Mainland law firm Llinks is to open a Hong Kong office this month that it plans to use as a hub to broaden services regionwide to tap cross-border opportunities arising from financial reform in China.
As such Llinks Law Offices is seeking to compete with established Chinese peer Jun He, which has been advising on cross-border deals from Hong Kong since 2006.
Llinks is seeking to capitalise on momentum generated by the launch of the Shanghai-Hong Kong Stock Connect trading link last November, alongside a raft of liberalisations from the mainland.
The Chinese firm doubled the number of associates on its staff last year to 30 to meet demand for cross-border work, advising a range of international fund managers on legal issues surrounding Stock Connect, such as beneficial ownership, disclosure of interest, short-selling and taxation.
Llinks claims to dominate the onshore mutual fund legal advice market in China with a 60% share, an increase from 55% in 2013. It counts some of the main Sino-foreign joint ventures as clients, including ICBC Credit Suisse AM, GTJA Allianz and UBS SDIC Fund Management.
The law firm expects Hong Kong to become its key regional base for offering China legal advice to foreign fund managers.
“Hong Kong is one of the most important hubs in Asia," Llinks partner Sandra Lu told AsianInvestor. "Through the Hong Kong office we can cover a larger client base to include other centres such as Singapore and Taipei, or even Japan and Korea."
Much of the client work carried out in Hong Kong will be providing legal advice to foreign institutions wanting to access China through qualified foreign institutional investor (QFII) and renminbi-denominated QFII (RQFII) licence applications, as well as the alternative investment schemes QDLP in Shanghai and QDIE in Shenzhen.
Lu said that Llinks has advised seven out of 10 foreign banks applying for mutual fund distribution licences in China. Current clients include HSBC, Citi and JP Morgan.
With Beijing actively encouraging Chinese institutions to expand overseas, Llinks sees itself as well-positioned to help companies internationalise.
Lu points to increasing activity among Chinese mutual fund companies and private fund managers setting up Hong Kong subsidiaries to obtain type 4 and type 9 licences from the city's Securities and Futures Commission.
Llinks is well-placed to discuss changes in the cross-border funds industry. Lu recently talked to AsianInvestor about the China Securities Regulatory Commission (CSRC) and the Hong Kong Stock Exchange being close to resolving the question of beneficial ownership that has so far stopped foreign fund managers from using Stock Connect. Last month Lu also outlined the CSRC's plans to merge the QFII and RQFII schemes.
One hedge fund consultant who declined to be named also noted Llinks’s capabilities in other up-and-coming significant projects, such as the qualified domestic limited partnership (QDLP) scheme, which allows foreign hedge funds to register and raise renminbi funds in China.
Equally, Llinks was also cited by the consultant as having done significant work in the qualified domestic investment enterprise (QDIE) space, which allows onshore China fund firms to invest in overseas alternative investment products.
“They are doing a lot of work with our clients that is newly involved in the overall opening up of the China market, which is a big theme in Hong Kong,” the consultant said.