Content Outline
The government is about to launch the Capital Investment Entrant Scheme (CIES) in mid-2024, which will be a move designed to energize the investment sector in Hong Kong. This strategic initiative is designed to bring high-net-worth individuals to the city by providing a way to get residency in exchange for a significant capital investment. By bringing in these wealthy investors, Hong Kong hopes to achieve a two-fold benefit:
Diversification of Investment Portfolio: Presently, Hong Kong’s investment environment may be concentrated in particular industries. The CIES is going to widen this pool by inviting investors with different investment experiences and interests. The inflow of new money can possibly cause the emergence of new industries and an energetic financial system in the city.
Boost for Fund Managers: The inflow of HNWIs via the CIES is projected to generate substantial investment opportunities. This opens up a good opportunity for the fund managers in Hong Kong, who can provide their knowledge and services to these new investors. The growth of the fund management industry can be achieved by the increased demand for wealth management and investment advice.
This article elaborates on the details of the CIES program, the criteria for eligibility, the investment thresholds, and the process of the application. In addition to the residency benefits, we will also look into the other advantages that investors will be getting, like a busy business environment and a city that is considered a global leader. To the fund managers, we will talk about the ways to use the new clients and the great opportunities that will be offered to them in the future.
Expanded Scope For Private Investments
The scheme’s acknowledgment of the fund types that are (i) open-ended fund companies registered under the Securities and Futures Ordinance (Cap. 571 (OFCs) and operated by corporations licensed by or institutions registered as Type 9 regulated activity and (ii) ownership interest in limited partnership funds (LPFs) registered in the Limited Partnership Fund Ordinance (Cap. 637) is an acceptable investment asset increases opportunities for fund managers. Such institutional units play a great role in the management of funds in the form of public securities, private equity, venture capital, and other alternative investment vehicles.
As for now, with the adoption of the CIES framework fund managers will be able to create OFCs and LPFs that could be utilized in the form of feeder funds or alternative investment vehicles and will allow fund managers to attract more investors on these fund products to a broader investor base.
CIES Requirements Summary
In order to make sure the applicants and fund managers have been duly informed, the information below presents an overview of the requirements of CIES.
- Eligible Applicants: Applicants must be people who are over 18 years old, including foreign nationals, Chinese nationals who have permanent residence in a foreign country, and Chinese residents of Taiwan or Macao SAR.
- Net Asset Requirement: Applicants need to show a net asset value of at least HK$30 million during the two years before applying.
- Investment Obligation: Candidates are required to spend at least HK$30 million on the assets that are allowed by law. The criteria for the ‘Home Economic Aid Scheme’ include a minimum of HK$27 million in permissible financial assets and non-residential real estate, as well as HK$3 million in a new CIES Investment Portfolio managed by the Hong Kong Investment Corporation Limited. The portfolio’s goal is to assist the growth of innovation and technology industries, as well as other important sectors that are crucial for Hong Kong’s long-term economic development.
- Permissible Investment Assets: The assets that can be invested in are the equities listed on the SEHK, some debt securities, certificates of deposits (with certain restrictions), some subordinated debt, the eligible collective investment schemes (including OFCs managed by Type 9 licensed corporations or registered institutions), ownership interests in LPFs and non-residential real estate in Hong Kong (subject to
When the CIES guidelines are set, investors and fund managers are advised to look at their investment portfolios and to maybe change them to fit the CIES scheme requirements. Our team is ready to give you custom-made advice on the inclusion of the CIES into your investment strategies and the creation of compliant fund structures.
Our expert team at FastLane Group is ready to assist you at every stage of the process, beginning with a customized plan for how CIES may work as a part of your investment strategies and continuing into the compliance of your fund structures. Contact us now to learn how our services can help you!