Capital Investment Entrant Scheme

1. 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 Capital Investment Entrant Scheme

2. 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.

3. 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

4. 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.

5. 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.

6. Eligibility Criteria Two Routes to Approval: • via Approval-in-Principle (AIP) first and then Formal Approval • direct Formal Approval (FA)

7. Eligibility Criteria Paragraph 2.1 of the Scheme Rules:- • (a) ≧ 18 years on date of application (DOA); • (b) ≧ HK$6.5M Net assets throughout 2 years preceding DOA (absolute beneficial entitlement to assets is a must);

8. 6M 6M AIP DOA investment time frame Eligibility Criteria • (c) to have invested within the specified “investment time frame” not less than HK$6.5 million Net in Permissible Investment Assets (PIAs) to which he is absolutely beneficially entitled;

9. 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.

10. Scope of the Scheme • Foreign nationals (except nationals of Afghanistan, Albania, Cuba and Democratic People’s 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

11. Permissible Investment Assets • Commercial, industrial or residential properties; • Pre-completion properties; • Land. Real Estate

12. 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 ImmD’s website: http://www.immd.gov.hk/

13. Monitoring Mechanism • Switching of investments amongst PIAs is allowed; • Observe relevant switching conditions.

14. 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

15. Change in Value of Investment • 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. During the period of ring-fencing:

16. 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 HK$6.5 million Net throughout the two years preceding the date he lodged his application for Approval-in-Principle or Formal Approval.

17. 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.

18. 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.

19. 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.

20. 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.

21. Statistics

22. Statistics

23. Questions and Answers

24. Thank You