Lead counsel to US based hedge fund manager with over US$4 billion of assets under management in respect of the establishment of Hong Kong operations
Overview
We represent hedge funds and fund managers throughout the entire fund life cycle. Our market leading Hedge Funds practice has been internationally recognized by the International Financial Law Review 1000 (IFLR1000), the Legal 500, Chambers & Partners and Asialaw Profiles. We have been advising hedge funds and their managers on Hong Kong requirements for over 15 years. Our clients have ranged from start-ups to bulge bracket investment managers with over US$60 billion of assets under management.
In our Hedge Funds practice, we advise clients on how to set up a hedge fund, how to operate a hedge fund and other matters:
Fund formation – Selection of fund vehicle, fund structure and fund jurisdiction and preparation of investment management agreements (“IMAs”)
Capital raising – Preparation and negotiation of private placement memoranda (“PPMs”), subscription agreements and side letters
Establishment of management group – Incorporation of manager, licensing applications to the Securities and Futures Commission (“SFC”) and preparation and negotiation of agreements between key principals, shareholder agreements, and share option schemes with key executives
Ongoing operational and regulatory issues
Fund restructuring
Our Hedge Fund practice is uniquely positioned to advise hedge funds and their managers:
Because our firm is heavily focused on financial services, including portfolio management, broking and dealing, financing, electronic trading and clearing, custody and derivatives trading, we bring a deep understanding of the full spectrum of the business activities that impact hedge funds.
At the same time, because we work routinely to assist clients on regulatory matters in Hong Kong, we understand the expectations of the SFC, the primary regulator of the Hong Kong securities and futures markets.
Finally, because we routinely represent clients in SFC investigations and prosecutions which test the limits of Hong Kong securities laws, we are fully conversant with the boundaries and complexities of the legal and regulatory framework under the Securities and Futures Ordinance (“SFO”).
Experience
Lead counsel to PRC based asset manager with US$15 billion of assets under management in respect of SFC inspection
Lead counsel to hedge fund in successful appeal to the Hong Kong Court of Final Appeal in a precedent setting Hong Kong securities law case...
Lead counsel to activist short seller in precedent setting Market Misconduct Tribunal proceedings alleging market manipulation as a result of the...
Lead counsel to former portfolio manager in connection with dispute with former employer
Q&A
How We Can Help in Hedge Fund Formation
We set out below some of the common concerns our clients encounter in the set-up of hedge funds in Hong Kong and how we can help address those concerns.
We have a solid understanding of the licensing requirements under the SFO. We assess your proposed business activities and advise on whether you need an SFC license and if so, whether you need an SFC license for Type 9 (asset management) or an SFC license for Type 1 (dealing in securities).
We have advised hedge fund management groups on the possible availability of the intra-group exemption from Type 9 licensing and the possible use of the professional investors exemption (“PI Exemption”) from Type 1 licensing.
In addition, we can help assess whether the active marketing provisions of the SFO, which extend the SFC licensing requirements to certain conduct and activities outside Hong Kong, may apply to you if you are targeting Hong Kong investors.
We have extensive experience assisting hedge fund managers in applying for SFC licenses. Our clients benefit from our vast knowledge of the SFC licensing process accumulated over the years.
We have a thorough understanding of SFC licensing requirements, such as the “fit and proper” and competence tests. We are familiar with the various factors which the SFC will have regard to when assessing your SFC license application.
We evaluate your individual background and your proposed business activities to help you prepare an application to meet all the applicable regulatory requirements and improve your chance of success of being approved, whether as a licensed representative or as a responsible officer.
We actively help you pre-empt any potential concerns which the SFC may have and address any issues before they arise to ensure the greatest chance of a smooth and quick grant of the SFC license.
We help you think through how the hedge fund management group should be governed if there are 2 or more key partners or stakeholders in the group. We guide you through the decisions which you may need to make to avoid future disputes and to protect your interests in the event that your relationship with partners or key stakeholders deteriorates. We can review or prepare investment agreements by which seed investors take a stake in the management group or by which you and one or more partners agree to work together to launch the fund.
We have extensive experience advising on the types of issues which you may face in these situations including as regards voting rights, the distribution of profits, deadlock in decision making, restrictive covenants and the “ownership” of investors in the event of a subsequent breakup of the partnership.
Awards
Chambers and Partners
Financial Services Regulatory
Leading Practice
Chambers and Partners
Financial Services Regulatory
Leading Individual
Chambers and Partners
Financial Services Regulatory
Leading Lawyer
Chambers and Partners
Financial Services Regulatory
Well Regarded Lawyer
Chambers and Partners
Investment Funds
Leading Practice
Chambers and Partners
Investment Funds
Leading Individual
Chambers and Partners
Investment Funds
Leading Lawyer
IFLR 1000
Financial Services Regulatory
"Positively Ranked"
IFLR 1000
Financial Services Regulatory
Highly Regarded Lawyer
IFLR 1000
Hedge Funds
Leading Practice
IFLR 1000
Hedge Funds
"Positively Ranked"
Legal 500
Financial Services Regulatory
Leading Individual
Legal 500
Financial Services Regulatory
“Recommended Practice”
Legal 500
Investment Funds
“Recommended Practice”
Asialaw Profiles
Corporate
Leading Practice
Asialaw Profiles
Corporate
"Recommended"
Asialaw Profiles
Financial Services Regulatory
Leading Practice
Asialaw Profiles
Financial Services Regulatory
Outstanding Practice
Asialaw Profiles
Financial Services Regulatory
Market Leading Lawyer
Asialaw Profiles
Financial Services Regulatory
Leading Lawyer
Insights
Hong Kong OFCs: The Alternative to the Cayman Islands for Hedge Funds
Recent changes in Hong Kong and the Cayman Islands make Hong Kong OFCs a compelling alternative to Cayman SPCs for hedge funds
Eligibility to act as the Custodian of a Private OFC
Prime brokers and other SFC Type 1 licensed brokers can now act as custodians of private OFCs under new SFC rules.
DIPN 61: Guidance on the New Unified Funds Tax Exemption for OFCs and Limited Partnership Funds
DIPN 61 provides guidance on applying the Unified Funds Tax Exemption to exempt OFCs and LPFs from Hong Kong profits tax