Jurisdiction - Hong Kong
Hong Kong – SFC Licensing And Compliance Hints.

27 March, 2014


Legal News & Analysis – Asia Pacific – Hong Kong – Regulatory & Compliance


“Knowledgeable Employee” ≠ PI: The U.S. Securities and Exchange Commission has recently released guidance as to when a “knowledgeable employee” can invest in a private fund managed by the employer without having to be a “qualified purchaser”. We do not have comparable guidance in Hong Kong: if a company is managing / marketing a private fund and the company’s licence is subject to the “Professional Investors Only” condition, the company may only market the fund to staff members who are professional investors, that is with investment portfolios worth at least HKD 8m, no matter the extent of their knowledge.

Deadline Reminder: The SFC Fund Management Activities Survey 2013 is due on 21 March 2014. 


Visa Requirements: The SFC prefers to see copies of employment visas (where required) before granting licences to individuals. It is advisable for companies to synchronize visa applications with licensing applications to ensure overseas individuals can hit the ground running when they arrive in Hong Kong.


New SFC Forms: The SFC has revised the following licensing forms: Form 1, Form 1A, Form 2, Form 5, Supplement 2 and Supplement 7. The new forms came into effect on 3 March 2014. The SFC is unlikely to process new applications or notifications on old forms.


Transaction Related Disclosures: The SFC published a circular on 14 March 2014, notifying the industry that it has amended paragraphs 8.3 and 8.3A of the Code of Conduct for licence holders. The stated purpose of the circular is to clarify the requirement for licensed corporations to make transaction related remuneration disclosures to clients.


Some have argued that the amendments change rather than just clarify the meaning of paragraphs 8.3 and 8.3A since the new wording spells out an additional obligation to make “pre-transaction” disclosures on sell orders by clients including where there is a back-to back transaction.


Where an intermediary needs to implement system changes to facilitate compliance, the SFC expects such changes to be in place by 14 August 2014.


Be Accurate And Consistent In Correspondence With Regulators: It is important to provide accurate information when communicating with the SFC. The SFC has recently convicted and fined a retail investor for misleading the SFC during an SFC investigation. The SFC has many ways to investigate and reconcile information from different sources – any discrepancies revealed are likely to be pursued.




For further information, please contact:


Rebecca Yip, Deacons

[email protected]


Heather Mak, Deacons

[email protected]


Deacons Regulatory & Compliance Practice Profile in Hong Kong


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