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Application of SFC License in
Hong Kong
Highlights of the Regulatory Requirements
Updated as of January 2012
1. Introduction
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Under the Hong Kong regulatory regime, companies which intend to carry on
Regulated Activities (“RA”) in Hong Kong are required to apply for the relevant
type(s) of RA license from the Securities and Futures Commission (“SFC”).
•
During the application process, an applicant is required to submit various documents
(e.g. business plan overview, internal control and compliance policies, information on
responsible officers and executives directors etc. ) to the SFC, which will be reviewed
and assessed by the SFC in order to determine the fitness and propriety of the
applicant for obtaining a RA license in Hong Kong.
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2. Overview of the SFC Licensing Regime
• 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 Securities and Futures Commission (“SFC”) is the regulator
empowered by the SFO to oversee such activities.
• Under the SFO, individuals who supervise and carry out those regulated activities (i.e.,
Responsible Offices) are also required to obtain the relevant SFC licenses.
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2. Overview of the SFC Licensing Regime
• 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:
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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.
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2. Overview of the SFC Licensing Regime
The principal requirements which are required to be fulfilled are highlighted below.
a)
Legal Structure
 A Hong Kong incorporated company or an overseas company registered with the
Hong Kong Companies Registry (i.e. a branch).
b)
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.
c)
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.
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2. Overview of the SFC Licensing Regime
d)
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.
e)
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.
f)
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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 zero to HK$30 million. In addition, all SFC License Corporations
are subject to a variable regulatory capital requirement (known as “Liquid
Capital”).
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2. Overview of the SFC Licensing Regime
• For purposes of obtaining a license, an applicant is required to submit relevant
information and prescribed forms to the SFC describing, inter alia, its proposed
business plan, shareholding structure, organisation set-up, internal control and
compliance systems, and financial position. In addition, it also needs to demonstrate
the fitness and propriety of its substantial shareholders, directors and Responsible
Officers etc.
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3. Our Services
The principal roles undertaken by us in license application projects are the provision of
ongoing regulatory advice as well as documentation and technical support to
our clients throughout the application process. In this regard, the scope of work
may include, inter alia, the identification of potential issues that may arise during the
application process, drafting of the business plan and other key documents, and providing
comfort to management on the quality and content of the documents submitted to the
SFC.
In summary, 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;
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Assist in identifying and capturing all the regulatory issues / hurdles that may arise
during the application process.
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3. Our Services
In summary, we can assist our clients with the following specific matters
(Cont’):
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Advise on the key areas considered by the SFC in granting the RA license (e.g.
business plan, financial resources projections etc.);
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Preparation of documentation for submission to the SFC. In this regard, we can make
reference to the documentation which is currently available within GMO and tailor it
to a standard acceptable by the SFC;
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Preparation of appropriate cover letters in support of the application;
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Work with management in responding to the queries raised by the SFC during their
review of the application documents; and
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Accompany management to any meetings with the SFC in order to discuss any issues
and concerns arising from the approval process.
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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Contact
For more information about our services, please feel free to contact the following person
or your usual PwC contacts:
Adams Chan
Partner, Regulatory Advisory Services
: +852 2289 2784
: adams.wf.chan@hk.pwc.com
This publication has been prepared for general guidance on matters of interest only, and does
not constitute professional advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No representation or warranty
(express or implied) is given as to the accuracy or completeness of the information contained
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information contained in this publication or for any decision based on it.
© 2012 PricewaterhouseCoopers Limited. All rights reserved. In this document, “PwC” refers to
PricewaterhouseCoopers Limited which is a member firm of PricewaterhouseCoopers
International Limited, each member firm of which is a separate legal entity.