
As Jersey companies are used for a wide range of purposes, by a
wide range of clients and for simple transactions such as holding a
residential property through to the largest and most complex
commercial transactions in the world, clients look for a good
"fit" with their corporate service provider.
Responsiveness, a thorough understanding of the client's needs
and an appropriate fee structure are usually at the top of the
list. Beyond that, clients usually look for depth of experience, as
the corporate service provider can play a key advisory role for the
client in avoiding potential pitfalls.
Footnote
This roundtable was originally published in Acquisition International and is in association with Hawksford.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
