Investment funds: China & offshore
We have broad market experience in providing legal services in connection with the structuring, marketing, regulation and operation of private investment funds in a range of regions worldwide, including offshore funds and China funds. We are committed to provide integrated, comprehensive, flexible and innovative fund solutions to meet your objectives within the shortest possible time.
We advise fund sponsor, adviser and investor clients in relation to fund structure, formation, marketing, licensing, transactional and fund management and are committed to develop funds and investments efficiently and creatively to maximise fund raising opportunities and legal flexibilities under the relevant legal and regulatory regimes. We also advise and suggest effective and practical steps and procedures in relation to fund management and compliance with ongoing obligations of the relevant jurisdictions upon its formation.
We have thorough understanding of a number of sectors in connection with the investment management industry. On the basis of our strengths in the areas of corporate finance, securities, investment management, financial services regulatory and enforcement, we are always able to provide specific legal and regulatory advice, and plan and create flexible structures for our clients that suit their needs for current and future investments.
Funds that we have structured include limited partnerships and unauthorised unit trusts, and closed-ended and open-ended investment companies involving investments in a wide range of different industries. For established funds, we also provide services in connection with legal transactional and regulatory advice relating its admission of new investors and new investments to be made. As a team player, we are also involved in coordinating relationships with various professional parties, including fund managers, custodians, offshore legal advisers and PRC legal advisers.
The main areas on which we will be involved include :
- establish a flexible structure permitted under the regulatory regime
- advise on the relevant licensing and marketing requirements governing the offer of investment products in Hong Kong
- advise on the major terms and conditions of the proposed structure
- liaise with the regulators from time to time in connection with the offering of the investment products in Hong Kong
- coordinate relevant professional parties in Hong Kong and other jurisdictions
Funds authorisation regime in Hong Kong
All funds, whether local or foreign, Hong Kong investment funds, China funds or offshore funds, which will be marketed to the public in Hong Kong, must be authorised by the Securities and Futures Commission (“SFC”). This requires funds to comply with relevant requirements of the Code on Unit Trust and Mutual Funds (“UT Code”) which include a proper structure, well-defined investment guidelines and restrictions, ongoing disclosure requirements, and other requirements related to the fund’s daily administration. The SFC’s authorisation procedure entails:
- its review of principal documents;
- its approval of the prospectus, advertisements and other documents; and
- its authorisation of the fund itself.
The SFC must also approve the fund manager and the trustee or custodian of the fund. The authorisation process may be quicker where the fund manager and its trustee or custodian already operate existing SFC authorised funds. It can also be quicker for overseas funds which are recognized jurisdiction schemes (discussed further below), so long as these don’t use financial derivative instruments.
A fund may apply for de-authorisation when it no longer targets the Hong Kong public, or it is to be terminated or merged with another fund. The fund normally needs to give at least three months’ notice to investors, explaining clearly the reasons for de-authorisation and the consequences, as well as any alternatives offered (e.g. a right to switch to another authorised fund). The SFC has the right to de-authorise an authorised fund in case of any breach of the UT Code.
Unauthorised funds can be placed privately and the onus is on the fund manager to ensure that the laws of Hong Kong are not contravened. An unauthorised fund is not subject to SFC regulation, thus its structures and operations are not governed by specific rules or regulations in Hong Kong, and the offering document is not required to be vetted by the Hong Kong regulatory authorities. These unauthorised funds, however, may be regulated by a foreign regulator in an overseas jurisdiction and subject to the investor protection measures adopted by that regime.
Charltons has experience with Hong Kong investment funds, China funds and other offshore funds.