27 October 2021
On 30 September 2021, the Government passed into law the Securities and Futures (Amendment) Ordinance 2021 and the Limited Partnership Fund and Business Registration Legislation (Amendment) Ordinance 2021 (the Ordinances). These new laws will enable foreign investment funds to be re-domiciled and registered in Hong Kong as open-ended fund companies (OFCs) or limited partnership funds (LPFs). The Ordinances will come into effect on 1 November 2021.
The Ordinances do not only set out the re-domiciliation procedure, but more importantly provide certainty on the continuity of non-Hong Kong investment funds upon registering in Hong Kong. The re-domiciliation does not operate to (a) create a new legal entity; (b) prejudice or affect the identity or continuity of the non-Hong Kong fund in its place of incorporation or establishment; (c) affect any contract made, resolution passed or any other thing done by or in relation to the non-Hong Kong fund; (d) affect any function, property, right, privilege, obligation or liability acquired, accrued or incurred by or to the non-Hong Kong fund; or (e) render defective any legal proceedings commenced or continued by or against the non-Hong Kong fund.
From overseas corporate funds to OFCs
An application should be made to the Securities and Futures Commission (SFC) to register a non-Hong Kong fund corporation as an OFC. As soon as reasonably practicable after such registration, the SFC will notify the Companies Registry (CR) which will issue a certificate of re-domiciliation, certifying that the entity has become an OFC.
Don’t forget that the new grant scheme for OFCs is also open to a non-Hong Kong fund corporation which successfully re-domiciles to Hong Kong as an OFC before 9 May 2024. The grant will cover eligible expenses paid to Hong Kong-based service providers in relation to the re-domiciliation, subject to a cap of HK$1 million per OFC and a maximum of three OFCs per investment manager. For further details, please refer to our publication “Time to apply for subsidies for open-ended fund companies and REITS”.
From overseas limited partnerships to LPFs
An application should be made to the CR by the general partner to register a non-Hong Kong limited partnership fund as an LPF. Such application must be submitted on behalf of the general partner by a Hong Kong firm or a solicitor. On registration, the CR will issue a certificate to that effect.
For both OFCs and LPFs, the non-Hong Kong investment fund must be deregistered in its original place of incorporation or establishment within 60 days after re-domiciling to Hong Kong. The SFC or CR (as the case may be) may extend this 60-day period on application if it considers appropriate.
We have seen strong interest from Hong Kong investment managers in adopting Hong Kong-domiciled fund structures since the introduction of the OFC and LPF regimes. This trend is expected to continue as the Hong Kong Government pushes out more initiatives to benefit the asset management industry and develop Hong Kong as the preferred fund domicile.
For further information, please contact:
Fiona Fong, Partner, Deacons
fiona.fong@deacons.com.hk
