Managing funds in the HK SAR is the exclusive prerogative of the SFO, HK’s main piece of legislation governing futures markets & securities. The said act provides the SFC, HK’s number one financial regulator, with powers to authorize CISs, supervise the managing of funds & oversee offering of securities.
It’s also responsible for issuing licenses to managers of funds, overseeing intermediaries’ activities & supervising products offered by retail funds. Intermediaries & managers of funds are expected to conform with the requirements & standards contained in SFC-published guidelines & codes.
What you’re about to read mainly concerns fund management regulation in HK. After getting acquainted with the below information, you’ll be able to get a much better idea of what it takes to conduct financial activities in HK or register investment funds in HK.
HK: Types of Licenses
Obtaining an SFC license in HK requires potential applicants to be involved in a special kind of activities (referred to as Type 9). Distributing or marketing products offered by funds, including Type 1 securities transactions, requires getting an SFC license as well.
Foreign fund managers can neither offer services to HK-based clients nor be involved in any regulated operations without being licensed by the SFC. Since managing funds is designated as Type 9 activities, opening a business in HK requires managers of funds to apply for an SFC license. SFC’s prior approval is also required for making changes to stakeholders’ list of licensed enterprises.
HK: Obtaining a Financial Services License & Restrictions
Foreign organizations selling fund products to the general public in HK must apply for an SFC license. If foreign-based managers of funds operate subsidiaries in HK or decide to register a subsidiary in HK, they’ll have to apply for a temporary license.
HK: Taxation of Retail Funds
Transferring HK-registered shares for fund investments requires paying a stamp duty. Normally, investors do not get taxed on dividends or on any other capital gains arising from the sale or repurchase of shares.
Because HK has no restrictions on foreign ownership, foreign & domestic investors establishing or managing funds in HK mustn't comply with any requirements in that regard. As said above, registering & operating funds in HK requires adherence to respective licensing-related requirements.
And that wraps up our short review of HK’s funds. Please do not hesitate to contact IQ Decision UK if you need legal assistance with setting up a fund in HK. Our legal experts will also be happy to help you with any other legal challenges you might encounter in that regard.