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Hong Kong’s Legislative Council (LegCo) 2018 – 2019 session will commence on 10 October 2018 with an address by the Chief Executive.
A legislative bill in Hong Kong is required to be given three readings for its passage by LegCo before becoming an Ordinance. Here we look at some current and planned bills that may be of interest to the asset management industry.
Current bills
Information about the bills that are currently planned for LegCo’s consideration in the next session are available here: http://www.legco.gov.hk/general/english/bills/bill1819.htm. Of those listed, fund managers may be interested in the Financial Reporting Council (Amendment) Bill 2018 which is designed to enhance the independence of the regulatory regime for auditors of listed entities, and to provide for registration, recognition, inspection, investigation and disciplinary matters regarding those auditors.
Future bills
Tax exemption for privately offered funds: In order to address the EU’s concerns over ring-fencing features in Hong Kong’s offshore funds tax exemption regime, the government is proposing amendments to provide tax exemptions for privately offered funds regardless of their structure and the location of their central management and control. The Financial Services and the Treasury Bureau engaged in a one-month industry consultation which ended on 2 May 2018. We understand the government plans to introduce an amendment bill into LegCo by the end of 2018.
OTC derivatives regime: On 24 July 2017, the Securities and Futures Commission (SFC) issued consultation conclusions on proposed changes to the financial resources rules for licensed corporations engaged in over-the-counter derivatives activity, and issued a further consultation on additional proposals. The consultation period ended on 23 August 2017 and the SFC’s consultation conclusions are pending. The government plans to introduce relevant legislative proposals into LegCo in the fourth quarter of 2018.
ORSO amendments: The government is proposing amendments to forestall the use of occupational retirement schemes for non-retirement purposes. The government plans to introduce a bill to amend the Occupational Retirement Schemes Ordinance in January 2019.
PE LP structure: Back in December 2015, the Financial Services Development Council issued a paper on limited partnerships for private equity funds. In the budget address of 28 February 2018, the Financial Secretary announced the government would examine the feasibility of introducing a limited partnership regime for private equity funds with related tax arrangements. It will consult LegCo in due course.
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