On 1 March the Hong Kong government announced the new Capital Investment Entrant Scheme.
This marks Hong Kong’s second stab at the scheme, the original of which ended in 2015. Unsurprisingly, the most essential criteria you will have to satisfy is proof of possessing the necessary capital and proof that you will invest it in Hong Kong.
The minimum investment is HK$30 million (approximately equivalent to US$3.8M) and must be invested in ‘Permissible Investment Assets’. Whilst the standard visa application requirements as well as any future extension applications will be assessed by the Immigration Department, the fulfillment of the investment criteria will be assessed by the New Capital Investment Entrant Scheme Office (“New CIES Office”) under InvestHK. The New CIES Office will also monitor the continuous compliance with the investment requirements and portfolio maintenance requirements.
Eligibility
First and foremost, if you intend to apply for this visa, you should ensure that you fulfill the basic eligibility requirements.
You must:
- be the age of 18 or above;
- be either a foreign national (excluding those nationalities barred by the Security Bureau, as stated on the Note 1 of the Eligibility Criteria), Chinese national with permanent resident status in a foreign country, Macao resident or a Chinese resident of Taiwan; and
- possess no adverse record (immigration issues, criminal convictions, etc.).
Net Asset Assessment
Having established you are eligible, before you can submit your CIES visa application, you must first apply for Net Asset Assessment. The Net Asset Assessment requires you to demonstrate that, throughout the 2 years preceding the application, you are/have been beneficially entitled to net assets or net equity of HK$30 million. In proving such, the services of a certified public accountant are required to produce a ‘fulfillment document’ with relevant supporting documents. The fulfillment document must show that you have met the Net Asset Assessment requirements and must be submitted within 14 days of the application for Net Asset Assessment.
Investment
You will be required to place HK$3 million of your minimum HK$30 million investment into a new CIES Investment Portfolio which will be set up and managed by Hong Kong Investment Corporation Limited – a Hong Kong government owned company. However, the remainder of your capital can be freely invested within the confines of the ‘Permissible Investment Assets’.
You will need to make a committed investment in Permissible Assets, for a specified period commencing on or after the 1 March 2024. Permissible Investment Assets consist of:
- Equities:
- (a). shares of companies that are listed on the Stock Exchange of Hong Kong (“SEHK”) and traded in HKD or RMB.
- Debt securities
- (a). debt securities listed on the SEHK and traded in HKD or RMB (including debt instruments issued in Hong Kong by the Ministry of Finance of the People’s Republic of China (“PRC”) and local people’s governments at any level in the Mainland);
- (b). debt securities denominated in HKD or RMB, including fixed or floating rate instruments and convertible bonds issued or fully guaranteed by:
- (i). the Hong Kong Government, the Exchange Fund, the Hong Kong Mortgage Corporation, the MTR Corporation Limited, Hong Kong Airport Authority, and other corporations, agencies or bodies wholly or partly owned by the Government as may be specified from time to time by the Government; or
- (ii). listed companies referred to in the above Equities category above.
- Certificates Deposits:
- (a). certificates of deposits denominated in HKD or RMB issued by authorised institutions (banks) under the Banking Ordinance (Cap. 155) with a remaining term to maturity of not less than 12 months at the time of acquisition, subject to a cap of 10% (i.e. HK$3 million) of the minimum investment threshold.
- Subordinated Debt:
- (a). Subordinated debt denominated in HKD or RMB issued by authorised institutions.
- Eligible Collective Investment Schemes
- (a). SFC-authorised funds managed by corporations licensed by or institutions registered with the SFC for Type 9 (asset management) regulated activity;
- (b). SFC-authorised real estate investment trusts managed by Type 9 licensed or registered entities;
- (c). SFC-authorised Investment-Linked Assurance Schemes issued by permitted insurers;
- (d). registered OFCs managed by Type 9 licensed or registered entities
- Ownership interest in Limited Partnership Funds
- Non-Residential Real Estate:
- (a). whether commercial and/or industrial (including pre-completion properties and excluding land) in Hong Kong, subject to a cap of HK$10 million.
Portfolio maintenance
Once you have established your investment intentions you will need to ensure your capital is exclusively deposited in a designated investment account within an eligible financial intermediary (banks, SFC licensed corporations, insurers, etc.).
Additionally, throughout your residence in Hong Kong on a CIES visa, you must ensure that you maintain your portfolio investments appropriately by preserving your HK$30 million and not actively withdrawing your investments. However, if your investments suffer losses due to a fall in market value, you will not be required to make up the difference to maintain HK$30 million.
Family Offices
The CIES measures firmly entrench Hong Kong as an ideal place for family offices to set up their operations and invest in one of the many Permissible Assets. Individuals will be exposed to many benefits, such as tax concessions and the Hong Kong Academy for Wealth Legacy
Furthermore, successful applicants seeking to pursue business and career development in Hong Kong can bring over their loved ones (including spouse and unmarried dependant children under 18) on dependant visas.
What’s more, structuring your investments through a family-office holding-vehicle could also open the door to further investments beyond the scope of the Permissible Investment Assets.
Final considerations
Applications for residence in Hong Kong via the CIES are unlikely to be straightforward, however with the correct planning and foresight, it can be a great option for those seeking to invest and reside in Hong Kong. Additionally, once your CIES application is accepted, you will initially be granted a 2-year visa which can then be extended for a further 3 years after which an additional 3 years. Once you have continuously resided in Hong Kong under this visa for 7 years, you will then be eligible for permanent residency.
On obtaining permanent residency, you will be free to use or dispose of your capital investment as you please – meaning careful planning now, could lead to a life-long and fruitful future in Hong Kong.
Every situation is different and needs bespoke advice, so please do not hesitate to contact our Employment & Immigration team for specific enquiries.
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.
