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                    Applying to the SFC for a Type 9 (Asset Management) Licence in Hong Kong

                    The following is general information in connection with an application by a company to carry out Type 9 (asset management) regulated activity in Hong Kong. This information however is for general reference only.

                    The Licensing Process

                    The licensing application process would commence following the submission of a letter application together with completed prescribed forms and supporting documents as well as a prescribed fee. The Securities and Futures Commission (“SFC”) would examine, inter alia, the business plan, compliance functions, financial status as well as other aspects of the licensed corporation and its proposed regulated activity, and it would need to be satisfied that the substantial shareholders and responsible officers of the licensed corporation (which must be incorporated in Hong Kong) are fit and proper persons. The SFC would send a letter to the applicant formally accepting the application following a preliminary review of materials received; quite often however, it may require submission of additional information and/or clarification of certain key issues identified prior to formally accepting the application. The SFC performance pledge for processing a licensing application for corporations is 15 weeks from formal acceptance. Depending on the completeness of the information provided and whether the SFC has particular concerns regarding the application, the licensing process would take approximately 4-6 months, but it may be longer depending on a number of factors such as the complexity of the issues which may be raised and the number of applications the SFC is processing at any particular time.

                    For setting up the corporation from scratch, some major preparation items are listed below:

                    • establishment of a Hong Kong private limited liability company (“HK Co”)

                    • opening of a bank account

                    • sourcing suitable responsible officers (at least 2 are required for each regulated activity) and assessing their fitness and properness to supervise the proposed activities

                    • preparation of a compliance manual, a business plan, a financial projection plan and other policies and documents

                    • securing premises for the HK Co

                    • compiling all relevant materials for the licensing application (including forms and supplements regarding proposed responsible officers and substantial shareholders)

                    • submitting the licensing application to the SFC (including the application for approval of the proposed responsible officers)

                    Requirement to establish a Hong Kong company

                    For a corporation to be licensed to carry out regulated activities in Hong Kong, section 116 (2) of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“SFO”) requires that it has to be either a company incorporated in Hong Kong or an overseas company registered under Part 16 of the Companies Ordinance (Cap. 622 of the Laws of Hong Kong) (“CO“) having a principal place of business in Hong Kong (i.e. branch company). While it may be possible to set up an overseas incorporated parent and subsequently register a branch in Hong Kong, the SFC prefers the use of Hong Kong incorporated companies and has expressed a strong preference against the use of a branch. This is because, inter alia:

                    • the SFC feels more comfortable from an enforcement perspective with the use of a Hong Kong incorporated entity;

                    • from the perspective of record keeping, it is impracticable for the records of an overseas parent company to be kept in Hong Kong;

                    • from a financial reporting perspective, there are higher compliance costs associated with periodic reporting of consolidated financial statements that satisfy Hong Kong requirements;

                    • the SFC has a preference for statutorily required capital of the licensed corporation to be kept in Hong Kong;

                    • there is almost no precedence in Hong Kong for the use of a branch as a licensed corporation; and

                    • from a corporate risk perspective, it may be beneficial to use a subsidiary rather than a branch as a subsidiary is a separate legal entity from the parent – i.e. the subsidiary will be completely separate from its parent so that the parent will not be liable for the debts of the subsidiary.

                    For information on establishing a Hong Kong company, please see the section headed “Establishing a Hong Kong private company” below.

                    Licensing in Hong Kong

                    The licensed corporation

                    For a corporation to be licensed to carry out regulated activities in Hong Kong, section 116 (2) of the SFO requires that it has to be either a company incorporated in Hong Kong or an overseas company registered under Part 16 of the CO having a principal place of business in Hong Kong (i.e. branch company). As explained above, the SFC prefers the use of a subsidiary rather than a branch.

                    Type 9 regulated activity

                    Type 9 (asset management) regulated activity is defined in Schedule 5 to the SFO as (i) real estate investment scheme management; or (ii) securities or futures contracts management.

                    Real estate investment scheme management, in relation to a person, means providing a service of operating a collective investment scheme for another person by the person, where (a) the property that is being managed under the scheme consists primarily of immovable property; and (b) the scheme is authorised under section 104 of the SFO.

                    Securities or futures contracts management, in relation to a person, means providing a service of managing a portfolio of securities or futures contracts for another person by the person, otherwise than by:

                    1. a corporation which provides such service solely to any of its wholly owned subsidiaries, its holding company which holds all its issued shares, or other wholly owned subsidiaries of that holding company;

                    2. a person who is licensed for Type 1 or Type 2 regulated activity who provides such service wholly incidental to the carrying on of that regulated activity;

                    3. an authorised financial institution which is registered for Type 1 or Type 2 regulated activity which provides such service wholly incidental to the carrying on of that regulated activity;

                    4. an individual:

                      1. whose name is entered in the register maintained by the Monetary Authority under section 20 of the Banking Ordinance (Cap. 155 of the Laws of Hong Kong) as engaged in respect of Type 1 or Type 2 (as the case may be) regulated activity by an authorised financial institution registered for that regulated activity; and

                      2. who provides such service wholly incidental to the carrying on of that regulated activity;

                    5. a solicitor who provides such service wholly incidental to his practice as such in a Hong Kong firm or foreign firm within the meaning of the Legal Practitioners Ordinance (Cap. 159 of the Laws of Hong Kong);

                    6. counsel who provides such service wholly incidental to his practice as such;

                    7. a certified public accountant who provides such service wholly incidental to his practice as such in a practice unit within the meaning of the Professional Accountants Ordinance (Cap. 50 of the Laws of Hong Kong); or

                    8. a trust company registered under Part 8 of the Trustee Ordinance (Cap. 29 of the Laws of Hong Kong) which provides such service wholly incidental to the discharge of its duty as such.

                    There are certain exemptions under the SFO to the licensing requirements in general, including, inter alia:

                    • if you are licensed for Type 1 regulated activity (dealing in securities) and you wish to carry out Type 4 (advising on securities), Type 6 (advising on corporate finance) and/or Type 9 (asset management) regulated activity, you do not need to be licensed for Types 4, 6 and 9 provided that these activities are carried out wholly incidental to your securities dealing business. This exemption normally applies to stockbrokers who provide investment advice or manage discretionary accounts for their securities clients.

                    • if you are licensed for Type 9 (asset management) regulated activity, and you wish to carry out Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities and/or Type 5 (advising on futures contracts) regulated activity, you do not need to be licensed for these regulated activities provided that they are carried on solely for the purpose of your asset management business (for Types 4 and 5, such asset management business must involve the management of a portfolio under a collective investment scheme). This exemption normally applies to fund managers who place trade orders to dealers or provide investment advice/ research reports in the course of managing their clients’ portfolios of securities and/or futures contracts.

                    • you are not required to be licensed for Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) or Type 9 (asset management) regulated activity if you provide the relevant advice or services solely to your wholly owned subsidiaries, your holding company which holds all your issued shares, or other wholly owned subsidiaries of that holding company (“group companies”).

                      • In relation to asset management activities

                        This exemption is only applicable to a corporation providing asset management service to its group company (on a wholly owned basis) in respect of that group company’s assets. It should not be read as applying to the management of assets belonging to the group company’s clients. Managing assets belonging to third parties would constitute “asset management” and attract a licensing requirement.

                      • In relation to advisory activities

                        This exemption should not be applied to a corporation advising its group company in respect of that group company’s client assets. However, where the investment advice and/or related research reports are provided to the group company for its own consumption, notwithstanding that the group company may rely, in whole or in part, on such advice/research reports to service its clients, the above exclusion will still apply if the advice/research reports are issued to the clients by the group company in its own name and that group company has assessed the corporation’s input before issuing such advice/research reports.

                    • if you are a trust company, you are not required to be licensed for Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) or Type 9 (asset management) regulated activity if you provide such investment advice or services wholly incidental to your discharge of duty as a trustee.

                    • you are not required to be licensed for securities or futures dealing activity (Type 1 or Type 2 regulated activity) if you act as principal and deal with professional investors only.

                    “Professional investors” is specifically defined in Part 1 of Schedule 1 to the SFO.

                    Capital requirements

                    The SFC requires licensed corporations to maintain a certain level of paid-up share capital and liquid capital. The capital amount that is required will depend on the type of regulated activities which will be carried on by the licensed corporation.

                    Below are the minimum capital requirements for Type 9 regulated activity as required under the SFO.

                    Regulated Activity

                    Minimum paid-up share capital

                    Minimum liquid capital

                    Type 9 –

                       

                    a.

                    in the case where in relation to Type 9 regulated activity, the corporation is subject to the licensing condition that it shall not hold client assets

                    Not applicable

                    HK$100,000

                    b.

                    in any other case

                    HK$5,000,000

                    HK$3,000,000

                    Under the Securities and Futures (Financial Resources) Rules (“FRR”) (Cap. 571N of the Laws of Hong Kong), licensed corporations are expected to maintain its capital requirements at all times that they are licensed and this must be monitored closely. The submission to the SFC would normally include confirmation of compliance of the FRR in connection with the amount of paid-up capital and liquid capital, attaching a copy of the bank statement.

                    Licensed persons

                    Responsible officer (“RO”)

                    A licensed corporation is required to appoint two ROs who have been approved by the SFC as ROs in relation to each of its regulated activities (however, the same individual may be appointed to be a responsible officer for more than one regulated activity).

                    At least one of the ROs must be an executive director (defined as a director who actively participates in, or is responsible for directly supervising, the business of a regulated activity for which a corporation is licensed). In addition, every executive director of the licensed corporation must be approved by the SFC as an RO in relation to the regulated activity in which he participates or supervises.

                    At the same time, at least one RO has to be available at all times to supervise the business of the regulated activity and must reside in Hong Kong. It is not strictly necessary for another RO to reside in Hong Kong provided he is able to satisfactorily discharge his responsibility to supervise the business. Relevant factors will include the frequency of the ROs visits to attend to regulated activities in Hong Kong and the internal control systems.

                    The SFC generally expects that Managers-In-Charge of the Overall Management Oversight function and the Key Business Line function of the licensed corporation should seek the SFC’s approval as responsible officers in respect of the regulated activities they oversee. For more information on Managers-In-Charge of Core Functions, please see the “Senior management” subsection below.

                    Licensed representative

                    An individual who carries on one or more regulated activities on behalf of a licensed corporation is required to apply for approval as a “licensed representative” accredited to that corporation. A licensed representative may be accredited to more than one licensed corporation. Insofar as the licensed corporation has two responsible officers, it is not required to have further licensed representatives. The current practice is that the SFC will process the applications of all proposed licensed representatives after the licensing application of the corporation is approved.

                    Competence and examination requirements of a licensed representative and RO

                    Charltons has prepared a summary of the competence and examination requirements of a licensed representative and RO as set out by the SFC.

                    Generally, proposed ROs must possess the appropriate ability, skills, knowledge and experience to properly manage and supervise the corporation’s proposed regulated activities and fulfil four basic elements as follows:

                     

                    Option 1

                    Option 2

                    Option 3

                    Academic /industry qualifications

                    • degree in the designated fields (Accounting, Business Administration, Economics, Finance or Law); or
                    • other degree (with passes in at least two courses in the designated fields; or
                    • internationally recognised professional qualifications in Law, Accounting or Finance ( CFA, CIIA? or CFP); or
                    • recognized industry qualification

                    Passes in Chinese or English and Mathematics in Hong Kong Diploma of Secondary Education (HKDSE) / Hong Kong Certificate of Education Examination (HKCEE) or equivalent

                    N/A

                    Industry experience

                    At least 3 years relevant experience over past 6 years immediately prior to application

                    At least 5 years relevant experience over past 8 years immediately prior to application

                    At least 8 years relevant experience over past 11 years immediately prior to application

                    Management experience

                    Minimum of 2 years proven management skill and experience

                    Minimum of 2 years proven management skill and experience

                    Minimum of 2 years proven management skill and experience

                    Local regulatory framework paper

                    Passed the relevant recognised local regulatory framework paper(s)

                    Passed the relevant recognised local regulatory framework paper(s)

                    Passed the relevant recognised local regulatory framework paper(s)

                    Source: SFC Guidelines on Competence ( and the updated Appendix C )

                    Assessment of proposed ROs’ competence

                    To evaluate the competence of proposed ROs, we would require a review of the CVs of the proposed candidates (including detailed description of their academic and industry qualifications and experiences) as well as their licensing records and details (including any licensing qualifications received from overseas institutions).

                    Each RO is required to possess the relevant industry experience related to the role and functions that the ROs will be carrying out in connection with the relevant regulated activities to which the application relates and all such experiences must be explained in detail in the licensing application. For such purpose, the SFC will consider industry qualifications and experiences, both gained in Hong Kong or elsewhere, that is closely related to the functions to be performed. Normally, the SFC requires an RO to have 3 years relevant industry experience over the 6 years immediately prior to the date of application (or 5 years over past 8 years, or 8 years over past 11 years) as well as a minimum of 2 years of proven management skill and experience.

                    Subject to exemptions, all ROs would be required to take local regulatory framework papers.

                    Where the proposed licensed corporation, RO or licensed representatives have previous licensing records, we would be grateful if these could be provided to us – including details of the relevant licensing examination papers (e.g. HKSI LE papers) that have been taken by individuals e.g. when they were passed and any licensing certificates and dates granted etc. This will also help us assess whether any further papers will need to be taken or whether any exemptions can be applied for (although ideally, the relevant persons sit all outstanding papers since any application for exemptions will usually require the provision by the licensed corporation as well as the ROs of certain undertakings as well as the imposition of conditions on the granted licences). Please see the possible exemptions from the local regulatory examination requirements.

                    Senior management

                    The senior management of a licensed corporation includes:

                    • directors;
                    • responsible officers (“ROs”); and
                    • Managers-In-Charge of Core Functions (“MICs”).

                    These three roles are not mutually exclusive. For instance, an individual can simultaneously be a director, responsible officer and MIC of a licensed corporation. An MIC can be in charge of more than one core function. In relation to a licensed corporation, the core functions consist of the following eight functions:

                    • Overall Management Oversight;
                    • Key Business Line;
                    • Operational Control and Review;
                    • Risk Management;
                    • Finance and Accounting;
                    • Information Technology;
                    • Compliance;
                    • Anti-Money Laundering and Counter-Terrorist Financing.

                    A corporation applying for a licence must provide information on its MICs and its organisational chart. The management structure of a licensed corporation (including the appointment of MICs) should be approved by the board of directors. The board of directors should ensure that each MIC has acknowledged his/her appointment as MIC and the particular core function for which he/she is principally responsible. Any MIC of the Overall Management Oversight function or the Key Business Line function must be approved as a responsible officer.

                    After being licensed, the licensed corporation must notify the SFC of any changes in its appointment of MICs or any changes in certain particulars of its MICs within seven business days of the changes. In some situations, an updated organisational chart may also be required for submission to the SFC together with the notification of that change.

                    For details on MICs and the relevant requirements, please see the SFC’s Circular to licensed corporations regarding measures for augmenting the accountability of senior management.

                    Fitness and properness of proposed licensed corporation and proposed ROs

                    Further to competence, the SFC requires all licensed persons to be fit and proper and will assess, inter alia, in respect of any applicant:

                    1. financial status or solvency;
                    2. educational or other qualifications or experience having regard to the nature of the functions to be performed;
                    3. ability to carry on the regulated activity competently, honestly and fairly; and
                    4. reputation, character, reliability and financial integrity.

                    Please refer to the Fit and Proper Guidelines and Guidelines on Competence (and the updated Appendix C) for further information in connection with qualifications of ROs.

                    Competence of the licensed corporation

                    An applicant for a licence to carry out regulated activity has to demonstrate to the SFC that it has proper business structure, good internal control systems and qualified personnel to ensure that proper management of risks that it will encounter in carrying on its proposed business as detailed in its business plan. In this regard, detailed information should be included in the business plan and compliance manual for submission.

                    Further, the SFC has set some very specific requirements to ensure proper corporate governance and compliance, for example:

                    1. under the Code of Conduct for Persons Licensed by or Registered with the SFC (“Code of Conduct“), it is stated that:

                      • a licensed or registered person should comply with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of clients and the integrity of the market (General Principle 7); and

                      • a licensed or registered person should comply with, and implement and maintain measures appropriate to ensuring compliance with the law, rules, regulations and codes administered or issued by the SFC, the rules of any exchange or clearing house of which it is a member or participant, and the requirements of any regulatory authority which apply to the licensed or registered person (Section 12.1 Compliance: in general).

                    2. under the publication of the “Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission”, it is stated that:

                      • policies and procedures shall be established and maintained to ensure the firm’s compliance with all applicable legal and regulatory requirements as well as with the firm’s own internal policies and procedures (Section V. Compliance)

                    3. there are control guidelines which state that (i) the management should establish and maintain an appropriate and effective compliance function within the firm, which, subject to constraint of size, is independent of all operational and business functions, and which reports directly to management; (ii) the management should ensure the staff performing the compliance function possess the necessary skills, qualifications and experience to effectively execute their duties; (iii) the staff performing the compliance function, in conjunction with the management, should establish, maintain and enforce effective compliance procedures; (iv) the staff performing the compliance function should promptly report to management upon the occurrence of material non-compliance by the firm etc..

                    Substantial shareholders, officers and other related persons to be fit and proper

                    The substantial shareholders, officers and any other person who is or is to be employed by, or associated with, the corporation for the purposes of the regulated activity for which the application is made should be fit and proper (section 129 of the SFO).

                    A “substantial shareholder” of the corporation is a person who, either alone or with any associates (i) has an interest in more than 10% in the total number of issued shares of the corporation or exercise or control the exercise of more than 10% voting power at the corporation’s general meeting; or (ii) holds shares in any other corporation which entitles him, either alone or with any associates, to exercise or control the exercise of 35% or more of its voting power at general meetings of the other corporation; or of a further corporation, which is itself entitled, or with any associates, to exercise or control the exercise of more than 10% of the voting power of the corporation.

                    “Officer”, in relation to a corporation, means a member of the senior management (including directors, responsible officers and MICs), manager or secretary of, or any other person involved in the management of, the corporation.

                    Business structure

                    As part of the licensing application, the SFC would require information on the organisation and corporate structure of the applicant.

                    Office premises

                    Licensed corporations are required to have suitable office premises to conduct their regulated activities. In assessing whether office premises are appropriate, the SFC will mainly consider the following:

                    • the security of the premises and whether there is a proper segregated office area;

                    • whether essential office equipment and telecommunication systems are situated in an area accessible only by the firm’s personnel;

                    • whether the firm has taken sufficient actions/measures to avoid confusion to its clients due to the co-existence of other firms in the same premises;

                    • whether confidential or non-public information and client privacy will be sufficiently safeguarded against unauthorised access or leakage; and

                    • whether the premises are always accessible for visit by regulators.

                    If the proposed licensed corporation does not have leased/owned premises for carrying out the regulated activity, it may share offices with existing operators and this should not be problematic although explanations may need to be included in the licensing application to explain arrangements relating to the sharing of office space (e.g. how sensitive/research material will be secured etc.). There is no specific provision in the SFO or the relevant codes or guidelines issued by the SFC that prohibits a licensed corporation from operating its business in a service office but the applicant may be required to explain how a service office is suitable for carrying out the proposed regulated activity.

                    It is not the SFC’s practice to approve overseas premises for the keeping of records or documents under section 130 of the SFO.

                    Insurance

                    The Securities and Futures (Insurance) Rules (“Rules”) (Cap. 571AI of the Laws of Hong Kong) set out the insurance requirements and according to section 3 of the Rules, the Rules are applicable to all licensed corporations other than one which (i) is not an exchange participant; and (ii) holds a licence subject to the condition that it shall not hold client’s assets.

                    Section 4 of the Rules further provides that a licensed corporation governed by the Rules shall take out and maintain insurance for that regulated activity where the SFC has approved a master policy of insurance. Currently, there are two master policies of insurance respectively applicable to stock exchange participants licensed for Type 1 regulated activity and futures exchange participants licensed for Type 2 regulated activity. As far as we are aware, no such policies are applicable to Type 9 regulated activity to date.

                    Licensing fees

                    The application fee payable to the SFC for:

                    1. corporations to be approved to carry out Type 9 regulated activity is HK$4,740;

                    2. an individual to be approved as a licensed representative to carry out Type 9 regulated activity is HK$1,790;

                    3. a licensed representative to be approved as a responsible officer to carry out Type 9 regulated activity is HK$2,950; and

                    4. transfer of accreditation is HK$200 per regulated activity.

                    Annual fees are also applicable for each licensed corporation, licensed representative and responsible officer.

                    Please see this list of all applicable licensing fees.

                    Documents and information required for the licence application

                    The following is a brief summary of a list of documents and information you would need to prepare for the licence application:

                    The following forms are required to be completed by the licensed corporation applicant:

                    • Form A

                    • Supplements A and B (as appropriate)

                    • Supplements C (at least 2 responsible officers should be nominated), D and E

                    • Questionnaire A

                    • Questionnaire B (if applicable)

                    • Application fee

                    Normally, the application letter to the SFC seeking licensing approvals will also include/attach the following information/documents for the SFC’s reference:

                    1. copy of the certificate of incorporation (and subsequent certificates of change of name, if any) of the applicant;

                    2. copy of the memorandum and articles of association of the applicant;

                    3. copy of the business registration certificate of the applicant;

                    4. identity/details of the executive and non-executive directors of the applicant;

                    5. identity/details of the shareholders of the applicant (including any substantial shareholders);

                    6. identity/details of the proposed responsible officer(s) for each regulated activity (including particulars of their experience, qualifications (academic / industry), fitness and properness and whether he or she satisfies the relevant competence requirements together with relevant forms and supporting documents such as CV and licensing/examination records);

                    7. description of how the compliance functions of the applicant will be carried out/supervised (i.e. through compliance officers or engagement of compliance services (together with a contingency plan) –NB: please let us know if you/your client would like us to obtain quotes from compliance service providers);

                    8. description of compliance with Securities and Futures (Financial Resources) Rules (“FRR”) (including amount of paid up capital and copy of bank statement); and

                    9. financial projection plan.

                    Further to the above, the client should:

                    • have a copy of the tenancy/lease agreement in place; and

                    • ensure that they have someone who is familiar with the FRR to monitor compliance at all times.

                    Timing and the SFC’s performance pledge

                    The current performance pledge of the SFC for the processing of a corporate licence application is 15 weeks. The performance pledge for processing representatives’ and ROs’ applications are 8 weeks and 10 weeks respectively. It may be difficult to shorten this indicative timing although we may actively communicate with the SFC to shorten the timeframe as much as possible. Despite the above performance pledge, the SFC may raise further questions both before and after formal acceptance of the licensing application and this may delay the processing of the application if responses are not provided to the SFC promptly.

                    The above timing does not include the amount of time required for preparation of the materials. Again, the duration required for preparation will depend on the preparedness and responsiveness of the client and normally this would take approximately 3 to 4 weeks. The location of the client may be a factor in this timing.

                    Future compliance

                    For the purpose of compliance with all applicable Hong Kong legal requirements (the SFO, the relevant codes and guidance) and the financial resources rules, the proposed licensed corporation would require a competent and suitably qualified compliance officer who would take charge of the compliance functions of the proposed licensed corporation. Such persons normally have financial/accounting experience.

                    Upon request, we can provide information on certain external compliance advisors which may be useful to assist in the compliance functions of the proposed licensed corporation.

                    The compliance officer (whether it is in-house or contracted) must ensure that proper compliance measures are in place and supervised by staff performing the compliance functions to satisfy the requirements of the Code of Conduct and the other publications of the SFC. In particular, certain changes require the prior approval of the SFC. It must be noted that the lists below are not exhaustive and are for general reference only.

                    Licensed corporations

                    Changes to the licences of licensed corporations that require prior approval are listed below. Form B is generally required for these applications. However, for applications concerning substantial shareholders, Form D should be submitted. Submissions can also be made through the SFC Online Portal.

                    Type of change (relevant SFO section)

                    Application fee

                    Remarks

                    Addition of regulated activity (Section 127(1))

                    Type 3: $129,730

                    Regulated activity other than Type 3: $4,740 per regulated activity

                    If the application is approved, the licensed corporation should return its old licence to the SFC for amendment or cancellation (as the case may be). Submission of Supplements C, D and E may be required.

                    Submission to act as sponsor

                    Nil

                    Submission of Supplements C, D and E may be required.

                    Reduction of regulated activity (Section 127(1))

                    $200 per regulated activity

                    If you intend to cease conducting the last regulated activity for which you are licensed, you are only required to notify the SFC of the intended change. No application fee is payable.

                    Modification or waiver of licensing or registration condition (Section 134)

                    $2,000

                    If the application is approved, the licensed corporation should return the old licence to the SFC for amendment where necessary.

                    Modification or waiver of “fit and proper” requirements under section 129 (Section 134)

                    $4,000

                    Change of financial year end and/or adoption of period exceeding 12 months as financial year (Section 155(3))

                    $2,000

                    This is applicable to the licensed corporation as well as associated entities of the licensed corporation which are not authorized financial institutions.

                    If this application is made in conjunction with an application for extension of deadline for submission of audited accounts (under section 156(4)), it should be made at least one month before the relevant deadline.

                    Extension of deadline for submission of audited accounts (Section 156(4))

                    $2,000

                    This is applicable to the licensed corporation as well as associated entities of the licensed corporation which are not registered institutions.

                    SFC may grant an extension if it is satisfied that there are special reasons for doing so. If a licensed corporation or an associated entity anticipates that an extension of the submission deadline may be required, it should submit its application to extend the submission period at least one month before the relevant deadline.

                    New premises to be used for keeping records or documents (Section 130)

                    $1,000

                    This application is required for any intended new business address.

                    The fee is payable on a per application basis regardless of the number of premises proposed in an application.

                    See also: FAQ (Premises for business and record keeping) on SFC website.

                    Becoming a substantial shareholder of a licensed corporation (Section 132)

                    $3,000

                    A person (including a corporation) is required to apply for the SFC’s approval before s/he can become or continue to be a substantial shareholder of a licensed corporation

                    A person, being aware that s/he became a substantial shareholder of a licensed corporation without the SFC’s prior approval should as soon as reasonably practicable and in any event within 3 business days after s/he became so aware, apply to the SFC for approval to continue to be a substantial shareholder of the corporation.

                    The SFC shall refuse this application unless the applicant satisfies the SFC that the corporation will remain fit and proper to be licensed if the application is approved.

                    This fee is payable on a per application basis regardless of the number of substantial shareholders proposed and the number of licensed corporations concerned in an application.

                    The approval (if granted) will initially be valid for 6 months, within which the intended share transfer(s) should be completed.

                    An applicant not having a “close link” with the licensed corporation may be allowed to provide less information for the application (see section 7.12 of the Licensing Handbook for details), although the SFC may subsequently require additional information and/or documents to be submitted if deemed necessary

                    Licensed representatives (including ROs)

                    Post-licence applications concerning licensed representatives (including ROs) are listed below. Submissions can only be made through the SFC Online Portal.

                    Type of change (relevant SFO section)

                    Application fee

                    Remarks

                    Addition of regulated activity (Section 127(1))

                    Type 3: $2,420

                    Regulated activity other than Type 3: $1,790 per regulated activity

                    Reduction of regulated activity (Section 127(1))

                    $200 per regulated activity

                    If you intend to reduce the last regulated activity for which you are licensed, you are only required to notify the SFC of the intended change. No application fee is payable.

                    Modification or waiver of licensing or registration condition (Section 134)

                    $2,000

                    Modification or waiver of “fit and proper” requirements under section 129 of the SFO (Section 134)

                    $4,000

                    Addition of accreditation (Section 122)

                    $200

                    This fee is payable on a per application basis regardless of the number of new principals proposed in an application.

                    Transfer of accreditation (Section 122)

                    $200 per regulated activity

                    If a licensed representative ceases to be accredited to her/his principal, s/he has 180 days to apply for transfer of accreditation to another corporation before revocation of her/his licence. The SFC has no power to extend this period.

                    However, where the representative re-applies for a licence in respect of the regulated activities for which s/he had been licensed within 3 years after resigning from her/his previous position, s/he will not be required to sit the relevant entry examinations.

                    Licensed representative becoming responsible officer (Section 126)

                    $2,950 per regulated activity

                    Please refer to Chapter 4 (Responsible officers) of the Licensing Handbook.

                    The application fee payable for Type 7 regulated activity is waived if the applicant’s proposed carrying on of Type 7 regulated activity is incidental to the carrying on, or proposed carrying on, of Type 1 or Type 2 regulated activity by that applicant.

                    Apart from the above, there are other change events require notification to the SFC. For details of the notification requirements, you should refer to relevant provisions of the SFO (e.g. sections 123 and 135) and the Securities and Futures (Licensing and Registration) (Information) Rules. For licensed individuals, notifications must be made through the SFC Online Portal. Please see the section 9.8 of the Licensing Handbook (Summary of notification requirements).

                    Complaints officer and emergency contact

                    In addition to a compliance officer, the proposed licensed corporation would also need to have a complaints officer and/or emergency contact person. Such a person may be unlicensed but should preferably have sufficient authority and is familiar with the overall affairs of the group. We recommend that the proposed licensed corporation set up a complaints register to record all complaints made and how they were resolved.

                    Continuous professional training (CPT)

                    Licensed corporations are primarily responsible for designing and implementing a continuous education programme best suited to the training needs of the licensed representatives they engage. Such programmes should enhance the individuals’ industry knowledge, skills and professionalism. The licensed corporations have to perform due diligence to ensure CPT compliance by the individuals concerned. Licensed individuals are generally required to complete 5 CPT hours per calendar year for each regulated activity which they may carry out. The important point to note is that the training topics must be relevant to the functions to be performed by the person.

                    Licensed corporations should keep sufficient records on the programmes and the CPT activities undertaken by the individuals for a minimum of 3 years and be made available for inspection upon request by the SFC. Individuals should also retain their own CPT compliance records for a minimum of 3 years.

                    Licensed corporations and individuals are required to confirm (when submitting their annual returns through the SFC Online Portal) whether they have complied with the relevant CPT requirements for the previous calendar year.

                    Reference materials

                    The SFC has issued various rules, codes and guidelines that are relevant to licensed corporations. Some of these include:

                    1. the Guidelines on Competence (of corporations and licensed individuals) and the updated Appendix C;

                    2. the Code of Conduct for Persons Licensed by or Registered with the SFC;

                    3. the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the SFC;

                    4. the Fund Manager Code of Conduct;

                    5. the Fit and Proper Guidelines

                    6. the Licensing Handbook

                    Establishing a Hong Kong private company

                    For a corporation to be licensed to carry out regulated activities in Hong Kong, section 116 (2) of the SFO requires that it has to be either a company incorporated in Hong Kong or an overseas company registered under Part 16 of the CO having a principal place of business in Hong Kong (i.e. branch company) . While it may be possible to set up an overseas incorporated parent and subsequently register a branch in Hong Kong, the SFC prefers the use of Hong Kong incorporated companies and has expressed a strong preference against the use of a branch.

                    There are in general three usual routes for establishing a company in Hong Kong. The relevant timing and the required procedures for each route are set out below.

                    1. Incorporating a company from scratch by physical submission (i.e. submitting original signed documents to the Companies Registry) – available in 4 to 5 business days (from the date of filing of signed documents)

                    2. A company may be incorporated from scratch with a name of your choice with the articles of association containing the relevant provisions required. A company name search on the proposed company name should first be carried out against the record of the Companies Registry to see if the proposed name has been used or is too similar to that of another company that has already been registered.

                      Once we have received from you the details of the director(s) and shareholder(s) of the proposed Hong Kong company, we shall prepare and send you the relevant incorporation documents for the director(s) and shareholder(s) to sign, including the draft articles of association, Form NNC1 – Incorporation Form (Company limited by shares) and Form IRBR1 – Notice of Business Registration Office.

                      Upon receipt of the original signed documents, we will arrange for them to be filed with the Companies Registry. We estimate that from the date of filing of the relevant documents (and provided that the documents are in order), a certificate of incorporation will be issued by the Companies Registry and a business registration certificate will be issued by the Inland Revenue Department in 4 to 5 business days. We will then prepare other post incorporation documents, including minutes of first director(s) meeting, for you to arrange for signing.

                    3. Incorporating a company from scratch by E-incorporation – available in 1 to 2 business days from the date we are instructed.

                    4. If you are unable to arrange for documents to be signed in the next day or two, we can instruct an agent to incorporate the company with a name of your choice by E-incorporation.

                      At least 1 natural person must be a director of a Hong Kong private company. The agent may provide an individual to be the first director of the proposed company who will resign from office after the company is incorporated. Alternatively, you may provide the agent with an individual/individuals to be the first director(s) of the proposed company.

                      The agent will have its service company become the first shareholder (i.e. the founder member) to incorporate the company (which takes 1 to 2 business days for receiving the electronic copy of the certificate of incorporation issued by the Companies Registry and the electronic copy of the business registration certificate issued by the Inland Revenue Department).

                      We will then prepare the transfer forms (instrument of transfer, and bought and sold notes) for you to acquire the shares after the company is incorporated. The transfer forms are required to be signed and stamped at the Stamp Office within a prescribed time from the date of transfer.

                      The advantage of this option is that you can have the company name and company number ready in 1 to 2 business days with a name of your choice. The disadvantage of this option, however, is that the name of the service company of the agent will appear in the public record of the company as the first shareholder and the certificate of incorporation and the business registration certificate of the company are electronic copies.

                    5. Purchasing a shelf company – available immediately on acquisition but may take 4 to 5 business days to change the company name.

                    6. A shelf company is an existing company that has been incorporated by standard articles of association (or for those shelf companies established before the commencement of the New Companies Ordinance, a standard memorandum and articles of association) and can be acquired immediately. Acquisition of a shelf company is done by way of transferring the shares of the shelf company, and the relevant documents required for effecting such a transfer includes the transfer forms (instrument of transfer, and bought and sold notes) which are required to be signed and stamped at the Stamp Office within a prescribed time from the date of transfer.

                      Upon acquisition of a shelf company, you may wish to change the name of the company. To change the name of the company, a company name search on the proposed company name should first be carried out against the record of the Companies Registry to see if the proposed name has been used or is too similar to that of another company that has already been registered.

                      A change of company name must be approved by a special resolution of the shareholders of the company, a Form NNC2 (Notice of Change of Company Name) must be filed with the Companies Registry within 15 days from the date of the special resolution and a prescribed fee for the change of name of the company is required to be paid upon filing. Upon receipt of the Form NNC2 and if the document is in order, it normally takes 4 to 5 business days for the Companies Registry to issue a certificate of change of name of the company and for the Inland Revenue Department to issue a new business registration certificate.

                      The advantage of this option is that the company is available immediately and the transfer can be done forthwith. However, the original name of the shelf company will appear in the public records of the company.

                      The documents that need to be signed by the directors and the shareholders include the transfer forms and forms for appointing the new directors.

                    SFC Type 9 license requirement

                    SFC Type 9 license exam

                    SFC Type 9 license exemption

                    SFC Type 9 license asset management

                    SFC responsible officer requirements

                    Licensed representative SFC

                    SFC licensing exemption

                    SFC notification requirements

                    SFC application for license representative

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