NCE Investment Manager Licensing and Product Admission List

Introduction

Since 1 March 2024, the Hong Kong Special Administrative Region Government has replaced the former Capital Investment Entrant Scheme (CIES) with the entirely new New Capital Investment Entrant Scheme (New CIES, hereinafter “NCE”). NCE has raised the asset threshold to HK$30 million and introduced the requirement of the “Capital Investment Entrant Scheme Portfolio”. In the operation of the scheme, the management and reporting of permitted investment assets are ongoing matters that applicants must continuously handle, and a licensed investment manager may assist applicants with the relevant investments and compliance matters. This article examines, across four dimensions — licensing conditions, the admission list of investment products, ongoing compliance obligations and practical operations — the comprehensive framework relating to NCE investment management.

NCE Scheme Core Structure: HK$30 Million Asset Threshold and Investment Allocation

The statutory basis of the NCE is the New Capital Investment Entrant Scheme Rules (hereinafter the “Rules”) made under the Immigration Ordinance (Cap. 115) Rules (full text PDF). Under the scheme, an applicant must have continuously held, throughout the entire six-month period preceding the application for net asset review, net assets with a net value of no less than HK$30 million in which they have absolute beneficial ownership. After approval to come to Hong Kong, the applicant must, within not more than 180 days after receiving principled approval, invest no less than HK$27 million in “permitted financial assets” and/or “real estate”, and invest the remaining HK$3 million into the Capital Investment Entrant Scheme Portfolio managed by Hong Kong Investment Corporation Limited.

The Rules set a cap on real estate investment. For real estate investments with a completion date of 17 September 2025 or after, the overall cap on total real estate investment counting towards the minimum investment threshold is HK$15 million, of which the cap on residential real estate investment is HK$10 million; the transaction price threshold for a single residential property has been lowered from HK$50 million to HK$30 million. In other words, the qualifying assets counted towards the scheme from an applicant’s purchase of real estate (including residential and non-residential) are capped at HK$15 million, of which the residential portion is capped at HK$10 million.

The HK$3 million portfolio has a unique mechanism: the funds are not managed by an investment manager of the applicant’s own choosing, but are allocated to a government-designated portfolio, the investment direction of which is determined by Hong Kong Investment Corporation Limited and allocated uniformly to all NCE participants. Whether an immigration application succeeds, and whether an extension of stay is granted, are both unrelated to the gains or losses of that portfolio.

Who May Act as an NCE Licensed Investment Manager — Type 9 Licence Threshold

In market practice, an investment manager assisting an applicant with managing permitted assets is generally a licensed corporation or registered institution licensed or registered under the Securities and Futures Ordinance (Cap. 571) to carry on Type 9 regulated activity (providing asset management). The public may check the licence type and status of any institution through the SFC Register of Licensees and Registered Institutions.

A licensed investment manager assumes multiple functions in actual operation:

• Opening and operating a designated investment account for the client: The investment manager must open a separate designated investment account at a Hong Kong authorised institution (which may be in the applicant’s sole name or jointly held) to ensure the assets are strictly segregated from the manager’s own assets.
• Executing buy and sell instructions on behalf of the client: The manager buys, sells and rebalances within the scope of the permitted assets list in accordance with the applicant’s instructions. All trading records must be retained.
• Maintaining permitted asset status: The manager must ensure that the client’s asset portfolio at any time consists only of permitted assets (and incidental items such as cash and interest). Purchasing non-permitted assets, or using assets as collateral for derivative transactions, directly breaches the scheme’s rules.
• Annual reporting: The investment manager must keep proper records of the permitted asset portfolio and assist the applicant in discharging the investment reporting responsibility under the relevant rules.

It is worth noting that the investment manager’s fee structure, the choice of investment platform and the arrangements for the underlying custodian bank are all set out in a commercial agreement between the applicant and the manager. The Immigration Department does not impose a mandatory fee cap, and only requires that the manager fully comply with regulatory requirements at the licensing and compliance level.

Complete List of Permitted Investment Product Admission

The complete list of permitted financial assets is set out in Schedule 1 to the Rules, and is not defined by the investment manager. The key categories can be summarised as follows:

1. Listed equities
Ordinary shares and preference shares listed on the Main Board or GEM of the Stock Exchange of Hong Kong (SEHK) and traded in Hong Kong dollars or RMB. Shares denominated in other currencies or listed only on overseas exchanges are not included.

2. Debt securities

• Bonds issued or unconditionally guaranteed by an authorised institution (licensed banks, restricted licence banks and deposit-taking companies);
• Bonds issued by a listed corporation;
• Debentures and notes issued by the Government of the Hong Kong Special Administrative Region, the Exchange Fund or a designated public body;
• Other debt instruments approved by the HKMA or the SFC.

3. Certificate of deposit
Issued by an authorised institution, with a remaining maturity of no less than 12 months at the time of purchase, and the total amount of this portion of investment must not exceed HK$3 million. This cap is independent of the overall HK$27 million requirement, meaning an applicant cannot fill the financial asset portion with a large volume of certificates of deposit.

4. Subordinated debt
Subordinated debt instruments issued by an authorised institution and complying with the HKMA’s Subordinated Debt Guidelines.

5. Qualifying collective investment schemes
Covering SFC-authorised unit trusts and mutual funds, SFC-authorised real estate investment trusts (REITs), SFC-authorised exchange-traded funds (ETFs), and investment-linked life assurance schemes issued by authorised insurers. In addition, SFC-authorised open-ended fund companies (OFCs) that invest purely in the aforementioned permitted assets also qualify as eligible investments. Exchange Fund notes, Mandatory Provident Fund schemes and occupational retirement schemes are not on the list.

6. Ownership interests in limited partnership funds
Limited partnership funds registered in Hong Kong whose overall assets are invested in permitted assets or non-residential real estate. Holding permitted assets indirectly through such funds allows risk to be diversified in one step.

7. Real estate
Non-residential real estate such as commercial, industrial, retail and hotel properties and parking spaces, as well as residential real estate, are recognised categories. For real estate investments with a completion date of 17 September 2025 or after, the overall investment cap counting towards the scheme’s minimum investment threshold is HK$15 million, of which the cap on residential real estate investment is HK$10 million and the transaction price threshold for a single residential property is HK$30 million; real estate investments purchased before that date are subject to the former caps. The relevant investment must be completed within not more than 180 days after receiving principled approval.

When executing trades, an investment manager may synthesise diverse portfolios based on the above list, but must guard against products with blurred boundaries, such as certain structured products and equity accumulation options. Even if the distributing bank claims they are “SFC-authorised”, if they are not specified in Schedule 1, they still cannot be included. The Immigration Department applies a strict “form over substance” test principle in this regard.

Ongoing Compliance Duties and Reporting Mechanism of the Licensed Investment Manager

The operation of the NCE is not a “buy once and done” affair. An applicant must continuously meet the investment management rules and general immigration requirements of the new scheme throughout the entire period; a licensed investment manager must also keep the relevant compliance requirements under ongoing review while assisting with the management of permitted assets.

Asset value fluctuations and cash handling: If the market value of permitted assets falls below HK$27 million due to price declines, the applicant has no legal obligation to make up the shortfall; likewise, capital appreciation may not be withdrawn when assets rise in value. Only cash dividends, interest income and distributions from permitted collective investment schemes may be freely used by the applicant. The investment manager must ensure that the relevant cash proceeds are transferred directly from the designated account to the applicant’s private banking account, so as to avoid confusion with the principal.

Prohibited conduct: Whether or not with the applicant’s consent, the investment manager may not use permitted assets for margin loans, short selling or as collateral for derivative positions. Even if a certain type of derivative transaction is made indirectly by a permitted collective investment scheme, the investment manager must still ensure that no naked derivative positions are held directly under the applicant’s name.

Practical Considerations: How to Select an NCE Investment Manager and Product Portfolio

For high-net-worth individuals intending to apply for the NCE, choosing a suitable licensed investment manager is often more than a matter of comparing fees. The following are three core considerations:

1. Management fees and platform costs
Type 9 licensed institutions offering NCE services in the market mainly comprise private banks, discretionary asset management teams at retail banks and independent asset management companies. Management fees are typically charged as a percentage of net asset value (AUM), with the annual fee range between 0.5% and 1.5%, and some institutions additionally levy a one-off account opening fee or portfolio reporting fee. Applicants should ask the investment manager for a comprehensive fee estimate covering custody fees, trading commissions and annual reporting fees, so as to avoid the net return being substantially eroded by hidden costs.

2. Breadth of investable products on the platform
The list of permitted collective investment schemes covered by different institutions’ open platforms varies. Some private banks may restrict clients to investing only in funds or investment-linked assurance products exclusively distributed by them. Applicants should confirm with the investment manager whether they may freely buy and sell third-party SFC-authorised funds and ETFs, and especially in cases where they intend to allocate to private limited partnership fund interests, should check in advance whether the manager’s operating system can handle the valuation and disclosure of non-standardised assets.

3. Experience in immigration compliance support
As the NCE has strict reporting timelines and the Director of Immigration reserves the right to require the applicant and the investment manager to submit written statements at any time, for clients encountering Hong Kong immigration law for the first time, whether they can obtain the investment manager’s support in document preparation, drafting of statutory declarations and communication with the Immigration Department often affects the smoothness of visa renewal. When selecting a manager, one may ask about the number of former Capital Investment Entrant Scheme (CIES) cases they have handled, and whether there is a dedicated person liaising with the Immigration Department’s approval team.

Portfolio strategy guidelines: Given that capital appreciation cannot be withdrawn, an NCE portfolio is best approached with an “income-oriented, capital-preservation” strategy. Allocating substantially to investment-grade bonds, high-dividend REITs and passive ETFs can generate usable cash income while reducing net value volatility. For applicants who need to maintain higher liquidity, a portion of permitted assets may be held in the form of certificates of deposit, but the HK$3 million cap and the 12-month maturity requirement must be strictly observed.

Conclusion

The New Capital Investment Entrant Scheme has an intricate investment management and compliance framework, and both applicants and their investment managers must abide by the relevant rules. Those intending to apply for the NCE should, before selecting an investment manager, carefully review its Type 9 licence status, fee structure and platform flexibility, and maintain close communication with the manager throughout the period of stay to ensure ongoing compliance.

This article is for information reference only and does not constitute legal advice. Any person should seek their own licensed legal or professional adviser’s opinion on NCE eligibility and the definition of permitted assets.