Planning to relocate with school – aged children to Hong Kong can introduce some new terms into your vocabulary. One of the most confusing is “Debentures”.
In the high-demand international school market that Hong Kong has become, there are a couple of ways schools are funding long term projects and development schemes. Two primary ways of doing this are through debentures and capital levies. Both are growing in popularity in Hong Kong, but what are they and how do these two programs differ?
Both Debentures and Capital Levies are interest-free loans from parents to the school. For entrance into some international schools, they are mandatory and for others, they provide a student’s application with a priority status.
Capital Levies are paid annually and Debentures are paid in a lump sum. Some Debentures are returned in full, however there are “Depreciating Debentures” which lose value over time.
Some companies purchase Corporate Debentures and provide them to give their relocating executives priority in the school application process. Most schools have capped the number of Corporate and Individual Debentures available so their numbers are controlled and may not be available for purchase. Sold out debentures may still be available on the secondary market, albeit for a higher price.
Overall, it is best to begin applying for schools in Hong Kong as early as possible in the relocation planning process.