Some legal experts are advising companies not to rush to redomicile to Hong Kong under the jurisdiction’s new corporate regime, stressing that Bermuda and other traditional offshore centres still offer clear advantages.

The new Hong Kong redomiciliation regime, introduced this year, allows eligible entities to transfer to Hong Kong “without the need to wind up or dissolve the original entity or pursue a more complicated, costly and time-consuming avenue such as a scheme of arrangement”, wrote Richard Hall and Ryan McConvey, partners at Conyers Hong Kong.

However, the debate over whether to stay or go comes as several high-profile insurers explore shifting their legal domicile from Bermuda to Asia.

In May, Axa China Region Insurance Co (Bermuda) Ltd announced that it would redomicile one of its Bermudian-based entities to Hong Kong, becoming one of the first companies to take advantage of the city’s new regime.

At the time, Sally Wan, Axa China region chief executive, said: “We are excited to be among the first to redomicile to Hong Kong.”

According to information issued by the Hong Kong government, the regime’s aim is to permit companies incorporated outside Hong Kong to redomicile to Hong Kong, “preserving their legal personality, contracts, assets, liabilities and ongoing legal proceedings”.

However, Conyers notes that while the new framework may be suitable for some firms, they should consider the strengths of traditional jurisdictions such as Bermuda, “which have long been used by parties conducting business in Hong Kong and globally”.

The firm highlighted that more than 70 per cent of the companies listed on the Hong Kong Stock Exchange are incorporated in Cayman, the British Virgin Islands or Bermuda.

Conyers said that Bermuda and other traditional offshore jurisdictions “continue to provide proven advantages for international businesses”, citing their “robust legal systems, political stability and established track records”.

They also pointed to Bermuda’s flexibility in paying dividends, noting that if regulations are followed, “a Bermuda company can pay dividends from profits, the contributed surplus account, indirectly from share capital or the share premium account”.

The trend has prompted questions about whether Hong Kong could lure more Bermudian-registered firms.

“It makes sense for them to redomicile in Hong Kong to save costs,” Anthony Lau of Deloitte China told the South China Morning Post.

In April, Manulife was said to be “considering move from Bermuda to Asia” by reason of changing financial regulations.

At the time, Manulife executive Patrick Graham acknowledged that “it is a quirk of history that we all started in Bermuda”, adding that Hong Kong officials and the insurance industry were “lined up to make the redomiciling happen”.

While acknowledging that Hong Kong’s regime may be suitable for certain companies, such as those with operations, executives or investor bases in the city, Conyers warned to proceed with caution, since there was no legal mechanism “for a Hong Kong-incorporated or redomiciled company to transfer its domicile out of Hong Kong to another jurisdiction should it so wish in the future”.