8 Acquisition International - December 2016

ACQUISITIONINTERNATIONALThe Top Trends in Company Formations

Leanne Ho, Managing Director, Hawksford, Hong KongLeanne 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, Singa-pore and Malaysia ranging from fashion retailing, food manufacturing, travel, investment holding and property development.

How would you define company incorpo-ration today and why is this important?

Jessica Liew – PrecursorIncorporation 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 - HawksfordOver the years, many corporate service providers have evolved from a mere executioner into a cor-porate compliance advisor and business planner for clients. Daniel O’Connor – Carey OlsenIncorporating a company in Jersey is a regulated activity which can only be carried out by a regulat-ed 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 some-times, 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.

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

Andrew Miller, Partner & Head of Global Wealth Structuring, Walkers, Cayman IslandsAndrew 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 structur-ing angle to his responses in this roundtable feature.

Daniel O’Connor, Partner, Carey Olsen, JerseyDaniel 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, SingaporeJessica 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.

Acquisition International - December 2016 9

AI ROUNDTABLE / The Top Trends in Company Formations Hawksford

Hawksford publishes a quarterly ‘Singapore Business Trends’ report that delivers critical information on business formation trends in Singapore during the quarter. It provides up-to-date information about the number of newly started business entities, the profile of recently incorporated companies, the industries that have the highest company incorporation activity and the countries whose residents and firms are establishing the largest number of companies in Singapore. To access the latest report visit https://www.guidemesingapore.com/business-formation-trends

10 Acquisition International - December 2016

To what extent do you think that compa-ny incorporation is a fiercely competitive arena?

Leanne Ho - HawksfordMost 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 – PrecursorCompany 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 digi-tal and online marketing in order to stay connected to their client’s information space.

Daniel O’Connor – Carey OlsenCompany 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 resi-dent 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 cli-ents 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 com-pany formations in the last year and what are the leading industries that are setting up subsidiaries in your region?

Leanne Ho - HawksfordIn 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 acceler-ators 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, educa-tion, and financial.

Jessica Liew – PrecursorThere 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 op-erations 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 OlsenEach 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 - HawksfordWe see a good mix of investors coming to Singa-pore 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 – PrecursorAccording to the Singapore Statistics Board, the stock of foreign direct investment (FDI) in Singa-pore 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 Nether-lands ($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 corpora-tions (MNCs) have the added benefit of reaching out to the Southeast Asian regions, both in terms of recruitment and widening their areas for distri-bution.

ACQUISITIONINTERNATIONALThe Top Trends in Company Formations

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AI ROUNDTABLE / The Top Trends in Company Formations Hawksford

Daniel O’Connor – Carey OlsenTraditionally, 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 (espe-cially 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 generation-al wealth clients with existing structures from North America and non-domicile UK.

What role do Company Secretaries and incorporation providers play in register-ing a company?

Leanne Ho - HawksfordFor the most part, company secretaries or compa-ny 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 – PrecursorOutsourcing 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 require-ments 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 OlsenCompany 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 - HawksfordIncorporation 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 en-gaged 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 – PrecursorSubsidiary registration for the most part involves liaising with the Singapore authorities and the company would need to appoint a nominee corpo-rate 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 repu-table law firm and/or licensed trust company.

Daniel O’Connor – Carey OlsenThe best place to begin is by contacting a reputa-ble 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 com-pany 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 - HawksfordCorporate 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 – PrecursorBusiness clients will look at various factors when choosing an agent to help them with the incor-poration 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 OlsenAs 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 corpo-rate service provider can play a key advisory role for the client in avoiding potential pitfalls.

1. Credits: http://www.singstat.gov.sg/docs/de-fault-source/default-document-library/publications/publications_and_papers/investment/fdi2014.pdf