New Subsidy Scheme to attract OFCs in Hong Kong
On 24 February 2021, the Finance Secretary of the Hong Kong Government delivered the 2021-22 Budget which, among other things, introduced a scheme to subsidise open-ended fund companies (OFCs) set up in or redomiciled to Hong Kong in the coming 3 years (the “Subsidy Scheme”). This development is in addition to various other recent initiatives to solidify Hong Kong’s status as an international asset and wealth management centre, including:
- the introduction of the OFC regime in 2018 and the Limited Partnership Fund (LPF) regime in 2020; and
- the initiative to allow a practical approach to re-domiciliation of foreign investment funds to register as OFCs or LPFs in Hong Kong.
Under this new Subsidy Scheme, OFCs set-up or re-domiciled in Hong Kong may apply to the Government for a subsidy of 70% of the expenses paid to Hong Kong professional service providers for the set-up of an OFC in or to re-domicile an OFC to Hong Kong in the coming 3 years. The subsidy will be subject to a cap of HKD 1 million per OFC.
The specific details of the Subsidy Scheme and how it will work will be announced by the Hong Kong Securities and Futures Commission in due course.
We welcome the introduction of this Subsidy Scheme, which is expected to bolster Hong Kong’s competitiveness in the investment funds industry. Other Asian cities also have in place similar subsidy schemes to encourage industry adoption of local fund structures. For example, Singapore’s VCC Grant Scheme, which was introduced in January 2020, offers a subsidy of 70% of the fees incurred for incorporating or registering a Variable Capital Company (VCC) in Singapore (subject to a cap of USD150,000).
The Hong Kong OFC structure may be attractive for hedge fund managers and “long-only” managers who invest in public markets.
Please contact Luke Gannon (Head of Funds and Investment Management, Asia) if you are interested in this new Subsidy Scheme, OFC or LPF structures or the upcoming procedures to redomicile foreign investment funds for registration as OFCs or LPFs in Hong Kong.
About our funds and investment management group
Our group in Asia represents a wide range of clients in the financial services sector including fund sponsors, fund managers, investment advisers, securities brokers, investment banks, investors, trustees, administrators, custodians and other players. We help clients design and establish a wide variety of funds including alternative assets funds such as hedge funds, virtual assets and digital assets funds, private equity, venture capital, real estate and infrastructure funds. We also advise clients on SFO regulation and SFC related matters such as advising on licencing requirements, registrations, licence applications and alterations, and general SFC regulatory and compliance requirements.
