Background

Family offices managing the affairs of high-networth families have become increasingly important to the financial services industry in Hong Kong and most other major financial centres. We have seen a recent surge in activities and developments around this topic in Hong Kong and elsewhere in Asia. This is not only due to the high levels of assets under management controlled by family offices, but also the existing capabilities and services the relevant financial centres offer.

A family office is typically a private company that operates an investment or wealth management business for one or more families. A family office that supports multiple families is referred to as a multi-family office. These family offices can provides a wide range of services including investment advice, tax and estate planning, risk management, succession planning and support, as well as lifestyle management and assistance with philanthropic endeavours and other special interests.

At the outset, a family office may be established with an inital focus on certain "core" assets such as real estate. Over time, the profits generated from these core activities are often reinvested into new and more varied opportunities including through private equity and venture capital platforms. At the same time, family offices are becoming more active in using their networks to make direct investments or to establish their own alternative investment vehicles. Some family offices, however, remain passive investors and only allocate funds to outside asset managers.

This article briefly summarises certain recent commercial developments and governmental and legislative initiatives before discussing the current regulatory regime applicable to family offices operating in Hong Kong.

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