Hong Kong – LCQ15: Attracting overseas private equity funds to re-domicile to Hong Kong

Mar 15, 2023 | International

LCQ15: Attracting overseas private equity funds to re-domicile to Hong Kong

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     Following is a question by the Hon Duncan Chiu and a written reply by the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan, in the Legislative Council today (March 15):
 
Question:
 
     This Council passed the Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Bill 2021 (the Bill) in 2021 to provide tax concessions for carried interest distributed by private equity (PE) funds operating in Hong Kong, with a view to attracting more PE funds to operate in Hong Kong and boosting more investment management and related activities, thereby creating business opportunities in related professional services and bringing economic benefits to Hong Kong. In this connection, will the Government inform this Council:
 
(1) whether it has comprehensively reviewed the effectiveness of the measures relating to the Bill since their implementation; if so, of the details, such as the number of enquiries received by the relevant government departments and regulatory bodies from overseas PE funds and the main contents involved in such enquiries, the number of applications from overseas PE funds for registration in Hong Kong (including the number of applications approved, rejected and automatically withdrawn), as well as the types of overseas PE funds successfully approved for registration in Hong Kong and the total value of assets under management by them; if not, the reasons for that, and whether it will conduct a review;
 
(2) whether it has compiled statistics on, among PE funds which have re-‍domiciled from overseas to Hong Kong, the number of those which have actively participated in investment business, as well as the major types of such funds, the industries and enterprises in which they have invested and the investment amounts respectively; of the major types and number of funds which have not been participating actively or have given up halfway on participating actively in investment business after re-domiciliation to Hong Kong, and how the authorities deal with and follow up the situation concerned;
 
(3) whether it has assessed the benefits brought by PE funds which have re-domiciled from overseas to Hong Kong to the investment management and related professional services in Hong Kong as well as to Hong Kong’s overall economy, and how the related benefits differ from the authorities’ original expectation; whether it has set clear targets and introduced new measures for further enhancing the overall benefits concerned; and
 
(4) given that members of the industry have quite a number of views on the existing tax concession measures for carried interest, and they consider that the relevant legislation still has room for improvement, whether the authorities will consider expeditiously launching public consultation in respect of introducing further amendments to the relevant tax legislation; if so, of the details and the timetable; if not, the reasons for that?
 
Reply:
 
President,
 
     Hong Kong is an international asset and wealth management centre. As of end-2021, the asset and wealth management business of Hong Kong amounted to HK$35.5 trillion, with 65 per cent of the funding sourced from non-Hong Kong investors. Hong Kong’s private equity (PE) capital under management as of end-2022 amounted to US$208.3 billion, ranking second in Asia.
 
     In consultation with the Companies Registry (CR), the Inland Revenue Department (IRD) and the Securities and Futures Commission (SFC), my reply to the question is as follows.
 
     The open-ended fund company (OFC) regime has been in operation since July 2018, facilitating an OFC to be set up as a public or private fund. As of end-February 2023, over 120 OFCs have been established in Hong Kong, including 104 private funds. OFCs have a diversified investment portfolio which covers asset categories of equities and fixed income bonds spanning Asia, the US, Europe and emerging markets. Apart from traditional sectors, OFCs also invest in a wide range of other sectors such as technology, mining, environmental protection, healthcare, artificial intelligence, etc. Private OFCs are not required to disclose their asset size to the SFC.
 
     The Government has introduced the limited partnership fund (LPF) regime since August 2020 to attract private investment funds to set up and operate in Hong Kong in the form of limited partnerships. As of end-February 2023, about 600 LPFs have been registered in Hong Kong. LPFs also invest in a wide range of products, including shares, bonds, notes and other securities issued by private companies, property development, education, etc. LPFs being private in nature are not required to disclose their assets under management to CR.
 
     Given Hong Kong’s strong community of investors and professional service providers, proximity to the Mainland and active initial public offering market for conducting fundraising, deal sourcing and investment management activities, Hong Kong is an attractive domicile for funds. The Government has been proactively encouraging fund formation and operation in Hong Kong, with a view to developing Hong Kong into a preferred fund domicile, thereby inducing demand for various relevant professional services. The Government has put in place a fund re-domiciliation mechanism since November 2021 for non-Hong Kong funds set up in the form of OFCs or LPFs to re-locate to Hong Kong. As of end-February 2023, the CR and the SFC have received over 60 enquiries on fund re-domiciliation to Hong Kong, and four applications (including two OFCs and two LPFs) which were all approved.
 
     In September 2022, the Shenzhen Qianhai Authority and the Hong Kong Special Administrative Region Government jointly promulgated the 18 Measures for Supporting the Linked Development of Shenzhen and Hong Kong Venture Capital Investments in Qianhai with a view to providing facilitation and preferential policies for the Hong Kong PE industry, including supporting eligible Hong Kong LPFs to set up qualified investment entities in Qianhai to commence onshore investment. In February 2023, the Mainland promulgated the “Opinion on Providing Financial Support for the Comprehensive Deepening Reform and Opening Up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone”, setting out 30 measures on financial reform and innovation, including measures to further support Hong Kong PE funds’ development in Qianhai. We will continue to maintain close communication with the Mainland authorities to implement the relevant measures.
 
     The Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Ordinance 2021 (the Amendment Ordinance), which has been effective from May 7, 2021, provides tax concessions for carried interest distributed by eligible PE funds operating in Hong Kong. IRD has consulted the industry on the Departmental Interpretation and Practice Notes (DIPN) being prepared for the Amendment Ordinance, and will, after careful consideration of the views collected, formally publish the DIPN to facilitate the industry’s better understanding of the application of the Amendment Ordinance.
 
     The Financial Secretary has announced in the 2023-24 Budget that the Government will review the existing tax concession measures applicable to funds and carried interest. The Government will engage the industry, listen to their views on the tax concession regimes, and consider the need to amend the relevant legislation.

2023 Overseas Adventure Travel Discount Offer Announced by AALTCI Director

Feb 14, 2023 | Business

 A special $1,000 savings has just been promoted to insurance agents and advisors by the American Association for Long-Term Care Insurance.

According to Jesse Slome, director of the AALTCI, the special coupon code will enable those booking new land tours or cruises to receive a $1,000 credit. The participating companies are Overseas Adventure Travel (O.A.T) and the parent companies Grand Circle Travel and Grand Circle Cruise Line.

According to the announcement posted by Jesse Slome on AALTCI’s website, the $1,000 can be saved by any traveler booking a new reservation before May 1, 2023. “Between 2022 and 2024, more than 124,000 travelers have departed on or reserved one of their trips,” Slome notes. “We’ve taken 12 different trips with the company and I have not seen an offer like this before.”

Slome posted details and the Overseas Adventure Travel $1,000 coupon code on the American Association website at https://www.aaltci.org/OAT-code/. To learn more go to https://www.aaltci.org/discount-coupon-oat-travel/.

Jesse Slome is director of the American Association for Long-Term Care Insurance as well as the American Association for Medicare Supplement Insurance. He is an ardent world traveler who regularly blogs about international travel as well as savings opportunities for seniors.

American Association for Medicare Supplement Insurance
Jesse Slome
818-597-3205
https://www.aaltci.org

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Series of “Overseas Talents’ China Visit to Shenzhen” Events Successfully Held

Dec 6, 2022 | Business




SHENZHEN, CHINA, Dec 6, 2022 – (ACN Newswire) – A series of “Overseas Talents’ China Visit to Shenzhen” events were successfully held in Guangming district, Shenzhen from November 21 to 22. The events were co-organized by Shenzhen Center for International Exchange of Personnel.





The events are hosted by the China Association for International Exchange of Personnel, the Shenzhen Science and Technology Innovation Commission, the Communist Party of China Guangming District Committee, and the Shenzhen Guangming District People’s Government.

Presented by Guangming District Talent Work Bureau and Guangming District High-level Talent Service Center and co-organized by Shenzhen International Personnel Exchange Center, the series of events feature visits and exchanges by foreign experts, a forum for global experts and an exchange activity for Chinese and foreign guests named “The Night of Guangming”, to name a few.

The foreign experts symposium under “Overseas Talents’ China Visit to Shenzhen” was held via video link in Beijing and Shenzhen on the afternoon of November 21.

Li Xin, Deputy Director-General of the Department of Foreign Expert Services of China’s Ministry of Science and Technology, Xia Bing, Deputy Director of China Association for International Exchange of Personnel, Cheng Buyi, Member of the Standing Committee of the CPC Shenzhen Municipal Committee and Minister of the Organization Department, Cai Ying, Secretary of the Guangming District Party Committee, attended the meeting and delivered speeches through online and offline channels. Qiu Haohang, Deputy Secretary of the Guangming District Party Committee and Chief of Guangming District, presided over the meeting.

The events gathered academicians and experts from six countries, including the US, the UK, Italy, Germany, France and Cuba, putting the spotlight on topics such as original innovation breakthroughs, scientific research and economic development, talents opening up, and talent highland construction.

Answering the requirements of “facing the world’s scientific and technological frontier, facing the main economic battlefield, facing major national strategic needs and facing people’s life and health”, the series of activities gave Shenzhen a thorough examination and offered suggestions based on the city’s industrial development characteristics and its environment for innovation and entrepreneurship.

Aimed at tapping into the innovation plateau with talents, the events help the Guangming district to speed up the construction of a world-class science city and to become a representative and pioneer for Shenzhen’s participation in future technology competitions.

During the events, foreign experts also visited Shenzhen Engineering Biological Industry Innovation Center, Feiyada Museum, Shenzhen Bay Laboratory, Dadingling Greenway — Hongqiao Park and other research institutes and key enterprises. They listened to the introduction of institutions, and exchanged with scientific and technological personnel, laying the foundation for future cooperation.

Media contact


Wang Chan, Shenzhen Center for International Exchange of Personnel


Email: wangchan@ciep.gov.cn


Tel: 0755-81707961; 0755-81773121


Website: http://www.ciep.gov.cn/

Hong Kong – Individuals overseas reminded to remain vigilant against email scams

Nov 20, 2021 | International

Individuals overseas reminded to remain vigilant against email scams

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     The Immigration Department (ImmD) and the Labour Department (LD) recently received enquiries from individuals overseas about emails from unknown sources offering employment in Hong Kong under an Employment for Professionals Assessment Scheme and requesting recipients to provide personal data and pay fees. The Government reminds people who have received similar suspicious emails to remain vigilant against possible scams.
 
     The emails concerned also included a deceptive approval letter purportedly issued by the ImmD, a confirmation letter and an application form allegedly issued and prepared by the LD, and an employment contract.
 
     The Government today (November 19) clarified that it had never launched the aforesaid scheme. The ImmD and the LD had not issued the letters concerned nor prepared the aforesaid application form. People who have received similar suspicious emails are urged not to provide any personal data or pay any fee. The relevant government department has commenced investigation on the incident, and the case has also been referred to the Police for follow-up action.
 
     Anyone receiving similar suspicious messages can contact the following government departments for enquiries:
 
Immigration Department:
Tel: (852) 2824 6111; email: enquiry@immd.gov.hk

Labour Department:
Tel: (852) 2150 6363; email: sld-hq@labour.gov.hk
 
     The Government also reminds members of the public to make reports to the Police at once when they receive an email suspected to be part of a scam.

Hong Kong – LCQ6: Overseas judges of the Court of Final Appeal

Jul 7, 2021 | International

LCQ6: Overseas judges of the Court of Final Appeal

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     Following is a question by the Hon Paul Tse and a reply by the Chief Secretary for Administration, Mr John Lee, in the Legislative Council today (July 7):

Question:

     Article 82 of the Basic Law stipulates that the Court of Final Appeal (CFA) may as required invite judges from other common law jurisdictions (overseas judges) to sit on the CFA. The CFA is constituted by five judges, including either a non-permanent Hong Kong judge or an overseas judge. In this connection, will the Government inform this Council if it knows: 

(1) the principles and conditions in accordance with which the Chief Justice of the CFA (CJ) decides on the necessity to select a judge from the list of overseas judges to sit on the CFA to hear individual cases;

(2) the total number of cases heard by the CFA in the past five years and, among them, the number of those in which no overseas judges sat on the CFA; and

(3) whether the CJ has, when deciding which judge on the list of overseas judges is to be selected to sit on the CFA to hear individual cases, considered if a judge was an appropriate choice from the national security perspective; whether the CJ will, in the light of the implementation of the National Security Law for Hong Kong, take national security as a key factor for consideration in making the relevant decision?

Reply:

President,

     Based on the information provided by the Judiciary, the Government’s consolidated reply is as follows:

     As stipulated under Article 92 of the Basic Law, judges of the Hong Kong Special Administrative Region (HKSAR) shall be chosen on the basis of their judicial and professional qualities and may be recruited from other common law jurisdictions. In making recommendations on judicial appointments, it is important to maintain the highest professional standards in the Judiciary.

     Under section 16 of the Hong Kong Court of Final Appeal Ordinance (Cap. 484), all appeals shall be heard and determined by the Court of Final Appeal, which is constituted by five judges as follows:

(i) the Chief Justice or a Permanent Judge (PJ) designated to sit in his place under the Hong Kong Court of Final Appeal Ordinance;

(ii) three PJs nominated by the Chief Justice; and

(iii) one non-permanent Hong Kong judge or one judge from another common law jurisdiction selected by the Chief Justice and invited by the Court of Final Appeal.

     Under section 10 of the Hong Kong Court of Final Appeal Ordinance, the total number of persons holding office as non-permanent judges shall not at any one time exceed 30.

     At present, there are 13 serving non-permanent judges from other common law jurisdictions (CLNPJs), nine of whom are from the United Kingdom, three are from Australia and one is from Canada. These CLNPJs are all judges of the most eminent standing in the entire common law community, with profound judicial experience as well as the highest professional status and reputation. Their participation in hearings of the Court of Final Appeal is conducive to maintaining the high degree of confidence in the independent judicial system under the Basic Law and allows Hong Kong to maintain strong links with other common law jurisdictions. 

     With the exception of a few cases, all along the arrangement has been that a judge is drawn from the list of CLNPJs to sit on the Court of Final Appeal. These exceptional occasions were mainly due to the unavailability of the CLNPJs at the scheduled hearing dates or because there were unforeseen circumstances which rendered it not possible for the CLNPJs to hear the appeals as planned.

     There are mainly two major types of cases heard by the Court of Final Appeal, namely applications for leave to appeal and appeals.

     In respect of applications for leave to appeal, section 18 of the Hong Kong Court of Final Appeal Ordinance stipulates that the power of the Court of Final Appeal to hear and determine any application for leave to appeal shall be exercised by the Appeal Committee. The Appeal Committee consists of the Chief Justice and two PJs nominated by the Chief Justice, or three PJs nominated by the Chief Justice, without having to invite the CLNPJs to sit in the hearings.

     In relation to appeal cases, from 2016 to 2020, the Court of Final Appeal disposed of a total of 143 cases, including those cases which have been allowed, dismissed, withdrawn, abandoned or discontinued. There were only two appeals in which the CLNPJs were not invited to sit in the hearings during those five years.

     The listing and handling of cases, as well as the assignment of which judge or judges are to handle cases have always been judicial functions to be exercised by the Judiciary independently, and the decisions concerned are to be made by the court leaders of the relevant levels of courts. Apart from stipulating that the courts are to assign judges from a list of “designated judges” to handle cases related to national security, the National Security Law in the HKSAR has not brought about any changes to the abovementioned judicial powers and functions. As such, in selecting and inviting the CLNPJs to sit in every hearing, the Chief Justice of the Court of Final Appeal will, as an established approach, consider all relevant factors, including the availability of the relevant judges, their areas of legal expertise, and the nature of the cases to be heard, etc.

     Thank you, President.