If an entrepreneur wants to establish an investment fund in Luxembourg or Hong Kong, he will be delighted to know that at the beginning of last year, the regulators of these jurisdictions shook hands and signed a memorandum for mutual recognition of funds.
What benefits does this event bring to funds and investors? Please read in our short overview.
Access to Asian counterparty
In order to gain access to the friendly jurisdiction, a Luxembourg fund must be a UCITS fund which is by definition open-ended. This is mandatory because UCITS is globally requiring a highly liquid investment. It is necessary to register a company in Luxembourg and obtain an asset management license. Otherwise, access will be denied. So, dip your toe in the water first!
Both the Luxembourg Fund and the management company must have evidence of net accounting for the past three years. It is mandatory to have a representative in Asia who will deal with trade and investors’ requests.
It is worth noting that documentation and notices addressed to investors should be published and distributed in two languages - English and Chinese - with respect to both jurisdictions.
Access to European counterparty
The Hong Kong funds striving to access Luxembourg must be SFC licensed and be managed by a company with an asset management license. Otherwise, access will be denied.
The appointment of an agent to operate in Luxembourg is the same for both jurisdictions.
With respect to its counterparty, all documents offered by a Hong Kong institution (notices, financial statements, adverts etc) to Luxembourg investors must be provided in four languages - English, French, German or Luxembourgish.
Benefits
New Luxembourg funds seeking access to Asia can take advantage of the simplified authorization procedure. Simultaneously, its operations should be considered compliant with the regulations of Hong Kong if they are consistent with those of its European counterparty. They must both comply with the same minimum set of rules.
Exceptions
Please keep in mind that the agreement between the countries in question does not apply to self-governing UCITS. A self-governing investment fund doesn’t have a management company. It complies with applicable regulation in relation to capital requirements and organizational structure.
A management company authorised in one EU member state can passport its services into another member state. Self-governing investment institutions cannot manage other UCITS.
Registration of an investment fund in Hong Kong or Luxembourg
IQ Decision UK legal professionals are ready to provide legal assistance to the client at all stages of the fund set up in Europe or Asia, as well as assistance in company registration in Luxembourg or the opening of an investment fund in Hong Kong. Our experts have deep knowledge and experience, we comprehensively study the problems of customers, offering an unbiased opinion. You can obtain detailed information exactly at your request by filling out the application form on our website.
