OIL's chief executive, Martin Crawford, said 62 per cent of the last 100 companies that listed on the Hong Kong stock exchange registered in the Cayman Islands.

But more of these firms would choose to incorporate their subsidiaries in Hong Kong, Crawford said.

'We saw a growth in demand for structures which combine off- and onshore elements since last year and it has been growing faster than expected since then,' he said.

Offshore companies have long been a popular tool for tax avoidance, fund management and asset protection because it is difficult for outsiders to get to the ultimate beneficiary of the company. But regulatory amendments introduced by the Organisation for Economic Co-operation and Development in 2008 have improved the transparency of the taxation systems of these offshore jurisdictions. That, plus treaties between countries to avoid double taxation on multinationals, has reduced the attraction of offshore companies.

Almost 80 per cent of the 92 lawyers, banks, regulators and industry associations polled recently by OIL said countries that had signed double-tax treaties became more attractive venues for company formation this year, compared with 53 per cent last year.

Hong Kong - which also signed a tax treaty - had an edge over other economies because of its low tax rate, Crawford said.

Companies would prefer to set up in Hong Kong for listing, investment holding and trading purposes, he said.

However, Singapore might be a preferred option if the companies were looking for wealth management because of the strong private banking facilities and experts there, he said.

651

The number of local public companies incorporated in Hong Kong in the first 10 months of this year