As one of the series of policy measures to attract high-net-worth individuals, new capital and talent pool, the Hong Kong SAR Government (Government) announced the details of the new Capital Investment Entrant Scheme (CIES) on 19 December 2023. Its aim is to bring a substantial boost to Hong Kong’s economic growth and to strengthen Hong Kong’s position as an international financial hub. It is expected that the CIES will be officially launched in mid-2024.
What are the key requirements?
An eligible applicant must meet the following criteria:
- aged 18 or above (including foreign nationals, Chinese nationals who have obtained permanent resident status in a foreign country, Macao Special Administrative Region residents and Chinese residents of Taiwan)
- demonstrate that he/she has net assets of not less than HK$30 million to which he/she is absolutely beneficially entitled throughout the 2 years preceding the application
- invest a minimum of HK$30 million in permissible investment assets, which includes:
- a minimum of HK$27 million in permissible financial assets and non-residential real estate (see below table)
- HK$3 million into a new CIES Investment Portfolio (which is being set up and managed by the Hong Kong Investment Corporation Limited to make investments in the innovation and technology sector and strategic industries with Hong Kong nexus)
PERMISSIBLE FINANCIAL ASSETS
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Equities
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shares of companies that are listed on the Stock Exchange of Hong Kong (SEHK) and traded in Hong Kong Dollars (HKD) or Renminbi (RMB) |
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Debt Securities
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Certificates of deposits
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certificates of deposits denominated in HKD or RMB issued by authorised institutions with a remaining term to maturity of not less than 12 months at the time of purchase, subject to a cap of 10% of the minimum investment threshold (i.e. HK$30 million) |
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Subordinated debt
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subordinated debt denominated in HKD or RMB issued by authorised institutions |
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Eligible collective investment schemes
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Limited Partnership Funds (LPFs)
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Ownership interest in registered LPFs |
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NON-RESIDENTIAL REAL ESTATE
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Non-residential real estate
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commercial and/or industrial (including pre-completion properties and excluding land) real estate in Hong Kong, subject to a cap of HK$10 million |
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The new CIES, as compared to the old CIES which was first implemented in 2003 and subsequently suspended in 2015, has expanded the scope of its permissible investments as part of the Government’s initiatives to provide a broader range of options for overseas investors and to maintain Hong Kong’s competitiveness amongst other international cities. Under the old CIES, applicants were required to make investments of no less than HK$10 million in permissible investment assets including equities, debt securities, certificates of deposits, subordinated debt and eligible collective investment schemes which were denominated in HKD.
In respect of investment funds, the new CIES has broadened the category for eligible collective investment schemes to encompass SFC-authorised funds which are managed by Type 9 licensed entities, REITs and registered OFCs, and has included an additional category for LPFs. This is in contrast to the formerly more restricted scope which was limited to HKD-denominated unit trusts and mutual funds that were pre-approved and authorised by the SFC, and which were also required to have at least 70% of average net assets invested in other categories of permissible investment assets.
What are the benefits?
Successful applicants may bring their dependants (including spouse and unmarried dependent children aged under 18 years) to Hong Kong. Permission to stay will normally be granted to applicants and their dependants for not more than 2 years. Upon expiry of the 2-year period, applicants will be allowed to apply for extensions at 3-year periods at each time until they reach the 7th year, at which point they will be eligible for Hong Kong permanent residence.
Further, successful applicants will benefit from the newly introduced arrangement which allows for the suspension of payment of Buyer's Stamp Duty and New Residential Stamp Duty in relation to acquisitions of residential property Hong Kong, with details of the relevant legislative amendments to be followed.
If an applicant is unable to fulfil the continuous residence requirement, but is able to continuously satisfy the financial requirements under the new CIES for not less than 7 years, he/she may apply for an unconditional stay in Hong Kong.
How can we help you?
As the current largest full-service law firm in Hong Kong and one of the largest teams dedicated to provide investment funds related legal services in Hong Kong, we maintain strong and long-standing working relationships with the Government and regulatory bodies as demonstrated by our pivotal role as one of the key drivers on the expanded coverage on investment funds under the newly revamped and relaunched CIES. With the anticipated fresh injections of capital and talent to Hong Kong in light of the new CIES, we are best positioned to assist fund managers, international financial institutions, corporate issuers and industry players in leveraging on this exciting opportunity to develop their financial, asset and wealth management businesses in Hong Kong.
We have a dedicated team across our network which possesses a comprehensive range of experiences in advising on asset management, traditional banking, financial, and regulatory matters (including licensing and ongoing compliance matters). With our market-leading expertise and knowledge, we are fully equipped to advise you on the latest exciting initiative and we very much look forward to assisting you on any related matters.
We welcome the opportunity for a more in-depth conversation about how the new CIES could benefit you. Please do not hesitate to contact us - we would be delighted to help.
Any reference to “Hong Kong” or “Hong Kong SAR” in this article shall be construed as a reference to “Hong Kong Special Administrative Region of the People’s Republic of China”.
