Hedge Funds

Overview

Hong Kong is a world-class centre asset management centre which continues to grow. The growth in the number of licensed asset management firms has continuously surpassed the growth of all other types of licensed corporations in Hong Kong in the past few years, including securities brokerages, which have traditionally been the biggest group of licensed corporations. Hedge fund sponsors continue to thrive in the city with the Hong Kong government supporting the industry. Recent government initiatives include tax exemptions to limit the risk of funds managed from Hong Kong being subject to Hong Kong profits taxes and the introduction of open-ended fund company vehicles.

Our firm has been active in advising and representing hedge funds and hedge fund management groups as well as family offices, institutions and other persons investing into hedge funds. We have a deep understanding of the industry as well as the full range of laws and regulations which govern it, including corporate laws, tax laws and securities laws and offer an integrated approach to addressing all these issues.

Experience

( swipe left or right for more )
  • Counsel to a US based hedge fund with over USD4 billion of assets under management in respect of the establishment of offices in Hong Kong

  • Counsel to a Hong Kong securities brokerage and asset management firm on the setting up of a fund, taking into account to major changes to regulatory requirements applicable to funds under the revised SFC Fund Manager Code of Conduct introduced in November 2018

  • Lead counsel to a USD1 billion hedge fund on its acquisition of a Hong Kong brokerage

  • Advising a Hong Kong based long-short and event driven asset management firm with over USD275 million of assets under management focused on Japan in connection with a major overhaul of the client’s internal control and compliance systems and advising on major changes to regulatory requirements in Hong Kong applicable to fund managers

  • Advising an NYSE listed asset management firm in connection with Hong Kong short selling reporting requirements

  • Advising Hong Kong asset managers in highlighting risks and recommendations in advance of SFC inspections

  • Advising a portfolio manager of a listed People’s Republic of China based financial services firm with a market capitalization of over USD16 billion in respect of managing liability exposure as a result of portfolio losses of as much as USD130 million in connection with a complex derivatives trading strategy

  • Advising a PRC based asset management firm with operations in Hong Kong and the mainland of China with almost USD9 billion of assets under management in respect of possible statutory and non-statutory regulatory breaches in connection with a field audit conducted by the regulator

  • Advising and representing a former trader of a hedge fund manager in connection with an SFC investigation in connection with possible offences of false trading, price rigging, and stock market manipulation

  • Counsel to an Asian based hedge fund with over USD100 million of assets under management in respect of the structuring of derivative trading activities to limit tax liabilities

  • Representing a private fund manager and its director in respect of an appeal to the Court of Final Appeal in respect of the proper interpretation of the provisions of Hong Kong securities laws governing offers of investments to professional investors

  • Counsel to a US based hedge fund with over USD4 billion of assets under management in respect of the establishment of offices in Hong Kong

  • Counsel to a Hong Kong securities brokerage and asset management firm on the setting up of a fund, taking into account to major changes to regulatory requirements applicable to funds under the revised SFC Fund Manager Code of Conduct introduced in November 2018

  • Lead counsel to a USD1 billion hedge fund on its acquisition of a Hong Kong brokerage

  • Advising a Hong Kong based long-short and event driven asset management firm with over USD275 million of assets under management focused on Japan in connection with a major overhaul of the client’s internal control and compliance systems and advising on major changes to regulatory requirements in Hong Kong applicable to fund managers

  • Advising an NYSE listed asset management firm in connection with Hong Kong short selling reporting requirements

  • Advising Hong Kong asset managers in highlighting risks and recommendations in advance of SFC inspections

  • Advising a portfolio manager of a listed People’s Republic of China based financial services firm with a market capitalization of over USD16 billion in respect of managing liability exposure as a result of portfolio losses of as much as USD130 million in connection with a complex derivatives trading strategy

  • Advising a PRC based asset management firm with operations in Hong Kong and the mainland of China with almost USD9 billion of assets under management in respect of possible statutory and non-statutory regulatory breaches in connection with a field audit conducted by the regulator

  • Advising and representing a former trader of a hedge fund manager in connection with an SFC investigation in connection with possible offences of false trading, price rigging, and stock market manipulation

  • Counsel to an Asian based hedge fund with over USD100 million of assets under management in respect of the structuring of derivative trading activities to limit tax liabilities

  • Representing a private fund manager and its director in respect of an appeal to the Court of Final Appeal in respect of the proper interpretation of the provisions of Hong Kong securities laws governing offers of investments to professional investors

Awards

( swipe left or right for more )
  • Corporate INTL Magazine

    Regulatory Law Firm of the Year in Hong Kong

    Financial Services Regulatory

  • Chambers & Partners

    Leading Practice

    Financial Services Regulatory

  • Chambers & Partners

    Leading Individual

    Financial Services Regulatory

  • Legal 500

    Leading Individual

    Financial Services Regulatory

  • Legal 500

    "Recommended Practice"

    Financial Services Regulatory

  • IFLR 1000

    Leading Practice

    Financial Services Regulatory

  • Asialaw Profiles

    Leading Practice

    Financial Services Regulatory

  • Asialaw Profiles

    Market-Leading Lawyer

    Financial Services Regulatory

  • Chambers & Partners

    Leading Lawyer

    Financial Services Regulatory

  • Asialaw Leading Lawyers

    Market-Leading Lawyer

    Financial Services Regulatory

  • Asialaw Profiles

    Outstanding Practice

    Financial Services Regulatory

  • IFLR 1000

    "Positively Ranked"

    Financial Services Regulatory

  • IFLR 1000

    Highly Regarded Lawyer

    Financial Services Regulatory

  • Chambers & Partners

    Well Regarded Lawyer

    Financial Services Regulatory

  • Chambers & Partners

    Leading Practice

    Investment Funds

  • Chambers & Partners

    Leading Individual

    Investment Funds

  • Legal 500

    Recommended Practice

    Investment Funds

  • Chambers & Partners

    Leading Lawyer

    Investment Funds

  • Asialaw Profiles

    Leading Practice

    Investment Funds

  • Asialaw Profiles

    Market-Leading Lawyer

    Investment Funds

  • Asialaw Leading Lawyers

    Market-Leading Lawyer

    Investment Funds

  • Asialaw Profiles

    Highly Recommended

    Investment Funds

  • IFLR 1000

    Leading Practice

    Hedge Funds

  • IFLR 1000

    "Positively Ranked"

    Hedge Funds

  • Who's Who Legal

    One of the World's Leading Practitioners

    Private Funds

  • Corporate INTL Magazine

    Regulatory Law Firm of the Year in Hong Kong

    Financial Services Regulatory

  • Chambers & Partners

    Leading Practice

    Financial Services Regulatory

  • Chambers & Partners

    Leading Individual

    Financial Services Regulatory

  • Legal 500

    Leading Individual

    Financial Services Regulatory

  • Legal 500

    "Recommended Practice"

    Financial Services Regulatory

  • IFLR 1000

    Leading Practice

    Financial Services Regulatory

  • Asialaw Profiles

    Leading Practice

    Financial Services Regulatory

  • Asialaw Profiles

    Market-Leading Lawyer

    Financial Services Regulatory

  • Chambers & Partners

    Leading Lawyer

    Financial Services Regulatory

  • Asialaw Leading Lawyers

    Market-Leading Lawyer

    Financial Services Regulatory

  • Asialaw Profiles

    Outstanding Practice

    Financial Services Regulatory

  • IFLR 1000

    "Positively Ranked"

    Financial Services Regulatory

  • IFLR 1000

    Highly Regarded Lawyer

    Financial Services Regulatory

  • Chambers & Partners

    Well Regarded Lawyer

    Financial Services Regulatory

  • Chambers & Partners

    Leading Practice

    Investment Funds

  • Chambers & Partners

    Leading Individual

    Investment Funds

  • Legal 500

    Recommended Practice

    Investment Funds

  • Chambers & Partners

    Leading Lawyer

    Investment Funds

  • Asialaw Profiles

    Leading Practice

    Investment Funds

  • Asialaw Profiles

    Market-Leading Lawyer

    Investment Funds

  • Asialaw Leading Lawyers

    Market-Leading Lawyer

    Investment Funds

  • Asialaw Profiles

    Highly Recommended

    Investment Funds

  • IFLR 1000

    Leading Practice

    Hedge Funds

  • IFLR 1000

    "Positively Ranked"

    Hedge Funds

  • Who's Who Legal

    One of the World's Leading Practitioners

    Private Funds

Insights

  • Reminder: New Tax Exemption for Private Funds Commences on April 1, 2019

    With the gazetting on March 1, 2019 of the new Inland Revenue (Profits Tax Exemption for Funds) (Amendment) Ordinance 2019 (“Amendment Ordinance”), from April 1, 2019, the tax position of investment funds in Hong Kong will be governed by a new tax exemption (“Private Funds Exemption”). Though the new exemption is broadly similar to the exemption (“Offshore Funds Exemption”) previously relied upon, there are significant differences, including:

  • The New Private Funds Exemption: an Update on Discussions with the Inland Revenue Department

    The Inland Revenue (Profits Tax Exemption Amendment) Bill represents a major step forward in allowing private funds, including hedge funds and private equity funds, managed from Hong Kong to obtain exemption from profits tax. Amongst other things, the Bill will provide bright line tax certainty for open-ended fund companies. At the same time, the Bill will allow funds to maintain their tax residency in Hong Kong, meaning that such funds will no longer be required to undertake board activities outside of Hong Kong and will no longer be required to maintain directors resident outside of Hong Kong to qualify for tax relief. Finally, the Bill will provide greater flexibility for tax relief in the context of private equity investments both in and out of Hong Kong. The Bill is on track to come into effect in April, 2019 and discussions with the IRD to date suggest that the IRD will be helpful in construing the legislation for the benefit of the asset management industry.

  • Open-Ended Fund Companies: IRD Confirms Availability of Offshore Funds Exemption

    Contrary to the belief of some tax practitioners, the Inland Revenue Department has confirmed our firm view that the offshore funds exemption is available to open-ended fund companies. There are no features inherent in open-ended fund companies which would make it impossible to relocate central management and control outside of Hong Kong. Given the lower costs, greater administrative convenience and lower legal risks associated with open-ended fund companies for asset managers based in Hong Kong, clarity as to the tax neutrality of open-ended fund companies re-affirms that open-ended fund companies are a compelling option for fund structures.