HONG KONG: Frequently Asked Questions Relating to Open-Ended Fund Companies

Tuesday September 4 2018

The Securities and Futures Commission (SFC) has published Frequently Asked Questions (FAQs) relating to Open-ended Fund Companies. The  FAQ is prepared by the Investment Products Division and aims to provide basic information to market practitioners in respect of openended fund companies (“OFCs”), which are subject to the Securities and Futures Ordinance (the “SFO”), the Securities and Futures (Openended Fund Companies) Rules (“OFC Rules”) and the Code on Open-ended Fund Companies (the “OFC Code”) (collectively, the “OFC-related Laws and Regulations”).

An applicant which seeks to establish a public OFC (as defined in the OFC Code) must also comply with all applicable requirements in the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products (“SFC Products Handbook”) including the Code on Unit Trusts and Mutual Funds (“UT Code”) for authorization by the Securities and Futures Commission (“Commission” or “SFC”). A public OFC and publicly offered sub-funds of an OFC must also comply with all applicable requirements in the SFC Products Handbook after registration.

The FAQs contains the following questions:

Requirements relating to establishment of an OFC

• How do I establish an OFC?
• How do I start an application for registration?
• Do I have to make separate applications for registration and authorization of a public OFC?
• What are the fees payable for establishment of an OFC?
• What is the expected processing time for registration of a public OFC and private OFC?
• Is there any template instrument of incorporation (“IoI”)? Must the template be adopted by an OFC? Can revisions be made when adopting the template?

Requirements in relation to post-registration changes to an OFC

• How do I apply for an addition of a new sub-fund to an existing umbrella fund?
• What are the changes to a SFCregistered OFC that requires the SFC’s approval? What are the documents and fees that should be submitted?
• What documents should be submitted to the SFC for a change of key operators of a public OFC?
• What documents should be submitted to the SFC for a change of name of a public OFC or its subfund(s)?
• What documents should be submitted to the SFC for a change of key operators of a private OFC or change of name of such OFC or its sub-funds?
• What are the fees payable for a change which requires approval from SFC to an OFC?
• What are the documents that need to be filed with the SFC for both public and private OFCs postregistration?
• How may I apply for a termination of an OFC or sub-funds of an OFC with the SFC?
• If I submit documents required by the CR to the SFC, how do I ensure the relevant deadlines for filings prescribed by CR have been met?
• Which are the post-registration filing forms required by the CR? Which ones need to be submitted via the SFC?

General

• Will my application lapse after a certain period of time?
• Can a private OFC be converted into a public OFC and vice versa?
• Can public OFCs be exchangetraded funds (“ETFs”)?
• Are OFCs qualified for the mutual fund recognition (“MRF”) arrangements entered into by the SFC?

Click on the link above for further information.