Capital investment scheme was established by the Hong Kong administration to facilitate entry for residents by capital investments. This means people who are ready to make capital investment but are not directly engaged in running the business could get entry into Hong Kong. Unlike other types of visas that require the applicant to be part of the business, the investor in the scheme only selects the assets and does not become part of the business. In this post, we discuss everything that you need to know about Capital investment: Essential informations.
Scope of Capital investment scheme
The people who apply to enter Hong Kong using the scheme have to follow its rules. Those who are eligible to apply include the following;
- All foreign citizens with exceptions of nationals from Democratic Republic of Korea, Cuba, and Afghanistan.
- Residents of Macao Special Administrative Region
- All Chinese citizens who have gotten permanent residence in other countries.
- Stateless persons with permanent residence in other states.
- Taiwan residents
Eligibility criteria to enter the scheme
For you to be admitted under the scheme, you must;
- Be over 18 years of age
- Have net assets of more than HK$10 million that you are absolutely the beneficiary for 2 years before this application.
- Demonstrate you have invested in the last 6 months before making this application. You can also invest not less than HK$10 million in the subsequent 6 months after being granted approval.
- Have no criminal record in the region of residence and in Hong Kong.
- Proof that you can support yourself and all dependants without relying on returns from the invested assets (permissible investment assets).
Conditions for staying
After your entry has been approved, you are allowed to enter Hong Kong as a visitor for 3 months. Then, this status is reviewed and increased with 3 months after proofing progress in the investment.
When the immigration department is sure beyond reasonable doubt that the required level of investment has been attained, the entrant is granted another extension of 2 years.
This period will continue being extended on a 2 years basis until 7 years when the entrant can apply for right of abode. The entrants under the scheme have a different set of conditions for staying in Hong Kong. If the entrant breaks the terms of stay, the immigration department does not renew the stay.
Entrants under Capital investment scheme are allowed to bring their dependannts (spouse and children under the age of 18 years).
Here, you must demonstrate the capability to support the dependants with decent accommodation and above average lifestyle. This support should not include the permissible investment assets that you have committed to enter Hong Kong.
Arrangement to engage a CPA (certified public accountant)
One of the rules of this scheme is that the applicant must meet the eligibility criteria among other requirements.
To help in streamlining the application procedure and shorten the timeline; applicants are allowed to engage CPAs in issuing a report demonstrating that they meet the requirements of paragraph 2.1 (b) that requires all members to have a net equity they are absolute beneficiaries with an entitlement of no less than HK$10 million. The report from the CPA can be submitted to the immigration department together with other application forms.
Classes of permissible assets under the scheme
The minimum equity of not less than HK$10 million can be in one form of investment or a combination of permissible assets.
- Shares: These are shares of companies that are listed and trading on Hong Kong Stock Exchange. The shares must be traded in Hong Kong Dollar.
- Debt securities: These are debt securities that have been dominated in Hong Kong Dollars. They include floating rate or fixed rate instruments and convertible bonds issued and guaranteed by the Hong Kong government, the Hong Kong Mortgage Corporation, Exchange Fund, MTR Corporation Limited, Hong Kong Airport Authority, Kowloon-Canton Railway Corporation, and other corporations, agencies or bodies wholly or partially owned by the Hong Kong Government.
- Certificates of deposits: These are certificates of deposits in Hong Kong dollars from authorized institutions as outlined in the Banking Legislation. The certificates should have a maturity date of fewer than 12 months.
- Subordinate Debts: Subordinate debts that are issued in Hong Kong dollars and issued by authorized institutions on the Banking Ordinance 4B and 4C (capital) Rules (Chapter 155L).
- Eligible Collective Investment Scheme according to the immigrations department.
Portfolio Maintenance Requirement
Portfolio and ring-fencing regulations are implemented to ensure that the applicant does not reduce the investment level/ commitment during the time he/she is allowed to stay in Hong Kong. The entrant can only transact on a specified financial asset in a specified account run with a single intermediary. Additional details are available in the Scheme Rules (ID(E)968).
To confirm that the entrant agrees with the regulations, he/she is required to complete and return a form agreeing to the rules. The financial intermediary has to be an authorized institution or licensed institution allowed to perform activity types A, 4, and 9 in the Securities and Futures Ordinance. The intermediary can also be an insurance firm on Class C businesses according to Part 2 of the First Schedule to the Insurance Companies Ordinance.
Change in Value of the Entrant Investment
Once you have hit the required minimum, you are not required to top up the investment if the total value of your assets falls below the minimum. Besides, you are also not allowed to withdraw capital gain that accrues from the investment before the agreed time lapses.
However, cash dividend income, as well as interest from the permissible financial assets, does not require being ring-fenced under the scheme.
Every entrant is free to change the investment from one type of permissible asset to a different one as far as the resultant profit is reinvented. The entrant is also required to keep record of all the changes on the investment portfolio because they can be of crucial importance if he/she wants to extend the stay in Hong Kong.