Hungary residency bond to be sold by Cayman Islands-registered company
From Portfolio.hu
Every legal condition is given to start selling Hungarian residency bonds in China and Vietnam and the first to have the access to these debt instruments will be non EU citizens living in Hungary, local daily Magyar Nemzet reported on Thursday. The paper said the Government Debt Management Agency (ÁKK) has already contracted with an intermediary, Hungary State Special Debt Fund registered in the Cayman Islands.
The paper said the first countries where Hungary will start selling residency bonds will be China and Vietnam. It reminds that under a law amendment passed last year, a foreign national who have purchased Hungarian government bonds worth at least EUR 250,000 (approximately HUF 70 million) with a minimum 5-year maturity will be granted permanent residence permit in Hungary in a preferential procedure within six months instead of three years being applicable in non-preferential procedures.
The law also stipulates that residency permits may be applied for by non-residents once they acquired the required amount of the residency bond from a business in contractual relation with the ÁKK. The intermediary business will first need to be approved by Parliament’s Economic Committee, which in this case has happened on 4 March. The Committee helmed by Antal Rogán, the head of the ruling Fidesz party’s parliamentary group, has given the go-ahead to sign the contract with Cayman Islands-registered Hungary State Special Debt Fund, the paper said.
This company has extended its operations to Hungary on 8 April and government sources told the paper that the ÁKK has already inked a deal with it.
The terms would be the following: The ÁKK provides EUR 250,000 face value residency bonds to the intermediary at a discount price which then issues a fixed-term ownership note of a bigger denomination. The paper learned that the business may ask EUR 300,000 from non-residents requesting residency permits via purchasing the special bonds. Attila Boros, director of the business, could not be reached by the daily.
According to earlier reports, interest for the Hungarian residency bonds is huge in China, Russia and the Middle East. The paper said the opportunity raised interest also in Iran, Pakistan, Ukraine, South Korea, South Africa, the Philippines and New Zealand. Being granted residency permit does not mean that citizenship will ensue, but it could definitely serve as a stepping board within the EU.
But this is not offshore
László Varju, an independent MP, raised it in March that Hungary State Special Debt Fund is an offshore company. László Koszorús, Vice President of Parliament’s Economic Committee (member of the Fidesz party) denied this claim. He said the company would not transfer funds out of the country but bring millions of dollars here.
He emphasised that the main owner of the aforementioned company is Simon Wu, head of China’s Wanhua the annual turnover of which amounts to several billion dollars. Among others Wu owns Hungary-based BorsodChem too. The owners also include Lian Wang, former employee at Deutsche Bank and Morgan Stanely, Jonathan Chan and Hungarian-born Attila Boros, he added.
It is a common and proven formula in the business sphere that if a company sells Hungarian equity or government securities abroad then it needs to be registered abroad, Koszorús explained.
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