What Is Hong Kong’s New Capital Investment Entrant Scheme About?
The New Capital Investment Entrant Scheme (CIES) was launched by the Hong Kong Government on 1st March this year.
Hong Kong is participating in the plan for the second time; the first attempt was terminated in 2015. It should come as no surprise that the two most important requirements you must meet.
- Firstly, you have the required amount of capital and,
- Secondly, you intend to invest it in Hong Kong.
A minimum investment of HK$30 million, or around US$3.8 million, is required, and it must be made in “Permissible investment assets.”
The New CIES Office under InvestHK will analyze and evaluate whether the investment requirements mentioned above are met, while the Immigration Department will review applications for future extensions and standard visa applications.
The New CIES office will keep an eye on ongoing adherence to the criteria for portfolio management and investments.
Qualifications
First and foremost, you must make sure you meet the minimum qualifying standards if you plan to apply for this visa. You must meet the following requirements:
- You must be at least eighteen years old;
- You must be a foreign national (except those nationalities prohibited by the Security Bureau, as stated on Note 1 of the Eligibility Criteria), a Chinese national with permanent resident status in a foreign country; a resident of Macao, or a Chinese resident of Taiwan;
- You must not have a criminal record or any other adverse record.
Evaluation of Net Assets
Before submitting your application for a CIES visa, you must first apply for a Net Asset Assessment and confirm your eligibility.
You must prove to the Net Asset Assessment that you are/have been beneficially entitled to net assets or net equity of HK$30 million for the two years before the application. To demonstrate this, a certified public accountant’s services are needed to create a “fulfilment document” together with any necessary supporting documentation.
Within 14 days of submitting your application for a Net Asset Assessment, you must provide the fulfilment document, which attests to your compliance with the conditions.
Equities
Stock Exchange of Hong Kong (“SEHK”) listed firms’ shares that are traded in HKD or RMB.
Debt Securities
Debt securities include:
- Debt instruments issued in Hong Kong by the People’s Republic of China (PRC) Ministry of Finance and local people’s government at all levels in the Mainland;
- Debt securities denominated in HKD or RMB, including convertible bonds and fixed or floating rate instruments issued or fully guaranteed by:
- The Hong Kong Government, the Exchange Fund, the Hong Kong Mortgage Corporation, the MTR Corporation Limited, the Hong Kong Airport Authority, and any other organizations, agencies, or corporations that the Government may from time to time designate as being wholly or partially owned; or
- Listed businesses mentioned in the section above under the Equities category.
Investment
Of your minimum HK$30 million commitment, you must invest HK$30 million in a new CIES commitment Portfolio, which will be established and run by the government-owned Hong Kong firm Hong Kong Investment Corporation Limited.
The remaining portion of your funds, however, is available for unrestricted investment under the “Permissible Investment Asset” category.
For a predetermined duration, on or after 1st March 2024, you must commit to investing in permissible assets. Among the assets acceptable for Investment are:
Certificate of Deposits
- Certificate of deposits with a remaining term to maturity of at least 12 months at the time of acquisition, issued by authorized institutions/banks by the Banking Ordinance (Cap. 155), subject to a cap of 10% (or HK$3 million) of the minimum investment threshold.
- Debt ranked lower:
- Subordinated debt issued by approved institutions and valued in RMB or HKD.
- Schemes for Collective Investment that Qualify
SFC-authorized funds managed by corporations licensed by the SFC or institutions registered with the SFC for Type 9 (asset management) regulated activity.
Type 9-licensed or registered entities managing SFC-authorized real estate investment trusts. Type 9-licensed or registered Investment-Linked Assurance Schemes issued by approved insurers. Type 9- registered OFCs managed by Type 9- licensed or registered entities.
Ownership interest in Limited Partnership Funds Non-residential Real Estate
Up to a maximum of HK$10 million, whether commercial and/or industrial (including properties under construction and excluding land) in Hong Kong.
Maintenance of a Portfolio
After deciding what you want to invest in, you must make sure all your money is placed in a specific investment account at a financial intermediary that is approved (banks, SFC-licensed companies, insurers, etc.).
You must make sure that you preserve your HK$30 million and do not actively withdraw your investments from your portfolio throughout your time living in Hong Kong on a CIES visa.
However, you will not have to make up the difference to keep your HK$30 million if your investments lose value because of a decline in market value.
Family Offices
The CIES regulations solidify Honk Kong’s position as the best destination for family offices to establish their businesses and make investments in one of the numerous permissible assets. People will have access to numerous advantages, including tax breaks and the Hong Kong Academy for Wealth Legacy.
Furthermore, successful applicants can bring their loved ones (spouses and unmarried dependent children under 18) over no dependent visas to pursue business and professional development in Hong Kong.
Furthermore, using a family-office holding vehicle to structure your investments may allow you to make additional investments outside the purview of the permitted investment assets.
Although applying for residence in Hong Kong through the CIES is unlikely to be simple, it can be a terrific alternative for people looking to invest and live in Hong Kong if they plan ahead and are proactive.
Furthermore, upon acceptance of your CIES application, you will initially be issued a two-year visa, which can be extended for an additional three years.
After living in Hong Kong consistently for seven years with this visa, one will be qualified for permanent residence.
Careful presentations now could result in a long and prosperous future in Hong Kong since you will be free to utilise or dispose of your capital investment as you wish after gaining permanent residency.