Whether a business owner should use his personal bank account or open a corporate bank account is one of the vital concerns when starting one’s own business. There is no legal obligation for a company to create a corporate bank account, although doing so could be beneficial both financially and administratively. This article will explain to you why you should consider using a separate corporate bank account for your business. Is it obligatory to use a corporate bank account for my business? The short answer is no. As a company, you are not legally obligated to create a corporate bank account. That means you may use your personal bank account for your business. However, in some cases, a personal bank account may only be used for personal funds and transactions. What are the benefits of using a corporate bank account? Although using a separate corporate bank account is not mandatory, it can be beneficial for effective finance management and business development in many ways. Accurate bookkeeping & clear assessment of business performance When the number of business transactions exceeds that of personal transactions, it may become confusing to understand your monthly business costs and revenues. Having a corporate business account that is separate from your personal account would make it easier to assess how well your business is performing, hence providing greater potential for growth. Simplified tax preparation If business and personal transactions are mixed together in a single bank account, preparing for taxation would be troublesome, time-consuming and complex. There are many differences between personal and corporate taxation, for instance, the tax rate. Insufficient accuracy and clarity may expose you to risks of penalties by the Inland Revenue Department. In case of audit, there will be a clear distinction between personal and business expenses if the bank accounts are separate; courts might hold you personally liable and not see

Requests from clients for third-party payment arrangements should normally be refused. Requiring a third-party to receive a client’s funds should be rare. Such arrangements are acceptable in exceptional and legitimate circumstances due to the financial crime and compliance risks associated with such transactions. For instance, third-party payments may be used to disguise the true beneficial owner or source of funds. Therefore, extra care must be taken to address the associated risks such as money laundering and misappropriation of funds. The SFC has laid down key control measures that should be adopted by parties accepting third-party payment arrangements. This article will help you understand (i) the SFC regulations with respect to accepting third-party payments; and (ii) how licensed corporations should protect themselves from risks; and (iii) the exceptional circumstances for accepting third-party payments;. Additionally, the issues surrounding money laundering would be examined. What should licensed corporations be aware of when accepting third-party payment arrangements? SFC has explained effective practices that corporations should take with respect to third-party payment arrangements. Corporations should adopt a policy that discourages third-party deposits and payments. Should such arrangements be accepted, detailed policies, procedures and controls should be in place to mitigate the risks. The acceptance should be subject to stringent management control. Corporations accepting third-party payment arrangements should clearly explain, in approved policies and procedures, the exceptional circumstances and the control measures to be carried out by designated managers and staff. Before accepting third-party payment arrangements, due diligence should be conducted on a risk-sensitive basis to determine (i) the identity of the third-party payor; (ii) the relationship between the client and the third-party payor; and (iii) the reason for

Cryptocurrencies and blockchain technology have established a new economy and thereby brought new investment opportunities. Without direct legislation regulating the use of cryptocurrencies in Hong Kong, there lies a certain degree of uncertainty regarding how they can be used legitimately. This article will explain (i) the relevant regulated activities; (ii) the Securities and Futures Commission (the “SFC”) regulatory approach; (iii) the licensing requirements; (iv) the licensing application process; and (v) the qualified corporations’ ongoing obligations. What is cryptocurrency? A cryptocurrency is a form of digital asset based on a network that is distributed, using blockchain technology, across a large number of computers that manage and record transactions. It is not issued by any central authority. When do I need a license to engage in cryptocurrency-related investment activities? As per the Securities and Futures Ordinance (“SFO”), any company or individual engaged in a regulated activity must apply for the relevant license, unless an exemption applies. Depending on the nature of your business, you may need to apply for more than one license to engage in the regulated activities. Currently, there are 12 types of regulated activities and the relevant ones are described below: Dealing in securities (Type 1) Making or offering to make an agreement with another person, or inducing or attempting to induce another person to enter into or to offer to enter into an agreement for or with a view to acquiring, disposing of, subscribing for or underwriting securities; or the purpose or pretended purpose of which is to secure a profit to any parties from the yield of securities or by reference to fluctuations in the value of securities. Dealing in futures contracts (Type 2) Making or offering to make an agreement with another person, or inducing or attempting to induce another person to enter into, or to acquire or dispose of, a

The shareholders of a Hong Kong company may choose to transfer their shares either by sale or gift to an existing or a new shareholder at any time. A share transfer may be triggered to, for instance, facilitate the restructuring of a company or the rearrangement of profit sharing or ownership etc. However, such transfer of shares must be carried out in accordance with the company’s Articles of Association and the procedure set out in the Companies Ordinance. This article will help you understand (i) the shares transfer process; (ii) required documents; and (iii) the stamp duty assessment. Share Transfer Process Shares may be transferred by means of an instrument of transfer in any usual form or any other form approved by the directors, which is executed by or on behalf of both the transferor and the transferee. Share transfer must accord with the provisions relating to share transfer in the Articles of Association. Generally, it requires approval of the board of directors; and offering of the shares to the existing shareholders before transferring them to new shareholders.   Before the shares are transferred, the transferee should Check the company’s Articles of Association for any limitations or restrictions on share transfersEnsure that any pre-emptive rights stated in the company’s articles of association have been satisfied or waivedReview the company’s shareholders agreement for limitations or restrictionsObtain approval to conduct the share transfer from the company’s shareholders What documents should be submitted for stamp duty assessment? Some of the documents required are: Bought and Sold Notes / Contract NotesSale and Purchase agreement (if any)Articles of Association of the companyCertificate of IncorporationLatest audited financial statements of the company (if consolidated accounts are not prepared)Latest certified management accounts of the company (if consolidated accounts are not prepared or they are not up to

More and more investors look for investment advice to advance their short- and long-term financial goals. Abundant “tips” and “advice” regarding investment have become increasingly accessible through social media platforms. However, any company or individual carrying out regulated activities such as in the securities and futures market needs to apply for a relevant type of regulated activity license with the Securities and Futures Commission (the “SFC”) to carry out these regulated activities in Hong Kong. This article will help you understand the SFC licensing regime and will provide an overview of (i) the relevant regulated activities; (ii) the licensing requirements; (iii) the exemptions from the licensing requirements; and (iv) the license application process. Regulated activities As per the Securities and Futures Ordinance (“SFO”), any company or individual engaged in a regulated activity must apply for the relevant license, unless an exemption applies. Depending on the nature of your business, you may need to apply for more than one license to engage in the regulated activities. Currently, there are 12 types of regulated activities and some of the relevant ones are described below: Advising on securities (Type 4) Giving advice and issuing analyses or reports on whether, which, when and terms of securities should be acquired or disposed of. Advising on futures contracts (Type 5) Giving advice and issuing analyses or reports on whether, which, when and terms of future contracts should be entered into. Advising on corporate finance (Type 6) Giving advice concerning The compliance with or in respect of the rules governing the listing of securities and the code published under section 399(2)(a) or (b) of the Securities and Finance Ordinance. Any offer or acceptance to dispose or acquire securities from the publicCorporate restructuring in respect of securities, to a listed corporation or public company or a

Licensed money lenders offer an alternative route of financing for individuals and businesses. Generally, a person carrying on business as a money lender in Hong Kong must obtain a money lenders licence. This article will help you understand (i) the situations where you would need to obtain a money lender license to lend money and some exemptions; and (ii) the license application process. When do you need a money lenders license to lend money? Money lenders refer to people whose business is that of making loans or who advertises or announces himself or holds himself out in any way as carrying on that business. The following persons are exempted from obtaining a money lender’s license: Any subsidiary of a bank, a restricted licence bank, or a deposit-taking company.A co-operative society registered under the Co-operative Societies Ordinance.A registered credit union.A registered trade union.An insurer.The University Grants Committee.A bank which is incorporated or established outside Hong Kong;recognised as a bank by the relevant declared banking supervisory authority; andcarrying on banking business in the place where that banking supervisory authority is located.An organisationwhich is a member of the International Union of Credit and Investment Insurers (The Berne Union); orwhich has been declared in writing by the Registrar that he is satisfied that it was established by one or more national governments with the object of financing, or guaranteeing the financing of, the export of a country’s goods or services.A corporation licensed to carry on business in securities margin financing.A corporation licensed to carry on business or an authorised financial institution registered to carry on business in engaging in securities margin financing to facilitate acquisitions or holdings of securities by the corporation or institution for its client. The following loans are generally exempted from the licensing requirement: made bona fide by an