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Special purpose vehicle in Hong Kong.

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Special purpose vehicle in Hong Kong
Acclime helps you set up, manage & advance your business in Hong Kong and beyond.

Foreign investors who want to minimise risks if their company goes bankrupt may want to consider a special-purpose vehicle. Let’s find out more about special-purpose vehicles in Hong Kong in this guide we have put together.

What is a special-purpose vehicle?

A special-purpose vehicle (SPV) is usually a subsidiary incorporated to secure the assets of the parent company’s investors if the company faces bankruptcy. It separates risks by safeguarding assets away from the parent company.

SPV may be a private limited company, a trust or a partnership. In Hong Kong, it is most common for an SPV to be a private limited company.

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Advantages of a special-purpose vehicle in Hong Kong

One advantage of incorporating an SPV in Hong Kong is that it is a gateway to Mainland China. An SPV in Hong Kong will give foreign investors access to the Chinese market, which is the second-largest economy globally, and Hong Kong is the key financial hub in Asia.

Using a Hong Kong SPV also allows foreign companies to own China-based assets or entities as a Wholly Foreign-Owned Enterprise (WFOE). The foreign company will then be able to sell any of the China-based assets.

Another reason is that Hong Kong provides many tax benefits, and the double tax agreement between Hong Kong and China offers special withholding tax rates on income and dividends.

Conclusion

If you are finding a way to secure your assets, then setting up a special purpose vehicle is the choice you should consider. Schedule a free consultation from Acclime for more information.