11 August 2021
As previously reported, the 2021-22 Budget Speech revealed a legislative proposal in the second quarter of 2021 to allow foreign investment funds to re-domicile to Hong Kong.
On 2 July 2021, the Government gazetted the Securities and Futures (Amendment) Bill 2021 and the Limited Partnership Fund and Business Registration Legislation (Amendment) Bill 2021 (collectively, the “Bills”). The Bills sets out the respectively scheme for foreign investment funds to be re-domiciled and registered in Hong Kong as open-ended fund companies (“OFC”) or limited partnership funds (“LPFs”).
Re-domiciliation of Overseas Fund Corporations to OFC in Hong Kong
An application for a non-Hong Kong fund corporation to register as an OFC can be made to the Securities and Futures Commission (“SFC”). The Securities and Futures (Amendment) Bill 2021 sets out the documentary requirements for such an application to the SFC. As soon as reasonably practicable after the SFC accepts the application for registration, the SFC will notify the Companies Registry (“CR”). Thereafter the non-Hong Kong fund corporation may apply to CR and deliver to the CR prescribed documents for issuance of a certificate of re-domiciliation.
As soon as practicable after the re-domiciliation of the funds, the fund cooperation must take all reasonable steps to procure its deregistration in its place of incorporation and submit proof thereof to the SFC.
The reader may wish to take note that there is a new grant scheme offering subsidies for open-ended fund companies to set up in or re-domicile in Hong Kong. The grant amount covers 70% of the eligible expenses for each application, subject to a cap of $1 million per OFC and a maximum of three OFCs per investment manager.
Re-domiciliation of Overseas Limited Partnership to LPFs in Hong Kong
An application for a non-Hong Kong fund in the form of limited partnership to be registered as a LPF can be made to the Companies Registry (“CR”). The application must be submitted by a Hong Kong solicitors’ firm or a solicitor on behalf of a general partner of the non-Hong Kong fund. The Limited Partnership Fund and Business Registration Legislation (Amendment) Bill 2021 sets out the documentary requirements for such an application to the CR. On acceptance, the CR will issue a certificate of registration to the fund.
Similarly, the non-Hong Kong fund must procure its deregistration in its place of establishment.
For both the re-domiciliation of Overseas Fund Corporations and Overseas Limited Partnership, applicants must take note of the requirement for simultaneous business registration.
The above changes in Hong Kong’s investment funds regime provides exciting possibilities for hedge funds, private equity funds and other funds, whether close-ended or open-ended, to move their domicile to Hong Kong.
For further information, please contact:
Charing Yu, Hauzen LLP
info@hauzen.hk
