Letter of Engagement: Family Office Setup
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Hong Kong Family Office Setup Engagement
Letter of Engagement: Family Office Setup
This Engagement Letter formalizes our partnership to establish your Family Office. Under the 2026-27 Budget enhancements, we have integrated the updated New CIES residency rules.
Bestr Consulting Limited
LETTER OF ENGAGEMENT: FAMILY OFFICE ADVISORY SERVICES
Date: March 9, 2026
Client: [Principal Name / Family Name]
Ref: HKG-WANG-2026-FO-001
Matter: Establishment and Structuring of a Single Family Office (SFO) in Hong Kong
1. Scope of Services
Our company will provide professional advisory services to facilitate the structuring and operational setup of your Family Office. The primary phases include:
Entity Structuring: Optimal legal form selection for holding family assets.
Tax Compliance: Ensuring alignment with Section 16U tax concessions (FIHVs).
Regulatory Review: Determining SFO licensing exemptions under the Securities and Futures Ordinance (SFO).
Operational Setup: Assistance with corporate banking, employment contracts, and regulatory filings.
2. Deliverables
Throughout this engagement, you will receive:
A Detailed Feasibility Report on the proposed structure.
Execution of all incorporation documents and filings with the Companies Registry.
A Tax Opinion Letter regarding the $240 million HKD minimum asset under management (AUM) threshold.
3. Fee Structure
Service Phase | Fee Type | Amount (HKD) |
|---|---|---|
Phase 1: Structuring & Tax Advice | Fixed Fee | $75,000 |
Phase 2: Incorporation & KYC | Fixed Fee | $30,000 |
Phase 3: Ongoing Compliance | Annual Retainer | $50,000 |
Note: External disbursements (government filing fees, courier charges, and third-party translation) are not included in the professional fees and will be billed at cost.
4. Responsibilities
Our Responsibility: We will act with reasonable care and skill in accordance with Hong Kong professional standards and AML/CTF regulations.
Your Responsibility: You agree to provide full disclosure of the source of wealth and provide all necessary "Know Your Customer" (KYC) documentation for all Ultimate Beneficial Owners (UBOs).
5. Limitation of Liability
5.1 Financial Cap: To the maximum extent permitted by law, our aggregate liability for all claims arising out of this engagement shall be limited to three (3) times the total professional fees paid or HKD 500,000, whichever is lower.
5.2 Exclusion of Indirect Loss: We shall not be liable for any loss of profits, business opportunity, or consequential damages.
5.3 Statutory Exceptions: Nothing in this agreement excludes liability for fraud, death, or personal injury resulting from our negligence, as per Hong Kong law.
5.4 Time Limit: Any claim must be brought within 12 months of the date of the act or omission.
6. Third Party Rights
6.1 Exclusion of Ordinance: A person who is not a party to this Letter has no right under the Contracts (Rights of Third Parties) Ordinance (Cap. 623) to enforce any term of this agreement.
6.2 No Third Party Reliance: Our advice is provided solely for your benefit and may not be disclosed to or relied upon by any third party (including family members not named as a Client) without our prior written consent.
7. Conflicts of Interest
7.1 Joint Representation: We may represent multiple family members or generations ("Family Group"). Information provided by one member relevant to this engagement will not be treated as confidential from other members of the Group.
7.2 Emergence of Conflict: If a material conflict arises between members of the Family Group, we reserve the right to withdraw from representing all parties or, with written consent, continue representing only one party.
8. Governing Law
This agreement shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region.
Acceptance
By signing below, you confirm your agreement with the terms and conditions set out in this Letter of Engagement.
Signed for the Client: __________________________ Date: __________
(Authorized Signatory)
Signed for the Firm: ___________________________ Date: __________
(Director)
Professional Tip
When sending this to a high-net-worth client in Hong Kong, it is standard practice to include an Appendix listing the specific "Know Your Customer" (KYC) documents required to satisfy the Anti-Money Laundering (AML) Ordinance.
Addendum: New CIES Residency Integration (2026)
This New CIES & Residency Addendum is designed to be integrated into your Engagement. In 2026, the synergy between a Family Office and the New Capital Investment Entrant Scheme (CIES) is the most efficient way to secure both 0% tax status and HK Residency simultaneously.
For clients seeking Hong Kong residency alongside their Family Office setup, the following 2026 updated requirements apply:
1. The HK$30 Million Investment Roadmap
The total investment of HK$30,000,000 must be deployed as follows:
HK$27,000,000 (Permissible Assets): * Equities & Debt: Shares of HK-listed companies or debt securities.
Residential Real Estate: As of the latest 2025/26 updates, a single residential property with a transaction price of HK$30M+ is eligible, with HK$10M of that value counting toward this CIES limit.
NEW for 2026: Eligible private holding companies (FIHVs) can now be used for this investment regardless of how recently they were incorporated (the 6-month "seasoning" rule has been removed).
HK$3,000,000 (CIES Investment Portfolio): * Placed into the government-managed portfolio supporting HK’s Innovation & Technology (I&T) sector.
2. Streamlined Eligibility (2026 Enhancements)
Asset History: You only need to demonstrate the HK$30M net asset value for the 6 months preceding the application (reduced from 2 years).
Family Inclusion: The principal applicant may include a spouse/partner and unmarried dependent children under 18.
Dual Benefit: The same HK$30M used for your visa counts toward the HK$240M AUM threshold required for your Family Office tax exemption.
Setting Up a Family Office in Hong Kong: The 2026 Strategic Guide
The global wealth landscape is shifting, and Hong Kong has emerged as the premier destination for family offices in 2026. With the recent expansion of tax concessions and the New Capital Investment Entrant Scheme (CIES), the city offers an unparalleled ecosystem for wealth preservation and succession planning.
As a leading professional firm, Bestar Hong Kong provides the localized expertise needed to navigate these complex regulatory waters.
Why Hong Kong is the Dominant Hub in 2026
In 2026, Hong Kong has streamlined its "substance-first" compliance model, making it more attractive than ever compared to other regional hubs. Key advantages include:
0% Profits Tax: Qualifying transactions for Family-owned Investment Holding Vehicles (FIHVs) enjoy a 0% tax rate under Section 16U.
Expanded Asset Classes: As of the March 2026 Budget, tax-exempt assets now include digital assets, gold, and insurance-linked securities (ILS).
No Pre-Approval Required: Unlike other jurisdictions, Hong Kong operates on a self-assessment basis, significantly speeding up the setup time.
Path to Residency: The New CIES allows for residency through a HK$30 million investment, which can now be held via your Family Office structure.
Critical Requirements for 0% Tax Exemption
To qualify for the Inland Revenue (Amendment) Ordinance, your Family Office must meet specific "Substantial Activities" requirements. Bestar ensures your entity maintains compliance in these three areas:
AUM Threshold: The family assets under management must be at least HK$240 million (approx. US$30 million).
Local Staffing: You must employ at least two qualified full-time employees in Hong Kong to manage the assets.
Operating Expenditure: A minimum of HK$2 million in annual local operating expenses must be incurred.
How Bestar Hong Kong Accelerates Your Setup
Letter of Engagement: Family Office Setup
Setting up an office is simple; ensuring it is bankable and tax-compliant is where Bestar adds value. We move beyond simple registration to provide a "Human-in-the-Loop" advisory service.
1. Entity Structuring & Governance
We draft your Articles of Association to incorporate the 2026 "Safe Harbor" rules, ensuring that divorce or family succession events do not trigger a "tax clawback" from the Inland Revenue Department (IRD).
2. Expedited Banking & KYC
In 2026, opening a corporate bank account for a Family Office remains a high-hurdle task. Bestar leverages its deep relationships with Tier-1 banks to pre-vet your KYC (Know Your Customer) documentation, reducing the typical 8-week waiting period by half.
3. Substance Management
We don't just set up the firm; we manage the substance. Bestar provides:
CPA-Certified Audits: Mandatory for maintaining the tax-exempt status.
Payroll & HR Outsourcing: Ensuring your local employees meet the "qualified professional" criteria required by the SFC and IRD.
Irrevocable Tax Election: Managing the formal filing process to secure your 0% rate indefinitely.
The Bestar Difference: Integrated Global Expertise
With a presence in Singapore, Malaysia, and Hong Kong, Bestar Group provides a cross-border perspective that pure software platforms cannot match. Whether you are moving capital from the Greater Bay Area or the West, our team—led by seasoned professionals like CEO Roger Pay—ensures your family legacy is protected by decades of due diligence and accounting expertise.
Expert Insight: "In 2026, compliance is not a one-time event—it is an ongoing operational requirement. At Bestar, we ensure your Family Office isn't just a legal entity, but a robust financial fortress."
Take the First Step Toward Wealth Security
Is your family ready to leverage Hong Kong’s 2026 tax incentives?
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