According to the U.S. Department of State:
“The United States enjoys substantial economic and social ties with Hong Kong. U.S. companies have a generally favorable view of Hong Kong's business environment, including its legal system and the free flow of information, low taxation, and infrastructure. There are some 1,400 U.S. firms…and over 60,000 American residents in Hong Kong.”
In addition, the website of the Hong Kong Economic and Trade Office in Berlin says that Hong Kong is considered to be a “Gateway to China,” serving as a global center for trade, finance, business and communications, due to its geographical position and special relationship with the People’s Republic of China. Because of the important relationship Hong Kong has with both the U.S. and China, it is increasingly commonplace for U.S. law firms to have a need to review the corporate records available for a Hong Kong company as part of their due diligence process. This article looks at the equivalents of common searches performed in the U.S. and what can be obtained for a Hong Kong entity.
Certificate of Good Standing
Hong Kong issues a “Certificate of Continuing Registration,” which can be requested online, but must be either sent by mail or picked up in person at the Companies Registry in Hong Kong. The Certificate of Continuing Registration attests to the fact that the Hong Kong company was duly formed and as of the date of the certificate the company remains on the Register of Companies.
Certified CopiesPlain copies of any document can be obtained online on the Companies Registry website. Documents include the Memorandum and Articles of Association, the formation document for a company in Hong Kong similar to both the Articles of Incorporation and Bylaws for a U.S. corporation, and the Certificate of Incorporation (a one page certificate issued upon the registration of the entity). You can also obtain any amendments, mergers, and indication of the dissolution or winding up of the entity, as well as the annual reports and financial statements filed by the entity. Finally, any copy can be certified by the registry but, as with the Good Standing, it must be picked up in person to receive a copy in an expedited manner here in the U.S. The Hong Kong registry will not send out documents via overnight courier.
UCC Search EquivalentFor company debtors in Hong Kong, charges are filed with the Companies Registry, providing a record of indebtedness. The following types of charges are required to be registered:
- A charge on uncalled share capital of the company
- A charge created by an instrument that would require registration as a bill of sale if it was signed by an individual
- Any charges on land or book debts of the company
- A floating charge
- A charge on calls made but not paid
- A charge on a ship or any share in a ship
- A charge on goodwill, on a patent or license under patent, on a trademark or on a copyright or license under a copyright
In addition to the above there are other searches which can be done to assist with due diligence for a Hong Kong company. A Hong Kong company is also required to maintain a business license and so a search of the Business Registration Office to ensure the license was granted and is up to date is often done.
A search for Writs and Summons issued to the company can be done at the High Court and the District Court.
Because tax information is confidential in Hong Kong, a true public record search regarding a company’s tax status cannot be done. However, it is sometimes possible to obtain basic information from the Inland Revenue Department (IRD) regarding outstanding tax returns or court orders related to tax issues. The IRD makes the final determination, however, as to whether or not this information can be disclosed.While what is available on the public record in Hong Kong does not exactly mirror what can be obtained in the U.S., there is a great deal of information publicly available at the Companies Registry and the courts. As the need for this type of information is becoming increasingly common for the U.S. legal practitioner, it is important to understand the differences and similarities in the information that can be obtained.