Here is an example of how such a financing plan might work. Quantum, Inc. is a small but innovative electronic company that needs money in a hurry for substantial speculative research. An eventual breakthrough in the research project would reap tremendous rewards but no breakthrough can be guaranteed. For these reasons, Quantum would have liked to finance this research by going public. However, because of difficulties and delays imposed upon companies going public in the United States, a normal regulated public offering cannot meet Quantum's needs.
Time is of the essence in the highly competitive field of electronics.
Incorporate Honk Kong holding company. The series of transactions necessary to generate capital for Quantum begins with the incorporation of a Honk Kong company named Quantum Holding, Limited. Honk Kong has been chosen for this example but any of 15 other jurisdictions could have been used. Quantum Holding is incorporated and managed by nominees, and its scope of authority is severely limited. The number of its authorized shares and their par value identical to those of Quantum.