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Setting up a Company: Merger and Acquisition

Two options are available for consideration:

  • Corporate brokers: intermediaries of corporate buying and selling, providing transaction information and advisory services. In Hong Kong this is mainly served by business consultancies.
    - Procedure and payment schedule of acquiring an existing Hong Kong company via corporate brokers:
    Chart: Procedures
    Chart: Procedures

Tips from HKTDC (on corporate brokers)

Making it worthwhile to make acquisitions through corporate brokers:

  • Four advantages of corporate brokers:
1Ideal matching, protecting interests of both partiesAs an intermediary has understanding of the parties’ backgrounds and needs, thereby reducing mismatching.
2Establishing mutual trust, facilitating a smooth negotiation processCommercial secrets may be involved in the process; an intermediary can assist in safeguarding disclosure and establishing mutual trust.
3Value assessment, ensuring assets are valued appropriatelyIntermediary as advisor, avoiding overpriced purchase or underpriced sale by the parties.
4After-sale service, ensuring a smooth transitionIntermediary as mediator of conflicts arising during transition.

 

  • Buying a shelf company. Shelf company refers to a dormant company duly registered as a limited company. Buying a shelf company helps save time on documentation in the initial stage. It normally takes about 7 days, halving the procedures for making a fresh business registration application.
    Chart: Procedures
    Chart: Procedures
  • Buying a shelf company through an intermediary is time-saving and convenient:
    - nominee incorporation services
    - business consultancy services
    - accountancy firms
    - legal firms

Tips from HKTDC (on buying a shelf company)

  • "all-in-one" fees: price includes service fees and the relevant government levies
  • Price range: the average charge in the range of HK$7,000 to HK$20,000 depending on scope of services provided, scale and quality. Price ranking from lowest to highest: nominee incorporated service –> medium-sized accountancy firms or legal firms –> large international accountancy firms
  • Be wary of price cutting: if price is substantially lower than market price, the quoted price may only represent service fees but exclude government levies, such as business registration fees and levies of HK$2,250 (one year) or HK$5,950 (three years)
  • "Green Box": the standard intermediary fees generally include the following documents and tools which are stored in a green box. These are statutory required information and materials for submission in starting a limited company or for later use:
    - directors' register
    - shareholders' register
    - secretary's register
    - shares transaction registrar
    - mortgage register
    - company's minutes book
    - share certificate book
    - memorandum and articles of association
    - company common seal
    - company pre-inked stamp
Content provided by Picture: HKTDC Research
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