Application of SFC License

Under the Hong Kong regulatory regime, companies which intend to carry on Regulated Activities (“RA”) in Hong Kong are required to apply for relevant type(s) of RA license from the Securities and Futures Commission (“SFC”).

Companies which intend to conduct regulated activities in Hong Kong are required to be licensed as “Licensed Corporations” under Section 116 of the Securities and Futures Ordinance (“SFO”). the SFC is the regulator empowered by the SFO to oversee such activites

Depending on the nature of the business, a company should apply for one or more RA licenses to conduct its proposed business. RAs are defined in the SFO and comprise the following 10 types of activities:

Type 1: Dealing in securities
Type 2: Dealing in futures contracts
Type 3: Leveraged foreign exchange trading
Type 4: Advising on securities
Type 5: Advising on futures contracts
Type 6: Advising on corporate finance
Type 7: Providing automated trading services
Type 8: Securities margin financing
Type 9: Asset management
Type 10: Providing credit rating services


The principal requirements which are required to be fulfilled re highlighted below:

LEGAL STRUCTURE
– a Hong Kong incorporated company or an overseas company registered with the Hong Kong Companies Registry (i.e. a branch)

FIT AND PROPER CRITERIA
– an applicant needs to demonstrate to the SFC that it has proper business structure, internal controls and qualified personnel etc. to undertake the regulated activities
– such assessment will be undertaken by the SFC with reference to the business plan, internal control documentation, compliance policies etc. submitted by the applicant

SUBSTANTIAL SHAREHOLDERS
– all substantial shareholders (i.e. those holding more than 10% interest or voting rights) are required to fulfill the fit and proper criteria stipulated by the SFC

RESPONSIBLE OFFICERS
– at least two Responsible Officers are required for each regulated activity
– an individual applies for as a Responsible Officer needs to possess relevant academic/ industry qualification and experience and pass the local regulatory framework paper

LICENSED REPRESENTATIVES
– all personnel carrying on regulated activities need to be licensed as a Licensed Representative
– Licensed Representatives are subject to similar but less stringent qualification and experience requirements as compared to those applicable to Responsible Officers

FINANCIAL RESOURCES
– an applicant needs to maintain sufficient financial resources. Depending on the types of license, the minimum paid-up share capital of an applicant may vary, ranging from $0- $30 million HKD.  In addition, all Licensed Corporations are subject to a variable regulatory capital requirement (known as “Liquid Capital”)


Our Services – we can assist our clients with the following specific matters:

  • Provide preliminary advice to management on the regulatory approval process and the types of RA license(s) required;
  • Assist in identifying and capturing the regulatory issues/ hurdles that may arise during the application process;
  • Advise on the key areas considered by the SFC in granting the RA license (such as business plan, financial resources projections)
  • Preparation of documentation for submission to the SFC. We can make reference to the documentation which is currently available within the organisation and tailor it to a standard acceptable by the SFC;
  • Preparation of appropriate cover letters in support of the application;
  • Work with management in responding to the queries raised by the SFC during their review of the application the approval documents; and
  • Discuss any issues and concerns arising from the approval processes.

We would be delighted to have the opportunity to meet with you to further discuss our regulatory service offerings and in particular how we could tailor them in order to meet your specific circumstances and needs.

 

 

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