Is the Hong Kong Capital Investment Entrant Scheme Actually Fit for Purpose?
Posted by The Visa Geeza / in Musing /
The Capital Investment Entrant Scheme (“CIES”) came into effect on October 27, 2003. The purpose of the CIES is to encourage financial investment in Hong Kong, granting residence to qualifying applicants who invest a minimum of HK$10 million into qualifying Hong Kong financial assets (not, for the moment, including real estate – but that might change).
Residence is granted for an initial period of two years and is extendable in two year increments upon furnishing of proof that the qualifying investments have been maintained throughout. Permanent residency is available after seven years continuous ordinary residence, subject to satisfaction of normal criteria for qualification for issuance of a Permanent Hong Kong Identity Card.
The CIES applies to foreign nationals, residents of Macau and Taiwan and stateless persons enjoying permanent residence in a third country. Chinese nationals who have obtained permanent residence status overseas are eligible but Mainland residents have traditionally been excluded from the CIES due to foreign currency controls (but that might change too!)
To qualify for admission under the CIES the entrant must have net assets of not less than HK$10 million to which he is absolutely beneficially entitled throughout the two years immediately preceding his application – and also have further funds to be able to live independently without recourse to those HK$10 million.
An applicant must then invest HK10 million into qualifying assets (permissible asset classes) which comprise HKSE listed and HKD denominated equities, debt (government and HKSE listed corporate), Certificates of Deposit and government approved mutual funds. The list is updated relatively often and can be found here.
The money must remain continuously invested for seven years before the applicant and his family can apply for the Right of Abode (or Unconditional Stay if the residence in Hong Kong has not been continuous throughout that time or the applicant cannot put his hand on his heart and validly declare that he has taken Hong Kong as his only place of permanent residence).
Participants in the CIES are subject to a Portfolio Maintenance Requirement. Investments are ring fenced for assurance of portfolio integrity to ensure that the participant in the CIES does not reduce his investment amount during the currency of his residence in the HKSAR.
Proof of continuing ownership of the qualifying financial assets throughout his residence is required up to the minimum HK$10 million (sum total asset value) and the CIES entrant is required to transact only in permissible investment assets in a designated account opened with a single financial intermediary. Moreover, the CIES entrant is required to undertake that he will abide by the CIES rules all throughout his time in Hong Kong as an entrant under the Scheme.
CIES entrants are not allowed to cash in any capital appreciation of their qualifying portfolio. Conversely, if the value of the portfolio falls below the original HK$10 million, no topping up is required.
The CIES entrant is allowed to switch investments from one permissible asset class to another provided that the entire proceeds from the sale of the initial assets are reinvested. A complete record of every change and movement in the asset portfolio should be kept for the purposes of applying for an extension of stay when the present period of stay expires.
Applicants are subject to security vetting. Those who have committed serious criminal offences are not accepted under the CIES.
Time line to approval is 4-6 weeks after the Immigration Department are in receipt of all the documentation needed to consider an application.
A successful CIES applicant is allowed to bring in his spouse and unmarried dependant children under 18 years.
However, he must be able to demonstrate that he is capable of supporting and accommodating himself and his dependants on his own without relaying on any return on the Permissible Assets, employment or public assistance in Hong Kong.
This notwithstanding, once approved, the CIES entrant may freely take employment or join in a business without further restriction. Dependants admitted under the CIES are not allowed to take up employment or join in any business without first securing the consent of the Director of Immigration.
The initial period of stay granted is two years, renewable subject to continuing portfolio eligibility.
Applicants first secure an Approval in Principle (based upon proof of net worth and security vetting) and are granted a six month Visitor visa to allow them to land in Hong Kong.
They then acquire the qualifying investments under the CIES and, upon furnishing of proof to this effect, convert their Approval in Principal to a Formal Approval, procuring their ‘full’ CIES period of stay at that time.
Applicants who have already invested HK$10 million in permissible asset classes within six months of making their application are granted Formal Approval at the outset (subject to successful completion of the normal security vetting procedures).
How about you? What has your experience been with the Capital Investment Entrant Scheme visa?
