Oversight: SFC announces subsidy for OFCs

The Securities and Futures Commission (SFC) announced on 10 May the much-anticipated details of the grant scheme available for open-ended fund companies (OFCs) and real estate investment trusts (REITs) (Grant Scheme) which, like its Singapore equivalent for Variable Capital Companies (VCCs), subsidises the establishment of locally domiciled fund vehicles.  At the same time as the issuance of the Grant Scheme the SFC published a list of Frequently Asked Questions on the Grant Scheme (FAQs) which provide greater detail.

The Grant Scheme is available for application for three years, from 10 May 2021 to 9 May 2024, on a first-come-first-served basis. The government has allocated HK$270 million to the Grant Scheme, and the availability period might end sooner if the funding has been fully committed. The grant amount is up to 70% of the eligible expenses (as defined below) for each application, subject to, in the case of the OFCs, a cap of HK$1 million per OFC and a maximum of three OFCs per manager.  In the case of REITs (which must be listed on The Stock Exchange of Hong Kong Limited (SEHK) and authorised by the SFC), the Grant Scheme provides a cap of HK$8 million per REIT. As usual, each application for the Grant Scheme will be considered on a case-by-case basis, and the SFC may request from time to time additional supporting information deemed necessary for the purpose of determining the merits of the application.

This Oversight explores the key features of the Grant Scheme as applicable to OFCs and compares it with the VCC grant scheme in Singapore introduced last year (VCC Scheme). For more information about the OFC regime launched on 30 July 2018, please refer to the Oversight published in September 2020.