In September 2003, the Immigration Department (“Immigration Department”) of the Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong”) introduced the Capital Investment Entrant Scheme (“Scheme”). Prior to the introduction of the Scheme, individuals seeking residency in return for investment in Hong Kong had to rely upon a subset of the Employment Visa known as the Employment Visa Based upon Investment in Hong Kong (the “Business Investment Visa”).
The Capital Investment Entrant Scheme
The Capital Investment Entrant Scheme was officially suspended on 15 January 2015. This page will be updated once more is known about next steps or alternative options.
- Business investment visa
Business Investment Visas are routinely granted to qualifying applicants and often are processed in approximately two to three months.
The approval test – substantial benefit to the economy of Hong Kong as a whole
In its barest sense, the Business Investment Visa approval test is often passed by virtue of being able to demonstrate to the Immigration Department that a suitable business vehicle will be created, local jobs will be created through implementation of the investment activities, that local vendors and suppliers will be utilized in the planned commercial activities, that the overall industry within which the investment activities are undertaken will be advantaged in some discernible way and that in the medium to long term the investment activities will result in the presence of a sound business entity.
This can take the form of a Limited Liability Company formed in Hong Kong or registration of a foreign corporation under the Hong Kong Companies Ordinance. Sole proprietorships and partnerships are not usually acceptable.
Documentation and required information
- An application form ID(E) 936, with relevant parts duly completed and signed
- A copy of the sponsor’s Permanent Hong Kong identity card and/or travel document (if he is sponsoring the applicant as an individual)
- A copy of the sponsor’s Business Registration Certificate (if he is sponsoring the applicant as a company)
- A copy of Business Registration Certificate of the company which the applicant is going to invest or has invested. Copy of Form 1A (for sole proprietorship) or Form 1B plus Form X(i) and X(ii) (for a limited company) or Form 1C (for partnership) from the Company Registry
- Details, with proof, of the applicant’s proposed business activities in Hong Kong
- Details, with proof, of the applicant’s proposed investment in Hong Kong , his paid-up capital and source of funds
- Details of the personal particulars of all other Directors of the company and their whereabouts
- Reasons why the applicant’s presence in Hong Kong is essential
- The number of local and expatriate employees
- Details, with proof, of the applicant’s academic qualifications and experience relevant to the post, e.g. copies of diplomas, certificates and testimonials
- Details, with proof, of the applicant’s plan to co-operate actively with Hong Kong commerce and industry
- Evidence of the applicant’s past residence in Hong Kong, if any”
This list is not exhaustive and other documents and information are often required in individual cases. The Business Investment Visa is not available to Chinese residents of the Mainland and nationals from Afghanistan, Albania, Cambodia, Cuba, Laos, North Korea and Vietnam.
The Business Investment Visa has been in place for many years as one of several types of visas available to people seeking to reside in Hong Kong. A reading of the requirements clearly indicates that the objective of the Business Investment Visa is to encourage global investors to engage in business activities within and from Hong Kong. The Business Investment Visa is relatively inexpensive and easy to obtain.
Conditions of stay, application and fees
Upon issuance of the Business Investment Visa, the applicant and his dependants (spouse and unmarried dependant children under 18) will usually be granted a one year stay. The period of stay is usually extended thereafter for two years on the basis that the commercial endeavours justifying the extension continue to satisfy the approvability criteria of the business being of substantial benefit to the economy of Hong Kong as a whole. Others conditions which apply include, but are limited to, not committing any criminal offences, remaining engaged in the business and earning enough income as not to become an economic burden to Hong Kong.
The applicant must complete an application form ID(E) 936 and the prescribed fee is HKD 135.
Success of the business investment visa
The Business Investment Visa has served its purpose well for Hong Kong, even during 2003 when Hong Kong suffered dramatically due to SARS. The Immigration Department does not publish information that distinguishes between “employment” and “investment” visas, but the Director of the Immigration Department advised in 2002 that there are approximately 300 Business Investment Visas issued annually in Hong Kong and that number has remained steady for several years.
Scheme vs Business Investment Visa
Although there are quite a number of differences between the Scheme and the Investment Visa, the three most significant are the following:
- The Scheme does not require details of the applicant’s proposed business activities in Hong Kong
- The Scheme does not require details of the applicant’s academic qualifications
- The Investment Visa does not require an ongoing investment of HKD 6.5 million (approximately USD 834,000) in permissible investment assets
When one considers these differences and the relatively easy criteria which give rise to a Business Investment Visa approval it is hard to imagine why anyone would choose the Scheme over the Business Investment Visa unless, as previously stated, investors wish to merely “park” in or otherwise desire a “retirement” to Hong Kong.
Proposed business activities and academic qualifications
The policy underpinning the Scheme is designed to attract to, and maintain foreign capital in, Hong Kong . Economic commentators here have observed, somewhat cynically, that the last thing Hong Kong actually needs is more money invested here as many banks have only loaned a relatively small percentage of their available capital.
The Scheme has been further criticized as it basically caters to an investor regardless of whether or not he/she possesses any business acumen or education. The visa is granted without the investor having to actively participate in the economy or society. It is not uncommon to hear members of the public in Hong Kong expressing their concern that Hong Kong will be seen as so desperate for investment that it is now accepting residents who are likely to be unproductive and uneducated, yet wealthy.
It also is generally believed by many in the Hong Kong that the Scheme was largely designed for the wives or significant others of wealthy Mainland entrepreneurs. These Mainland entrepreneurs view the Scheme as a good investment ( Hong Kong is a prime “overseas” investment destination of such people) and relatively easy way to provide something of a “gift” to their wives or significant others. The statistics somewhat support this belief as more than half of the applications received, approved in principle and formally approved have been for “Chinese nationals” and “Taiwan residents”.
The Scheme requires the applicant to make an investment of HKD 6.5 million (approximately USD 834,000) in defined Hong Kong assets. This is a fairly significant investment by any measure.
The Investment Visa basically requires the applicant to form and capitalize a Hong Kong private limited company, which involves an investment of approximately HKD 15,000 (approximately USD 1,900) or register a branch of foreign corporation at an approximate cost of HKD 12,000 (approximately USD 1,500). Ongoing costs, including government fees, audits and company secretary, would probably not exceed HKD 20,000 per annum (USD 2,600). This is, by any measure, a fairly modest sum and is obviously far below that required by the Scheme.
Although it is true that the applicant for the Investment Visa must demonstrate some proposed business activities and a certain level of education, these requirements are not too burdensome.
Simply stated, unless the applicant intends to be merely a passive investor in Hong Kong, the Business Investment Visa is an absolute bargain compared to the Scheme.