During the meeting of the Executive Council on December 19, 2023, the Executive Council advised and the Chief Executive ordered the new Capital Investment Entrant Scheme (CIES).
Introduction to the new Capital Investment Entrant Scheme
In 2003, the HKSAR government created an early version of CIES with the goal of attracting capital inflows into Hong Kong. It not only greatly facilitates Hong Kong’s economic growth and financial development, but it also significantly improves the job situation in Hong Kong. Nonetheless, the government has halted it from January 15, 2015. However, the new Capital Investment Entrant Scheme (CIES) has recently been restarted.
Eligibility Criteria
To fit the current situation, the government has imposed a new eligibility criteria for the new Capital Investment Entrant Scheme, which is slightly different from the previous one.
Age
- Applicants applying for a net asset assessment should be 18 years old or older.
Types of applicants
- (i) Foreign nationals
- This does not include citizens of the Democratic People’s Republic of Korea, Cuba, or Afghanistan.
- Under the new Capital Investment Entrant Scheme, stateless individuals who have acquired permanent resident status in a foreign nation with established reentry facilities are eligible to apply for CIES.
- (ii) Chinese nationals who have obtained permanent resident status in a foreign country
- (iii) Macao Special Administrative Region residents
- (iv) Chinese residents of Taiwan
Value of assets
- Types of assets include equities, debt securities, certificates of deposits, eligible collective investment schemes, real estate, etc.
- Firstly, applicants should have at least HK$30 million in net assets, and it is acceptable for an equivalent amount in foreign currencies.
- Secondly, they should be absolutely beneficially entitled for two years before the application.
No adverse record
- Firstly, an applicant must demonstrate that he or she has no adverse immigration record.
- Secondly, they should meet normal immigration and security requirements.
- Applicants may need to provide supporting documents that show their capability to accommodate themselves in Hong Kong. This does not include reliance on any return on the permissible investment assets, employment, or public assistance in Hong Kong.
Minimum Investment Threshold
- Applicants must make an investment of a minimum of HK$30 million in the permissible investment assets.
Permissible investment assets
A minimum of HK$27 million in any of the following permissible assets, which have taken account of the latest market and industry developments.
Financial assets
Equities
- Shares of companies listed on the SEHK and traded in HKD or RMB
Debt securities
- Debt securities listed on the SEHK and traded in HKD or RMB
Certificates of deposit
- Certificates of deposits in HKD or RMB
- Issued by authorized institutions in the Banking Ordinance
- They should have a remaining term to maturity of not less than 12 months at the time of purchase, and
- They are subject to a cap of 10% of the minimum investment threshold.
Subordinated debt
- Subordinated debt in HKD or RMB
- Issued by authorized institutions in compliance with Schedules 4B and 4C to the Banking (Capital) Rules
Eligible collective investment schemes
- SFC-authorized funds
- Real estate investment trusts (SFC-authorized)
- Investment-Linked Assurance Schemes (SFC-authorized)
- Open-ended fund companies registered under the Securities and Futures Ordinance
Non-residential real estate
- Commercial and/or industrial in Hong Kong (Including pre-completion properties and excluding land), and
- they are subject to a cap of HK$10 million.
CIES investment portfolio
- CIES applicants must invest HK$3 million in a Hong Kong-based investment portfolio.
- This portfolio is set up and managed by Hong Kong Investment Corporation Limited.
- This can support innovation and technology industries and strategic sectors in Hong Kong.
Portfolio maintenance requirements
Financial assets
An applicant must deposit his or her financial assets in a designated investment account operated by a single eligible financial intermediary.
Examples:
- An authorized institution in the Banking Ordinance A licensed corporation to perform Type 1 or 9 regulated activities under the Securities and Futures Ordinance, or
- An insurer carries on Class C business as specified in Part 2 of Schedule 1 to the Insurance Ordinance.
An applicant in Hong Kong must use their designated investment account exclusively for permissible investment assets.
- Firstly, they cannot reduce their committed investment while in Hong Kong.
- Secondly, they can switch between permissible financial assets and non-residential real estate under the ring-fencing principle.
- For example, reinvesting the trading proceeds fully with proper record-keeping and timely reporting to the government.
An applicant must not withdraw cash or investment from their designated account, make any arrangements to extract value, or incur debt using the investment portfolio as collateral.
- Exception: cash dividends or interest income from permissible financial assets.
A financial intermediary should to conduct customer due diligence and provide regular reports to the government on the applicant’s compliance with the new CIES requirements
Non-residential real estate
- CIES does not restrict the number of properties bought for entry, but only counting equity in real estate towards the minimum investment threshold.
- An applicant can take out a mortgage loan with a Hong Kong-licensed bank or financial institution, but only counting the amount of equity.
- Refinancing of the outstanding mortgage loan is acceptable, when the applicant does not increase the outstanding loan or realize any capital gain on the real estate’s value.
- An applicant can sell the real estate and continue to qualify under the new CIES if they invest the entire proceeds in other permissible investment assets after deducting the original mortgage loan amount.
- The applicant can retain and pay the rental income from non-residential real estate.
- To qualify under the new CIES, applicants must prove all transaction details to InvestHK, and provide documents such as Land Registry records, bank statements, and a professional valuation report, and declare themselves as the absolute beneficial owner of the non-residential real estate.
Application Procedures, Permission of Entry, Stay and Extension
- InvestHK and the Immigration Department (ImmD) are responsible for assessing applications for visa/entry permits, extensions of stay, and unconditional stays in Hong Kong.
- Firstly, an applicant must first submit an application to InvestHK for financial requirements, and then submit an entry application to ImmD for a visa or entry permit.
- After that, ImmD grants a visa or entry permit for 180 days for a committed investment after approval. Permission to stay is granted for 24 months on time limitation, subject to the applicant’s continued compliance with the new CIES requirements.
- Upon expiry, they can apply for three years of extension of stay.
- However, if the applicant cannot fulfill the continuous ordinary residence requirement and meets the financial requirements for seven years, they can apply for an unconditional stay in Hong Kong.
- Afterwards, if ImmD approves, the applicant can dispose of their invested assets.
For more comprehensive information, please check the original file introducing the new CIES and the official website of the Immigration Department.
How can FastLane HR help with the new Capital Investment Entrant Scheme?
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