With the upcoming company re-domiciliation legislation expected to take effect soon, where a foreign company can re-domicile to Hong Kong, it is worth revisiting the provisions for investment fund re-domiciliation, where a foreign investment fund can re-domicile to Hong Kong, which have been in place since November 2021. Below, David Cameron Law Office (DCLO) provides a refresher on the key aspects of investment fund re-domiciliation to Hong Kong.
Q1: Why are investment funds moving to Hong Kong?
A: Hong Kong offers tax exemptions, carried interest concessions, investment incentives, and legal continuity. See DCLO’s article on the tax treatment of Limited Partnership Funds here: Tax Treatment of LPFs link. The Capital Investment Entrant Scheme also recognizes Limited Partnership Fund ownership interests, and re-domiciliation does not trigger asset transfer or stamp duty.
Q2: What types of funds can re-domicile to Hong Kong?
A: Both Limited Partnership Funds (LPFs) and Open-ended Fund Companies (OFCs) can be re-domiciled under Hong Kong’s regulatory framework, provided they meet eligibility requirements.
Q3: What are the eligibility requirements for an LPF?
A: The fund must have a limited partnership agreement, at least one general and one limited partner, a registered Hong Kong office, and an investment manager. The general partner must meet specific qualification criteria.
Q4: What are the eligibility requirements for an OFC?
A: The fund’s governing documents and jurisdiction of incorporation must permit re-domiciliation. The fund must also have directors, a fund manager, and a custodian meeting Hong Kong’s regulatory standards.
Q5: What is the application process for LPFs?
A: The general partner must submit an application through a Hong Kong law firm to the Companies Registry (CR), obtain necessary approvals, and deregister the fund in its original jurisdiction within 60 days.
Q6: What is the application process for OFCs?
A: The fund must apply to the Securities and Futures Commission (SFC), submit operator details and incorporation documents, obtain approval, and complete deregistration within 60 days.
Q7: What happens to the fund’s legal status after re-domiciliation?
A: The fund retains its legal identity, existing contracts, rights, and obligations. No new entity is created, and all property remains with the fund.
Q8: What are the key benefits of re-domiciliation?
A: Funds benefit from a clear regulatory framework, tax efficiency, business continuity, investor confidence, and exemption from Hong Kong stamp duty.
Q9: What are the challenges of re-domiciliation?
A: Asset managers must secure investor approval, comply with local regulations, and complete deregistration within the specified timeframe. Some jurisdictions have complex deregistration processes.
Q10: How can asset managers ensure a smooth transition?
A: Engaging legal and financial advisors early, obtaining required approvals, updating offering documents, and adhering to compliance timelines will help ensure a successful re-domiciliation.
For any questions or additional information, please feel free to reach out to the author David Cameron at david.cameron@dc-lo.com.
