The Hong Kong government’s upcoming launch of the new Capital Investment Entrant Scheme (CIES) in mid-2024 represents a strategic initiative designed to attract high net worth investors and diversify the city’s investment landscape. This client alert outlines the CIES’ requirements and how it could benefit investors and fund managers.
The scheme’s recognition of (i) open-ended fund companies registered under the Securities and Futures Ordinance (Cap. 571) (OFCs) and managed by corporations licensed by, or institutions registered with, the SFC for Type 9 regulated activity and (ii) ownership interest in limited partnership funds (LPFs) registered under the Limited Partnership Fund Ordinance (Cap. 637) as permissible investment assets provides an attractive proposition for fund managers. These structures are instrumental in managing investments in public securities, private equity, venture capital, and other alternative investment arrangements.
For the time being, the CIES framework appears to allow for the creation of OFCs and LPFs as feeder funds or alternative investment vehicles, which could allow fund managers to channel investments into their existing investment structures, enhancing the appeal of their fund products to a broader investor base.
To ensure that potential applicants and fund managers are well informed, the following is a succinct overview of the CIES requirements:
Moving forward, investors and fund managers are encouraged to assess and potentially restructure current investment vehicles to align with the CIES and stay abreast of further details as the scheme’s guidelines are finalized.
Our team stands ready to provide bespoke advice on how the CIES can be incorporated into your investment strategies and to support the establishment of compliant fund structures.