Capital Investment Entrant Scheme

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Capital Investment Entrant Scheme

• Presented by Mr Andy Y. M. CHAN,
• Immigration Officer of Hong Kong Immigration
  Department
• Venue Hong Kong Institute of CPAs Training
  Centre,
• 27/F of Wu Chung House
• Date Friday, 8 May 2009

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Disclaimer

• The materials of this seminar / workshop /
  conference are intended to provide general
  information and guidance on the subject
  concerned. Examples and other materials in this
  seminar / workshop / conference are only for
  illustrative purposes and should not be relied
  upon for technical answers. The Hong Kong
  Institute of Certified Public Accountants (The
  Institute), the speaker(s) and the firm(s) that
  the speaker(s) is representing take no
  responsibility for any errors or omissions in, or
  for the loss incurred by individuals or companies
  due to the use of, the materials of this seminar
  / workshop / conference.
• No claims, action or legal proceedings in
  connection with this seminar/workshop/conference
  brought by any individuals or companies having
  reference to the materials on this seminar /
  workshop / conference will be entertained by the
  Institute, the speaker(s) and the firm(s) that
  the speaker(s) is representing.

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Outline

• The Policy and Benefits of the Scheme
• Eligibility Criteria
• Permissible Investment Asset Classes
• Monitoring Mechanism
• Ring-fencing
• New Arrangement of Engaging a CPA (Practising)
  under CIES
• Common Types of Assets or Equity
• Statistics

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Adjustment of Policy

• To facilitate the entry for residence by capital
  investment entrants who need not be engaged in
  the business operation here.
• Before the introduction of the Scheme in 2003,
  the entry of overseas investors on employment
  visas requires personal involvement in business
  operation.

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Benefits to Participant

• Can reside in HK
• Can bring in dependants
• May apply for permanent residence after 7 years
  of continuous ordinary residence OR
• May apply for unconditional stay in HK after
  meeting obligations under the Scheme for 7 years.

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Eligibility Criteria

• Two Routes to Approval
• via Approval-in-Principle (AIP) first and then
  Formal Approval
• direct Formal Approval (FA)

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Eligibility Criteria

• Paragraph 2.1 of the Scheme Rules-
• (a) ? 18 years on date of application (DOA)
• (b) ? HK6.5M Net assets throughout 2 years
  preceding DOA (absolute beneficial entitlement to
  assets is a must)

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Eligibility Criteria

• (c) to have invested within the specified
  investment time frame not less than HK6.5
  million Net in Permissible Investment Assets
  (PIAs) to which he is absolutely beneficially
  entitled

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Eligibility Criteria

• (d) be capable of supporting and accommodating
  himself (and his dependants) without relying on
  any return on PIAs, employment or public
  assistance in HK
• (e) have no adverse immigration record and
  meeting normal immigration and security
  requirements.

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Scope of the Scheme

• Foreign nationals (except nationals of
  Afghanistan, Albania, Cuba and Democratic
  Peoples Republic of Korea)
• Macao Special Administrative Region residents
• Chinese nationals who have obtained permanent
  resident status in a foreign country
• Stateless persons who have obtained permanent
  resident status in a foreign country with proven
  re-entry facilities and
• Taiwan residents

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Permissible Investment Assets
Real Estate

• Commercial, industrial or residential
  properties
• Pre-completion properties
• Land.

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Permissible Investment Assets
Specified Financial Assets

• Equities listed on Hong Kong Stock Exchange and
  traded in HK dollars
• HK dollar denominated debt securities issued by
  specified organisations
• HK dollar denominated certificates of deposits
  of not less than 12 month maturity after AIP is
  granted
• HK dollar denominated subordinated debt
• Eligible Collective Investment Schemes (ECIS)
  as published and updated in ImmDs website
  http//www.immd.gov.hk/

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Monitoring Mechanism

• Switching of investments amongst PIAs is allowed
• Observe relevant switching conditions.

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Principle of Ring-fencing

• Purpose to avoid abuse of scheme
• Scope capital gains but not recurrent income
  (like rents and cash dividends)
• Length of application 7 years

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Change in Value of Investment
During the period of ring-fencing

• no need to top up investment if it falls below
  HK 6.5 million
• prohibits withdrawal of any capital gain from
  investment if market value rises above the
  requisite level.

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New Arrangement of engaging a CPA (Practising)
under CIES

• As set out in paragraph 2.1(b) of the Rules for
  the Capital Investment Entrant Scheme "the
  Scheme Rules", an Applicant has to meet the
  eligibility criteria, among others, that he has
  Net assets or Net equity to which he is
  absolutely beneficially entitled with a Market
  value of not less than HK6.5 million Net
  throughout the two years preceding the date he
  lodged his application for Approval-in-Principle
  or Formal Approval.

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New Arrangement of engaging a CPA (Practising)
under CIES

• To streamline the procedure and to shorten the
  processing time, with effect from 16 March 2009,
  applicants under the Capital Investment Entrant
  Scheme CIES may at their own cost engage a
  Certified Public Accountant (Practising) CPA
  (Practising) who is a member of the Hong Kong
  Institute of Certified Public Accountants to
  issue a report to demonstrate that they meet the
  requirement of paragraph 2.1(b) of the Scheme
  Rules.
• The report may be submitted to the Immigration
  Department together with the CIES application
  form. This is an optional arrangement and whether
  or not a CPA (Practising) is engaged will not
  affect the outcome of the application. The new
  arrangement is also applicable to applications
  submitted before the implementation date.

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Common types of Assets or Equity

• (a) Bank Assets
• (i) ascertain the ownership
• (ii) convert the foreign currency to HKD
• (iii) check the bank statements falling within
  the specified 2 years
• (iv) ensure the specification for bank reference
  letter.

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Common types of Assets or Equity

• (b) Real Estates
• (i) review land title document to ensure the
  ownership
• (ii) ascertain the market values of the real
  estate from the property appraisal report
• (iii) take note of the net value consideration
  on any and every charge, lien and encumbrance
  secured on that property throughout the
  concerned 2 years
• (iv) Applicant is required to report any
  liability be attached to that property in the
  form of a declaration which should be submitted
  together with the Report of Factual Findings.

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Common types of Assets or Equity

• (c) Unlisted Equity Investment
• (i) obtain the legal document to ascertain the
  existence of the investment
• (ii) review the Memorandum or Articles of
  Association to ensure the establishment of
  ownership and shareholding of the Applicant and
  to obtain the recent company search to check the
  latest ownership status
• (iii) acquire any necessary document to verify
  the change of ownership during the specified 2
  years
• (iv) obtain the audited financial statements
  which cover the 2 years concerned
• (v) any personal loan made by the Applicant to a
  company or an individual is not considered.

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Statistics
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Statistics
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• Questions and Answers

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Thank You