Shell companies: quick, cheap, anonymous

PUBLISHED : Monday, 28 February, 2011, 12:00am
UPDATED : Monday, 28 February, 2011, 12:00am

Setting up a shell company in Hong Kong is a simple process that begins with a visit to the Companies Registry to apply for a Certificate of Incorporation. Upon incorporation, newly formed companies are required to register their business with the Inland Revenue Department and, finally, open an account with a local bank.

Secretarial firms can expedite this process by offering a range of services, from filing incorporation documents to providing a company secretary and a local address for the company. They can also provide another benefit - complete anonymity.

Some secretarial firms provide nominee shareholders and directors, who are listed on filings to the Companies Registry, ultimately masking the true ownership of the company.

These firms range from small, mom-and-pop businesses to multinational incorporation outfits. Many law firms operate their own secretarial firms as a service to their clients. Hong Kong does not require local residency for company shareholders and directors, and individuals or companies can serve in both positions.

Calls to various secretarial firms found that a person could hire a secretarial firm, complete with nominee shareholders and directors, for as little as US$3,000. Certain firms said the full incorporation process, including setting up a corporate bank account, could be completed in as few as eight working days and, depending on the bank, without travelling to Hong Kong.

When offering nominee services, secretarial firms typically perform their own due diligence procedures in order to verify the true identities of potential customers. However, information about the ultimate beneficiaries of their corporate clients is completely hidden from public view.

When asked whether the Companies Registry would verify customer information, a representative of a Hong Kong-based secretarial firm reacted with a laugh.

'They will not verify it,' he said. 'But if you have business with outside parties, [those parties] will verify your documents.'

A Companies Registry employee answering the inquiry hotline said that they 'typically trust' that the information provided in company registration documents is true.

A Companies Registry spokesman said the department did not identify a company's beneficial directors and shareholders, as its primary regulatory role was ensuring compliance with the Companies Ordinance, adding that it 'verifies company information, including particulars of directors and shareholders, whenever necessary'.

'If a company carries on illegal activities, relevant regulatory authorities will take appropriate action against the company,' the spokesperson said.

When issuing business registration certificates, the Inland Revenue Department will only check the information provided by a business if there are 'reasonable grounds for doubt'.