A new fund vehicle for private equity in Hong Kong 26 August 2020 | Confidential
Speakers Daniel Tang Daniel Yong Junko Shiokawa Partner | Hong Kong Partner | Singapore Partner | Hong Kong +852 3711 1668 +65 6238 3910 +852 3711 1628 Daniel.Tang@withersworldwide.com Daniel.Yong@witherskhattarwong.com Junko.Shiokawa@withersworldwide.com Disclaimer The information contained in this presentation does not constitute legal advice. Users of this presentation should take appropriate legal advice based on their individual circumstances. Withers accepts no responsibility or liability for any loss which may result from reliance on any of the information, opinions or Material contained in or accessed through this presentation. While Withers uses commercially reasonable efforts to post information on this presentation that is correct, Withers does not warrant the accuracy or completeness of the material on this presentation. Withers may make changes to the material on this presentation at any time without notice. The material on this presentation may contain certain omissions, errors or may be out of date, and Withers makes no commitment to update such material. The material on this presentation is provided on an “as is” basis without any representation, warranty, term or condition of any kind (whether express or implied by law). To the maximum extent permitted by law, withers excludes all representations, warranties, conditions and terms (including, without limitation, and implied terms or conditions of satisfactory quality, fitness for purpose or reasonable care and skill) which but for this legal notice might have effect in relation to this presentation. Representatives in this presentation do not practise laws of the Cayman Islands. Withers works with a range of leading Cayman Islands qualified lawyers and law firms and has extensive experience working on cross border legal and tax matters involving Cayman Islands entities. The Cayman Islands is a British overseas territory and the laws are based largely on the laws of the United Kingdom. 2 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Limited Partnership Fund
Flexible framework ● General Partner ● no residency or registration requirement ● individual, local or foreign company/partnership ● a ppoint “authorized representative” if not a legal person ● Limited Partner(s) ● individual or legal entity ● statutory safe-harbour provisions 4 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Flexible framework ● Limited Partnership Agreement ● free to contract for operation of fund ● minimal statutory requirements ● e quivalent to a company’s articles of association ● v arying GP’s fiduciary duties ● Investment Manager ● individual or local/foreign company ● responsible for day-to-day investment management functions 5 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Simple Registration ● GP to apply via HK law firm or solicitor ● Registration form and supporting documents ● HK address ● No disclosure of LPA or LP information ● Registration certificate available in 4 working days ● Nominal registration fees 6 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Ongoing compliance ● Annual audit by independent auditor ● Annual return and filings ● change in the fund’s investment scope or principal place of business ● change of GP/IM, AML officer or their registered particulars ● AML officer ● authorized institution/licensed corporation ● accounting or legal professional 7 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Licensing ● GP/IM's fund raising activities ● private placement and other safe harbors ● IM ● type 9 regulated activity (asset management) for real estate or “securities”/futures contracts management ● incidental exemption for types 1 (dealing in securities), 2 (dealing in futures contracts), 4 (advising on securities) and/or 5 (advising on futures contracts) 8 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Minimal Tax Exposure ● No withholding tax for profits repatriation ● Increasing network of comprehensive DTAs ● 43 DTAs ● covering Mainland China, Japan, Belgium, Canada, France, India, Ireland, Italy, Korea, Luxemburg, Macao, Malaysia, UK Vietnam, etc. 9 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Minimal Tax Exposure ● Unified tax exemptions for funds ● effective from 1 April 2019 ● “Qualified Transactions” & “Qualified Investment Fund” ● investment in private companies exemption ● Carried interest concessions ● concession rate will be highly competitive ● effective as of 1 April 2020 ● validated by HKMA ● substantial operations and expenditure in HK ● focus on PE investment 10 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Hong Kong, Singapore and Cayman: ● Hong Kong: up and coming ● Singapore: 10 years of experience ● Cayman: leading choice for 20+ years 11 Withersworldwide | A new fund vehicle for private equity in Hong Kong
Hypothetical case Hong Kong / Singapore/ Cayman Other jurisdictions LP 1 LP 2 Limited Partnership Fund GP LP Interests LP 3 Performance fees & carried interest LP 4 Investment SPV/ Master Manager SPV SPV Fund LP 5 SPV Other Investee Investee Investee qualifying Companies Companies Companies transactions 12
Thank you for joining us. ● Daniel Tang Webinar | A new fund vehicle for private equity in Hong Kong | 26 August 2020 ● Partner | Hong Kong +852 3711 1668 Daniel.Tang@withersworldwide.com ● Daniel Yong Send in your questions ● Partner | Singapore in the Q&A section. +65 6238 3910 Daniel.Yong@witherskhattarwong.com ● Junko Shiokawa Global office locations ● Partner | Hong Kong +852 3711 1628 New York | New Haven | Greenwich | Los Angeles | Rancho Santa Fe | San Diego | San Francisco | British Virgin Islands Junko.Shiokawa@withersworldwide.com London | Cambridge | Geneva | Milan | Padua | Hong Kong | Singapore | Tokyo | Sydney
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