Background
On 10 May 2021, The Securities and Futures Commission of Hong Kong (the “SFC”) announced the implementation of the Hong Kong Government’s grant scheme (the “Grant Scheme”) to provide subsidies for setting up qualified open-ended fund companies (the “OFCs”) and real estate investment trusts (the “REITs”) in Hong Kong. The Grant Scheme covers 70% of eligible expenses paid to Hong Kong-based service providers, subject to a cap of HK$1 million per OFC and HK$8 million per REIT.
Grant Scheme for OFCs and REITs
The application period of the Grant Scheme is three years starting from 10 May 2021 until 9 May 2024 on a first-come-first-served basis[1]. The table below sets out a general summary of the Grant Scheme:
|
OFC |
REIT |
|
| Eligibility | The OFCs that incorporated in or non-Hong Kong fund corporations re-docmiciled to Hong Kong. | The REITs that are listed on The Stock Exchange of Hong Kong Limited (“Exchange”) with a market capitalisation of at least HK$1.5 billion (or equivalent) at the time of listing. |
| Maximum amount of the grant | 70% of the eligible expenses subject to a cap of HK$1 million per OFC. | 70% of the eligible expenses subject to a cap of HK$8 million per REIT. |
| Scope of eligible expenses | Examples include fees charged by: 1. legal advisers for legal work in relation to incorporation or re-domiciliation of an OFC; 2. auditors, accountants or tax advisors for accounting and/or tax services in relation to incorporation or re-domiciliation of an OFC (but excluding annual audit review fees); 3. fund administrators, corporate service provides or company secretaries for set-up of an OFC, including work done for all necessary filings or registration of an OFC; and 4. regulatory consultants for works done in relation to authorisation of an OFC with the SFC. It should be noted that generally it does not include statutory fees such as registration or application fees to the SFC. |
Examples include fees charged by: 1. underwriters for underwriting commissions in relation to the listing of a REIT; 2. auditors, accountants or tax advisors for accounting and/or tax services in relation to the listing of a REIT (but excluding annual audit review fees); 3. legal advisers for legal work in relation to listing of a REIT; 4. valuer of a REIT to produce valuation report on properties for the listing of a REIT; and 5. marketing agencies or consultants for advertisement and marketing related services for the listing of a REIT, such as roadshow expenses. It should be noted that listing fees to the Exchange will not be covered. |
| Application procedures | Applicants should submit to the SFC a duly signed and completed application form for the Grant Scheme together with all requisite supporting information and documents and scanned copies of the invoices/receipts.
SFC may request submission of additional and necessary information and documents during the vetting process. |
|
| Timing of submission to the SFC |
1. for private OFCs, within 3 months from the date of certificate of incorporation or re-domiciliation issued by the CR; 2. for public OFCs, within 3 months from the date on which the authorisation of the public OFC becomes effective. |
Within 3 months after the listing date of the REIT. |
| Clawback of the grant awarded | The OFC commences winding-up or applies for termination of registration within 2 years from the date of incorporation or re-domiciliation. |
1. The REIT is delisted or suspended from trading within 2 years of its listing date; or 2. The REIT has been suspended from trading for a continuous period of 18 months within 2 years of its listing date. |
Applicants are recommended to consult the Investment Products Division of the SFC for further details.
According to Mr. Ashley Alder, the Chief Executive Officer of the SFC, the Grant Scheme “will reinforce Hong Kong as a leading capital raising venue and its status as an international assets and wealth management centre”[2].
Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.
This newsletter is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.
[1] The Financial Secretary announced in the 2021-22 Budget Speech that the Government has allocated funding of HK$270 million to the Grant Scheme
[2]https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=21PR47