Thank you, Deputy President. I rise to speak on behalf of the insurance industry in support of the Companies (Amendment) (No. 2) Bill 2024.
Many years ago, many enterprises (including Hong Kong insurance companies) chose to register in offshore “tax havens” overseas for tax and regulatory reasons. However, in recent years, the tax rates and compliance costs in these “tax havens” have increased significantly, eliminating the economic incentives they previously offered. Consequently, many enterprises and insurance companies now wish to move their domicile back to Hong Kong.
Under the current system, a non-Hong Kong corporation wishing to transfer its domicile to Hong Kong must either wind up the company in its original domicile and set up a new company in Hong Kong or go through a court-sanctioned scheme of arrangement before it can be converted into a joint-venture subsidiary incorporated in Hong Kong. In other words, transferring domicile to Hong Kong is a time-consuming and costly process that involves complicated judicial procedures. In response to market needs, the Bill introduces a company re-domiciliation regime that streamlines administrative procedures, significantly reduces the costs for insurance companies and other non-Hong Kong corporations relocating to Hong Kong, and allows re-domiciled companies to directly preserve their existing legal identities, thereby eliminating cumbersome processes and shortening the time required for overseas companies to complete the re-domiciliation process. This initiative is welcomed by the industry, with five to six medium- to large-sized insurance companies prepared to re-domicile to Hong Kong as soon as the Bill is passed.
In order to prevent an entity from losing its registered status as a re-domiciled company and having to make corresponding changes in relation to its insurer or banking regulation within a short period of time due to its failure to deregister in its place of incorporation within 120 days after the date of re-domiciliation, the Bill requires a non-Hong Kong-incorporated insurer to obtain a “letter of no-objection” from the Insurance Authority and complete the deregistration process in its origin domicile before becoming an insurer of a re-domiciled company. In other words, this places them under the same regulatory framework as local insurance companies, helping to maintain market fairness and protect the interests of policyholders. In addition, the Government has also responded positively to the industry’s feedback by extending the time frame for deregistration in the original domicile from 60 days to 120 days, thereby reducing administrative pressure on enterprises and balancing administrative efficiency with compliance needs. This fully demonstrates the positive interaction between the Government and the industry.
Hong Kong boasts a robust legal system, a favourable business environment, and a world-class professional services network, making it a core hub for insurance businesses in the Asia-Pacific region. The implementation of the Bill is expected to attract more local and international institutions to re-domicile to Hong Kong through simplified company domiciliation procedures. This will open up new opportunities for Hong Kong and the insurance industry, enhance the international competitiveness of the local market, and create more employment opportunities in areas such as auditing, and legal and accounting services. This will also give new impetus to the development of Hong Kong’s headquarters economy and further consolidate Hong Kong’s position as a global risk management centre. The industry fully supports the Bill and urges the Government to strengthen publicity and promotional efforts to attract more target enterprises to re-domicile to Hong Kong, thereby achieving a win-win situation for all parties.