HONG KONG: SFC Concludes Consultation on New OFC Rules and OFC Code

Friday May 18 2018

On 8^th May 2018, the Securities and Futures Commission (SFC) released consultation conclusions on the proposed Securities and Futures (Open-ended Fund Companies) Rules (OFC Rules) and Code on Open-ended Fund Companies (OFC Code) which set out detailed legal and regulatory requirements for the new open-ended fund company (OFC) structure. This will enable investment funds to be established in corporate form in Hong Kong, in addition to the current unit trust form.

After considering market feedback, the SFC will implement the proposals set out in the consultation paper with certain modifications and clarifications. The proposals include requirements relating to an OFC’s formation, its key operators, ongoing maintenance, termination and winding-up. These include streamlining the approval requirements for private OFCs and setting out a one-stop arrangement for the establishment, ongoing corporate filings and termination of OFCs.

The OFC Rules and the Securities and Futures (Open-ended Fund Companies)(Fees) Regulation, both subsidiary legislation under the Securities and Futures Ordinance, were gazetted today and will be submitted to the Legislative Council for negative vetting. Subject to the legislative process, the OFC regime is targeted to come into effect on 30 July 2018.

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