Hong Kong Type 9 (Asset Management) License

Permissions

Under the Securities and Futures Ordinance (SFO), Type 9 “asset management”, means providing a service of managing a portfolio of securities or futures contracts for clients on discretionary basis. This category of regulated activity will cover discretionary investment managers, whether managing a hedge fund, account or related fund.

Licensed for Type 9 regulated activity and carry out certain other regulated activities

You are licensed for Type 9 regulated activity (asset management) 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 out solely for the purposes 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 own clients’ portfolios of securities and/or futures contracts.

Capital Requirement

Type 9 

• 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

Minimum paid up capital – Not applicable

Minimum liquid capital — $100,000

• In any other case

Minimum paid up capital – $5,000,000

Minimum liquid capital — $3,000,000

Local physical office is required.

Desfran shall seek to understand your business activities and goals to assist with your business plan drafting that best encompasses this whilst still being compliant to the prevailing regulations. Desfran shall also advise on the possible questions that might be posed by the regulator.

• Company is required to be incorporated in Hong Kong or a non-Hong Kong company must be registered with the Companies Registry of Hong Kong.
• You must satisfy the SFC that you have proper business structure, good internal control systems and qualified personnel to ensure the proper management of risks that you will encounter in carrying on your proposed business as detailed in your business plan.
• For every regulated activity applied, it is required to appoint a responsible officer
• A successful on-boarding process in terms of due diligence on the approved person, the client firm, and the business/operating model.
• The client firm will be responsible for ensuring that the activities which fall outside of the scope set by the SFC are compliant with other regulations, e.g. Asia and /or European. The client firm may be required to engage an appropriate legal advisor to summarise these in an appropriate file note.
• Every company must appoint an auditor who must be a member of the Hong Kong Society of Accountants and hold a practicing certificate. Although there is no requirement to file accounts with the Registrar, there is a requirement to file accounts with the tax authorities. Annual return is required to be filed to the Companies Registry within 42 days after the date of anniversary of incorporation, and then each year thereafter.

Due Diligence is necessary to formally verify the identity of all clients of the firm. The following documents are required to conduct due diligence for the license application:

• A copy of the photo page of the passport ceritifed by a notary public for each director and shareholder;
• A copy of proof of address (issued within the last 3 months) by a notary public for each director and shareholder;
• Curriculum Vitae (CV);
• Business Plan;
• Financial Forecast;
• Organisation Chart;
• For company directorship or shareholdership, a certified copy of the constitution documents of the company and above details on each director and shareholder of the company;
• Other supporting document when necessary.

Please note for a company listed on a major stock exchange or subject to regulatory supervision in a country with equivalent AML regulations to Hong Kong, evidence of such listing or regulation will suffice in place of the above information. Where the directors to be appointed are employees of such a listed or regulated company, a certified passport copy and confirmation of employment (to include position) will suffice.

For local regulatory authority:

(Each beneficial owner, shareholder, director, Responsible Officer and secretary must provide)

• CV
• A notarized copy of valid passport
• Notarized 2nd ID
• A copy of proof of residential address (ex. utility bill that is not older than 3 months) in English or translated into English
• Bank Reference Letter
• Bank Statement Leller
• A notarized copy of a University Diploma
• Signed and notarized application forms
• Two Professional letters from a notary, lawyer, auditor or similar

Note

1. If documents are not in English language or language of particular country, then they must be accompanied by a notarised translation.
2. Please ensure that notarisation is in English language if not then please provide with notarised English translation.
3. Additional documents may be requested by the regulatory authority or local Bank at any point to certify specific information.

The Securities and Futures Commission (SFC) is an independent statutory body set up in 1989 to regulate Hong Kong’s securities and futures markets.

The SFC derive investigative, remedial and disciplinary powers from the Securities and Futures Ordinance (SFO) and subsidiary legislation. Operationally independent of the Government of the Hong Kong Special Administrative Region, they are funded mainly by transaction levies and licensing fees.