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Establishing hedge funds in Hong Kong

Charltons has significant experience in advising fund managers and promoters on the structuring, establishment and marketing of hedge funds in Hong Kong. Our lawyers provide an insightful and highly personalised service, delivering high impact, smart and practical advice.

We advise on all forms of fund vehicles, including limited liability companies, umbrella funds, protected cell or segregated portfolio companies, limited liability partnerships and unit trusts. We also advise on a variety of fund structures, including open-ended and closed-end funds, master / feeder structures and fund of funds.

Charltons has worked on funds across the full spectrum of asset classes, including listed stocks, fixed income and derivative securities, property, natural resources, private equity, venture capital, and distressed debt. We have also advised on a range of fund strategies including long / short, arbitrage and socially responsible investing.

We advise on the types of regulated activities that require licensing by the Securities and Futures Commission (SFC) under the Hong Kong Securities and Futures Ordinance (SFO) and related exemptions. We also assist hedge fund managers in applying for SFC licences and complying with on-going obligations as licensed corporations.

We help both local and international hedge fund managers to structure and launch investment funds in Hong Kong. We will advise on the applicable regulatory framework and suggest structures, selling restrictions and other solutions that will enable funds and fund managers to avoid SFO authorisation and prospectus registration. In the case of non-exempt and retail hedge funds, we will assist with the application for authorisation of the fund in Hong Kong under the SFO and the SFC’s Code on Unit Trusts and Mutual Funds.

We have an in-depth understanding of the key legal and commercial points in the capital-raising process and have considerable experience in advising on development of fund terms and negotiations with anchor investors. We will prepare information memoranda and subscription agreements, draft and negotiate the investment management, custodian, administration and other service agreements, and prepare corporate resolutions and other launch documents.

Charltons has experience of advising clients on establishing hedge funds, providing fund manager legal advice and a range of issues concerning hedge funds in Hong Kong.

 

 

Regulation of hedge funds in Hong Kong 

Hedge funds in Hong Kong are generally private and non-retail in nature and do not require authorisation from the Securities and Futures Commission (“SFC”). They are primarily regulated through the regulation of Hong Kong-based fund managers which must be licensed with the SFC under Part V of the Securities and Futures Ordinance (Cap. 571 of Laws of Hong Kong) (“SFO”) and comply with SFC’s Fund Manager Code of Conduct. To be licensed, the SFC must be satisfied that these fund managers (and their substantial shareholders and responsible officers) (i) are, and continue to be, fit and proper and competent in carrying out fund management activities; (ii) comply with prescribed capital and other requirements (including having proper business structure and good internal systems) as set out in the SFO, its subsidiary legislation and the SFC’s codes, guidelines and circulars; and (iii) comply that all conditions that may be imposed on them by the SFC.

Retail hedge funds are uncommon in Hong Kong. These require authorisation with the SFC and must comply with the subsidiary legislation and the relevant codes and guidelines of the SFC, including, in particular, Code 8.7 of the Code on Unit Trust and Mutual Funds (which sets out more particular requirements on the management company, the prime broker (if any), the minimum subscription amount of each investor, general disclosure and disclosure of performance fees, dealing and valuation etc.).

A retail hedge fund that is listed would be subject to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. However, to date, there are no listed hedge funds in Hong Kong.

Charltons has experience of advising clients on establishing hedge funds, providing fund manager legal advice and a range of issues concerning hedge funds in Hong Kong.

 

Hedge funds in Hong Kong

Fund manager legal advice

Establishing hedge funds

Establishing hedge funds in Hong Kong

Regulation of hedge funds in Hong Kong

Legal advice for hedge funds in Hong Kong

Hong Kong hedge fund manager legal advice

Hong Kong hedge fund managers

Hong Kong Securities and Futures Ordinance SFO

Hong Kong Securities and Futures Commission SFC

Code on Unit Trusts and Mutual Funds

Code 8.7 of the Code on Unit Trust and Mutual Funds
SFO authorisation and prospectus registration
Legal advice for hedge funds explained
Establishing hedge funds offshore
List of hedge funds