Q&A on Re-domiciling of Investment Funds to Hong Kong
Updated: Sep 28
With the upcoming company re-domiciliation legislation expected to take effect soon, where a foreign company can re-domicile to Hong Kong, it is worth revisiting the provisions for investment fund re-domiciliation, where a foreign investment fund can re-domicile to Hong Kong, which have been in place since November 2021. Below, David Cameron Law Office (DCLO) provides a refresher on the key aspects of investment fund re-domiciliation to Hong Kong.
Q1: Why are investment funds moving to Hong Kong?
A: Hong Kong offers tax exemptions, carried interest concessions, investment incentives, and legal continuity. The Capital Investment Entrant Scheme also recognizes Limited Partnership Fund ownership interests, and re-domiciliation does not trigger asset transfer or stamp duty.
Q2: What types of funds can re-domicile to Hong Kong?
A: Both Limited Partnership Funds (LPFs) and Open-ended Fund Companies (OFCs) can be re-domiciled under Hong Kong’s regulatory framework, provided they meet eligibility requirements.
Q3: What are the eligibility requirements for an LPF?
A: The fund must have a limited partnership agreement, at least one general and one limited partner, a registered Hong Kong office, and an investment manager. The general partner must meet specific qualification criteria.
Q4: What are the eligibility requirements for an OFC?
A: The fund’s governing documents and jurisdiction of incorporation must permit re-domiciliation. The fund must also have directors, a fund manager, and a custodian meeting Hong Kong’s regulatory standards.
Q5: What is the application process for LPFs?
A: The general partner must submit an application through a Hong Kong law firm to the Companies Registry (CR), obtain necessary approvals, and deregister the fund in its original jurisdiction within 60 days.
Q6: What is the application process for OFCs?
A: The fund must apply to the Securities and Futures Commission (SFC), submit operator details and incorporation documents, obtain approval, and complete deregistration within 60 days.
Q7: What happens to the fund’s legal status after re-domiciliation?
A: The fund retains its legal identity, existing contracts, rights, and obligations. No new entity is created, and all property remains with the fund.
Q8: What are the key benefits of re-domiciliation?
A: Funds benefit from a clear regulatory framework, tax efficiency, business continuity, investor confidence, and exemption from Hong Kong stamp duty.
Q9: What are the challenges of re-domiciliation?
A: Asset managers must secure investor approval, comply with local regulations, and complete deregistration within the specified timeframe. Some jurisdictions have complex deregistration processes.
Q10: How can asset managers ensure a smooth transition?
A: Engaging legal and financial advisors early, obtaining required approvals, updating offering documents, and adhering to compliance timelines will help ensure a successful re-domiciliation.
David Cameron, Managing Partner
David has more than 18 years of experience advising clients in Hong Kong and across Asia on corporate transactions, private investments, fund structures, capital raising and cross-border matters. Learn more about David.
