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What’s the story where a new company in Hong Kong has not yet set up shop in the HKSAR but want to hire staff? What do the Immigration Department make if this situation when it comes to visa sponsorship for foreign employees?

QUESTION

Hello Visa Geeza,

Thanks in advance! Your website has brought clarity on a number of questions I had on the visa process.

I do however have a few more.

I’m currently employed by a Hong Kong limited company, in the professional services industry, as a U.S. citizen.

I was originally invited to Hong Kong to work for this company, and arrived in Hong Kong in June 2011 (approximately 3 years and 3 months ago) under an employment visa sponsored by the said company.

I have since renewed my employment visa with the same company in June 2014, and it will expire in June 2016.

I have since been offered a new job with a different company located in Singapore that has no currently business dealings in Hong Kong.

The new company in Hong Kong does not deal in professional services, but industrial chemicals.

The parent company has been established in Singapore for the last 15 years with offices in the U.S. and Europe.

The new company in Hong Kong does not currently have any employees, nor do they have a current/valid business registered.

As part of the new job, they have asked that I set-up an office and register a new business in Hong Kong focusing on sales/trading of their products with me being the sole director/shareholder of the intended new Hong Kong office.

The intentions are to leave my current company, and establish/register the new business within the next couple of months.

As I begin the process to apply for an investment visa (I believe this is the appropriate visa rather than an employment visa) and register the new business, I have yet to notify my current company of my intentions to resign.

No official documents have been filed on either end for the investment visa or business as I’m trying to determine the right course of action.

Given my intentions to apply for an investment visa and register a new business as the sole director, I’m wondering what steps need to be completed first to ensure I have the correct visa application process in place (sponsored by the new company in Hong Kong) to avoid any visa breaches, and which does not jeopardize the business registration, or vice-versa.

This seems like a chicken versus the egg dilemma…

My goal is to successfully apply for the investment visa under the newly formed company, and to keep my path towards Permanent Residency uninterrupted since I’m already half way there!

I have rented my apartment for the 3 years 3 months I have lived in Hong Kong, established bank accounts, utility services/accounts, and etc in Hong Kong.

Again, thank you for your help!  This site and your services are invaluable for foreigners looking to establish ourselves in Hong Kong!

Hopefully, I have given a detailed account for your guidance.

ANSWER

Very interesting question with lots of moving parts. So, I’ll get straight into it. Effectively, if you’re going to change your employment visa category through to investment from employment, then you need to pass the approvability test that shows to the extent that you can make a substantial contribution to the economy of Hong Kong.

However, I suspect in the way that you’ve couched the language of your question,  you’ve interpreted being a director and a sole shareholder as effectively representing ownership by the Singapore parent entity, with you being the single executive that’s responsible for the development of the legal establishment and the commercial operations going forward.

So on the basis that it’s the parent company who’s going to be the shareholder, that is essentially the new Hong Kong entity is going to be a wholly owned subsidiary of the Singapore office, then you will not be an investor, you will be an employee for the purposes of your immigration status.

So you would be applying to change your visa sponsorship from your current employer through to this new employment scenario. Now, because it’s a completely new business situation without any legal establishment or any commercial operations or infrastructure at all on the ground here, effectively, what you’re going to have to do is to steer your parent company employer in Singapore to fund the necessary infrastructure arrangements so the Immigration Department can be satisfied that the new subsidiary in Hong Kong is going to be a suitable and credible sponsor for the purposes of your employment visa permissions.

And to that end, clearly you’re going to have to incorporate a new company and get it registered under the business registration arrangements and get a business registration certificate issued to you. You’re going to have to procure suitable business premises for you to report to work to each day. And you’re going to have to set out what your staffing plan is as you roll the operations out in Hong Kong, in the wake of having successfully secured the Immigration Department’s permission to change your sponsorship into the hands of this new employer accordingly.

Now, as part and parcel of that exercise, because the Singapore entity doesn’t have a presence here in Hong Kong yet, effectively, as a new business scenario, you’re going to have to show to the Immigration Department documents as to the  Singapore business, its commercial performance, its accounts, what it’s doing in Singapore, how long it’s been in business, all of that kind of good stuff to allow the Immigration Department to rest assured that the new Hong Kong operation, as a wholly owned subsidiary of the Singapore business is resourced sufficiently enough to satisfy the Immigration Department’s requirement that the new Hong Kong entity can be a suitable and credible sponsor for your immigration permissions.

So in that respect, assuming that you are going to be the founding director, but the shareholding is going to be held in the hands of the uh Singapore company, then, effectively you are on your way on the basis that you can get the infrastructure in place and your plans laid out for the Immigration Department to be satisfied that this business arrangement is suitable for the purposes of Hong Kong’s requirement for Singaporeans to make a substantial contribution to the economy of Hong Kong.

Now turning, to the question of you switching industries from professional services through to chemicals trading. Well, as long as you’ve got in your background the requisite skills, knowledge and experience to be undertaking these types of activities, then as a founding executive in this situation if you’ve got a good track record as a professional previously, then I suspect that there’ll be sufficient enough meat in your sandwich, as it were, to persuade the Immigration Department that you do possess the requisite skills, knowledge and experience to do the job and that somebody locally can’t be expected to uptake that work instead of you. But aligned with that will be a requirement for the Immigration Department to be advised as to what the future staffing complement of the business in Hong Kong is going to look like and where you fit in the overall sort of organisational framework what you’re going to do as regards implementing those new jobs.

So all things considered, this is an application that from the sounds of it appears approvable; you’re just going to have to grasp the nettle and recognise the fact that this would not be an investment visa application as such, although the Immigration Department as it is a new business situation, will apply elements of the investment visa provability test to it, that is Singapore companie’s to show that through the establishment of its operation in Hong Kong, it can make a substantial contribution to the economy of Hong Kong.

And that from your perspective as an incoming employee, that is employee number one, you do possess special skills, knowledge and experience of value to and not readily available in Hong Kong. So if you can put all that together then it seems to me that you’re probably on your way.

On the other hand you stated that you are going to be the sole shareholder. Now if you are a sole shareholder then, effectively the situation is completely different because it’s not going to be a wholly owned subsidiary scenario. It’s going to be effectively the Immigration Department looking at your ability to make a substantial contribution to the economy of Hong Kong.

And in that regard then I suggest that you look really in detail at the investment visa approvability criteria detailed elsewhere on the website. But, as I say, my sense is from how you’ve couched your question that you are in fact not going to be an owner of this business, the business in fact will be owned by the Singapore parent, and given that you’ve got a sufficient period of time left on your current limit of stay, you need to make an application to change your sponsorship, and you’ll only be able to do that once you’ve laid down the infrastructure for the new commercial presence and legal presence in Hong Kong. So the sooner you crack on with that the better. And, insofar as your, permanent residency scenario goes well, as long as you maintain your continuous ordinary residence in Hong Kong all throughout the period of transitioning from your old employer to the new employment arrangements. And then in the wake of getting the permission of the Immigration Department to change your sponsorship into the new employer arrangements, you continue to be ordinarily resident in Hong Kong. Then you’ll maintain your present trajectory through to an eventual seven years continuous ordinary residence so that when the moment comes for you to be able to make an application for the Right of Abode, you’ll be able to do so.

And now just a note on the practicalities of this type of application: it’s firstly incorporate, get the business registration certificate, secure clear arrangements for your business premises where you’re going to be reporting to work to each day. Don’t expect that you’ll be able to run this business from your spare bedroom or your kitchen table. The immigration department won’t buy into that. You’re going to have to have dedicated business premises. Immigration Department are going to want to see, as I said, a staffing plan and that the new company bank account is properly funded to be able to finance operations. You then, once all that’s in place, make an application to adjust your sponsorship from your old employer to this new arrangement. It’s a fifth floor application and you’ll find that it probably takes about between six and ten weeks for the Immigration Department to finalise your case, given that it is a new business situation. Okay, so as I said, there’s quite a lot of moving parts to this but I see this scenario happen all too often and as long as the Singapore parent, in your instance, is a decent sized operation, I  think you’ll find once you’ve got your infrastructure on the ground here that the immigration plan will more than likely buy into the plan and allow you to adjust your sponsorship accordingly.

Okay. Hope you found that useful.

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