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In brief

In his recent 2021-22 Budget Speech,1 the Financial Secretary (“Financial Secretary“) of the Government of the Hong Kong Special Administrative Region (“Hong Kong Government“) confirmed the intended timing for submission of a legislative proposal to allow foreign investment funds to re-domicile to Hong Kong for registration as an Open-ended Fund Company (OFC). The Financial Secretary also announced subsidies for the costs of setting up a new OFC or re-domiciling of foreign investment funds registering as an OFC in Hong Kong. The latest measures represent further important steps in ongoing enhancements and incentives to promote use of the OFC regime. We discuss the recent developments in more depth below.

In more detail

Reflecting the Hong Kong Government’s aim to consolidate Hong Kong’s status as an international asset and wealth management center, Hong Kong’s OFC regime commenced in 2018.2 In September 2020, amendments to the Code on Open-ended Fund Companies announced by the Securities and Futures Commission (SFC) contained several welcome enhancements for private OFCs, including liberalization of the types of entities that can act as custodian, removal of investment restrictions, and announcement of ongoing development of a re-domiciliation capability.3 Further enhancements announced by the SFC in December 2020 included confirmation of customer due diligence requirements and enhanced guidance in the form of updated frequently asked questions to clarify custodial requirements.4

The 2021-22 Budget Speech also contained additional measures that continue efforts to make OFCs a compelling option and that will be welcomed by the industry. Those were:

  • confirmation of the planned submission of a legislative proposal in the second quarter of this year to allow foreign investment funds to re-domicile to Hong Kong for registration as an OFC
  • an intention to provide subsidies to cover 70% of the expenses paid to local professional service providers for OFCs set up in, or re-domiciled to Hong Kong in the coming three years, subject to a cap of HKD 1 million per OFC5

The SFC is expected to announce relevant details of how the subsidies may be obtained in due course.


The proposed subsidies are a welcome benefit, with the potential to significantly reduce the costs of establishing an OFC in Hong Kong or re-domiciling a foreign fund for registration. They provide further compelling argument to consider Hong Kong as a domicile of first choice for asset and wealth management.

We will continue to monitor further developments in the OFC regime as the SFC publishes additional information and the Hong Kong Government releases exposure drafts of the legislation to give effect to the re-domiciliation proposal. To discuss how our experience with OFCs can assist you, or if you have any questions on any of the matters above, please do not hesitate to liaise with your usual contact at Baker McKenzie or the lawyers listed in this Alert.

2 Please refer to our previous client alert available at the following link for more detail on the regime:

3 Please refer to our previous client alert available at the following link for more detail:

4 Please refer to our previous client alert available at the following link for more detail:


Sophia Man is a partner in Baker McKenzie’s Financial Services Group. She has over 17 years’ experience in advising trustees, fund managers, custodians, administrators and employers on fund formation, restructuring, investment and regulatory matters. Sophia is a member of the Retirement Schemes Committee of the Hong Kong Law Society.


Kennan Castel-Fodor is a registered foreign lawyer in Baker McKenzie's Hong Kong office. He has significant experience in US regulatory issues related to fund structure/formation, marketing, and registration requirements for non-US clients. Kennan also has experience advising US registered funds and their boards, investment advisers, and related financial services firms. He is actively engaged in the Firm's global commodities and derivatives practice.


Aaron Dauber is a Registered Foreign Lawyer and the Knowledge Lawyer for Baker McKenzie's non-contentious Financial Services Regulatory practice. He is responsible for monitoring and training on regulatory change, legal content projects and other knowledge initiatives to support the firm and our clients. Aaron's experience includes over 13 years' as an in-house counsel responsible for legal support to businesses across the Asia Pacific region including Japan and Australia with a global systemically important bank.