BVI/Seychelles holding company being sole owner/director of Hong Kong trading company

[DayTrader]

Hello all!


I'm looking to setup the structure in the title of this post as I would like to maximize my privacy, but am uncertain of how to proceed and have a few questions:


1. Am I right in thinking that the BVI/Seychelles company should be incorporated first, before setting up the HK company, or can they be setup simultaneously?


2. Is there any advantage in using the same formation company to setup both companies, or is it better to keep everything separate?


3. As the BVI/Seychelles company will be the sole shareholder/director of the HK company, will ANY of my personal details be required in the articles of incorporation of the HK company?


4. I do not wish to use nominee shareholders/directors and assume this should be possible with my structure having read other threads on this forum, can you confirm this is correct?


5. I would like to open an HSBC or Standard Chartered bank account for the HK company, but both banks have their global headquarters in the UK (I'm a UK citizen, but reside outside the EU and do not pay UK taxes). Is there any chance that information on my accounts will be passed on to HMR&C (the UK IRS)?


I would be very grateful for any input and am ready to clarify any points.


Cheers.

 

[Zqq]

1. Am I right in thinking that the BVI/Seychelles company should be incorporated first, before setting up the HK company, or can they be setup simultaneously?

The BVI or Seychelles company must be set up first as it will act as director and/or shareholder of the HK company.

2. Is there any advantage in using the same formation company to setup both companies, or is it better to keep everything separate?

It's easier to use the same offshore service provider (OSP) for both companies. As long as you use good OSPs, it doesn't matter if you use one or two.

3. As the BVI/Seychelles company will be the sole shareholder/director of the HK company, will ANY of my personal details be required in the articles of incorporation of the HK company?

No.

4. I do not wish to use nominee shareholders/directors and assume this should be possible with my structure having read other threads on this forum, can you confirm this is correct?

Correct.

5. I would like to open an HSBC or Standard Chartered bank account for the HK company, but both banks have their global headquarters in the UK (I'm a UK citizen, but reside outside the EU and do not pay UK taxes). Is there any chance that information on my accounts will be passed on to HMR&C (the UK IRS)?

No. Just because a bank is multinational doesn't mean they can transfer customer data across borders without complying with applicable law.

 

[DayTrader]

Many thanks for your very quick reply, Zqq.


My mind is now at ease!

 

[DayTrader]

A few more questions if I may:


1. Opening a bank account in HK for the BVI holding company would seem to be quite tricky on the face of it as I have read elsewhere that banks may require evidence such as a couple of invoices/contracts for sales/purchase. If it's just a holding company such evidence would not be available. Can I ask forum members who have experience of this what sort of business evidence a HK bank would require to open an account for a holding company?


2. If sometime in the future I decided to take out a "loan", this would come directly from the trading company that is owned by the holding company. I cannot think of any circumstances in which I would actually use the bank account of the holding company. Does the holding company actually need a bank account or is this a requirement, to hold its capital for example?


3. The HK trading company will be engaged in proprietary financial trading. Again, evidence such as invoices/contracts for sales/purchase would not apply as financial markets are traded though a brokerage account, with all profits/losses from each trade being detailed in a monthly statement and held in the account. I would prefer to open the bank account before opening my company brokerage account as I would like to fund it from this account, in which case I would not be able to furnish the bank with any brokerage statements.


I can provide the bank with brokerage statements from my personal account proving the activities I am engaged in, but I do not see how else I can provide evidence of the business my company will be engaged in. I can ask my bank for a reference, but do not think European banks provide such a service. My business plan is my trading plan and this is one document I do have. Can anyone advise me on what else the bank will be looking for before they would be willing to open an account?


Thanks.

 

[Zqq]

1. Opening a bank account in HK for the BVI holding company would seem to be quite tricky on the face of it as I have read elsewhere that banks may require evidence such as a couple of invoices/contracts for sales/purchase. If it's just a holding company such evidence would not be available. Can I ask forum members who have experience of this what sort of business evidence a HK bank would require to open an account for a holding company?

A good business plan should be all you need to open an account. I set up an account with a bank in Hong Kong just a few weeks ago, providing them nothing more than my passport and a copy of a six-page business plan which outlined the business ownership, marketing strategy, business partners, countries of customers, countries of suppliers, competition analysis, and financing.

2. If sometime in the future I decided to take out a "loan", this would come directly from the trading company that is owned by the holding company. I cannot think of any circumstances in which I would actually use the bank account of the holding company. Does the holding company actually need a bank account or is this a requirement, to hold its capital for example?

Holding companies do not necessarily need to have a bank account, though it is expected and in some jurisdictions a legal requirement to guarantee that the company has enough funds to cover the share capital.

3. The HK trading company will be engaged in proprietary financial trading. Again, evidence such as invoices/contracts for sales/purchase would not apply as financial markets are traded though a brokerage account, with all profits/losses from each trade being detailed in a monthly statement and held in the account. I would prefer to open the bank account before opening my company brokerage account as I would like to fund it from this account, in which case I would not be able to furnish the bank with any brokerage statements.
I can provide the bank with brokerage statements from my personal account proving the activities I am engaged in, but I do not see how else I can provide evidence of the business my company will be engaged in. I can ask my bank for a reference, but do not think European banks provide such a service. My business plan is my trading plan and this is one document I do have. Can anyone advise me on what else the bank will be looking for before they would be willing to open an account?

Contact a couple of banks and see what they say. You will likely get very different answers from different banks.

 

[clemens]

In some situtations you don't even need a business plan to open a bank account for your company.

 

[hugger]

Excellent questions by DayTrader and excellent answers by zqq.


I would only add that the BVI/Seychelles holding company does not really need a bank account. Its sole purpose is to be the Director of the HK trading company. As long as the offshore service provider (OSP) knows that you can pay the annual fees, you won't have a problem.


DayTrader, you will have an excellent company set-up if you use this structure. Furthermore, if your broker is outside of Hong Kong, you will not be liable for taxation on any of the profits because Hong Kong does not tax on revenues earned OUTSIDE of Hong Kong

 

[DayTrader]

In some situtations you don't even need a business plan to open a bank account for your company.

This is the one document I do have as I was thinking of setting up in a country that did want to see a business plan.

I would only add that the BVI/Seychelles holding company does not really need a bank account. Its sole purpose is to be the Director of the HK trading company. As long as the offshore service provider (OSP) knows that you can pay the annual fees, you won't have a problem.

This is what I was hoping, thanks for confirming. It would also mean one fewer unnecessary hoop to jump through. I neglected to mention that I already have a personal offshore bank account in a non-tax haven, so this could be used to pay the OSP fees as the initial payments to them would also come from this account.

Furthermore, if your broker is outside of Hong Kong, you will not be liable for taxation on any of the profits because Hong Kong does not tax on revenues earned OUTSIDE of Hong Kong

Yes, broker is based in the US, so this structure would work for me.

 

[electric]

If you decide to go this route, can you share what Offshore Service Provider you use? I'm looking to setup something very similar but I'm having a very difficult time trying to find a reputable OSP. (Every time I find one that looks decent, I send them a few specific questions to check them out and I get a reply in broken English that doesn't even address my questions.)


Thanks!