Incorporation of a Hong Kong company limited by shares as a special purpose vehicle (spv) or holding company
Andy Lau has substantial experience representing pe/vc funds, investment banks and startup and growth companies in pe/vc investments, M&A, IPO and capital markets transactions. For a preliminary consultation, please email him at andy@askventure.com.
Some clients I work with require the incorporation of a Hong Kong limited company in the process of their private equity, M&A or capital markets investments. I have helped a lot of clients incorporate such company which is mainly used as a special purpose vehicle (SPV) or a holding company. In this article, I discuss a few important points to consider when incorporating a Hong Kong limited company.
Company name check – Do a search (and it’s free) and see if the proposed company name has already been used. If it has been used, think of another name. Also there are restrictions on the use of certain words for a Hong Kong company. Generally speaking, you can’t use such words as “Government”, “Department”, “Federation”, “Commission”, “Bureau”, Authority”, “Council”, etc.
Share capital and shareholders – You need to decide on the authorised share capital and issued share capital, and the founder of the Company who must take up at least one share in the company.
Directors – Who are the directors? Their names, passport numbers and residential addresses need to be submitted when you submit your incorporation form. Directors of a Hong Kong company have certain responsibilities and obligations under Hong Kong law, and a breach of such responsibilities and obligations could be a civil or criminal offence that would lead to a fine or imprisonment.
Company secretary – Details of the company secretary also need to be submitted.
Memorandum and articles of association – The M&A is a very important constitutional document of a company. It sets out what the company can do and such things as board compositions, voting mechanism, etc.
Objects clause – if there is no objects clause in the memorandum of association, the company has the capacity and the rights, powers and privileges of a natural person. Most SPV or holding companies do not have an objects clause.
Quorum – In the context of a board meeting, a quorum is the minimum number of directors that must be present to hold a valid board meeting. This is stated in the articles of association. Depending on how many directors there are and how much control over the board of directors you want to have, you need to be careful when deciding the quorum of the board.
I’ll stop here. Seek legal advice if you have any questions.
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a good summary. thx.