Produced in partnership with Penelope Shen and Jet Tang of Stephenson Harwood
The Home Return Permit for your Foreign Funds
11 May 2021 | PDF Version
Second quarter, 2021 – This is when the Hong Kong Legislative Council meets to hear the first and second readings of a landmark bill (the “Bill”) that will provide a mechanism for foreign funds to re-domicile in Hong Kong as Open-ended Fund Companies (“OFC”) or Limited Partnership Funds (“LPF”).
Under the Bill, foreign funds set up as corporates or limited partnerships will be able to, subject to meeting certain eligibility requirements, redomicile in Hong Kong as OFCs or LPFs, respectively.
This is a crucial development that boosts Hong Kong’s investment funds environment, and its prime advantages are substantial: (i) the process does not require a transfer of fund assets or a change of their beneficial ownership, which means there will be no stamp duty implications in Hong Kong, and (ii) investors will not need to be redeemed from the foreign fund and resubscribed into the Hong Kong vehicle.
In other words, the Bill will help managers save both time and cost if they plan to bring their funds home to a burgeoning market.
The proposed application mechanism is straightforward, as summarized below:
|Application to be submitted to Securities and Futures Commission (“SFC”) with the applicable fee||Application to be submitted to the Registrar of Companies through a registered Hong Kong law firm or solicitor with the applicable fee|
Accompany the application with:
The application should:
|After the re-domiciliation, the fund will need to notify the SFC and provide evidence of deregistration in its place of incorporation within 60 days.||After the re-domiciliation, the fund will need to be re-registered in its place of establishment within 60 days.|
Disclaimer: This article is provided for reference purposes only and are not intended, nor should they be used, as a substitute for professional advice or judgment or to provide legal advice with respect to specific circumstances. If you require any legal advice or other expert assistance, please consult a competent professional adviser.
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Partner, Stephenson Harwood
Penny focuses on the establishment and structuring of private investment funds, with a particular emphasis on hedge funds and private equity funds.
Her years of providing legal leadership advice to such clients extends naturally to advising on fund restructuring, distribution and private placement, compliance and regulatory requirements, side letters and derivatives documentation (including ISDA and prime brokerage agreements). Her clients include some of the largest asset managers in Hong Kong, China and Singapore.
Penny’s substantial experience from working at top-tier law firms, both onshore and offshore, has equipped her with first class knowledge in her chosen field while exposing her to its biggest players.
Associate, Stephenson Harwood
Jet specializes in the practice of funds and financial services. Prior to private practice, Jet worked at Value Partners and Vanguard for a number of years where he provided legal services related to SFC authorized funds, private funds, exchange traded funds, default investment schemes under the Hong Kong MPF and the companies’ business development in China. His time in private practice has been devoted mainly to private funds such as hedge funds, private equities funds, credit funds, real estate funds and alternative investment funds.