Highlights of the Guidelines
The Guidelines outline simplified licence application procedures for family offices, private equity firms, hedge fund managers and mainland practitioners. The highlights include the following.
Recognition of Mainland’s Academic and Professional Qualification
When assessing the competence of an applicant, the SFC will acknowledge the applicant’s academic and professional qualifications in the Mainland, as well as their industry and administrative experience obtained in the Mainland. Experience not subject to regulation or scrutiny may be factored in. The SFC has also relaxed the academic requirement on Mainland practitioners. For example, an applicant who has not obtained a bachelor’s degree but is equipped with sufficient relevant industry experience in the Mainland may choose to complete additional training, rather than obtain relevant accredited industry qualifications, in order to pass the competency assessment. Holders of qualifications issued by the Securities Association of China (中国证券业协会), the China Futures Association (中國期貨業協會) or the Asset Management Association of China (证券投资基金业协会), as well as Mainland executive-qualification holders, may be deemed as qualified as a licensed representative in the Hong Kong securities industry. In a nutshell, the SFC has provided a more lenient approval threshold for Mainland practitioners.
Exemption from Licensing for Single-family Offices
A single-family office serving the investment needs of members of a single family rather than being run as a business or pursuing profit as its business objective will not need to be licensed. At this moment, the SFC has no intention to enlarge the scope of supervision to single-family offices engaging in any regulated activity outside Hong Kong. Meanwhile, a multi-family office, if operating as a commercial entity, is likely to need a licence, depending on the services they provide.
Incidental Exemption for Private Equity Firms
As provided in the Guidelines, a private equity firm licensed for Type 9 Regulated Activity to engage in asset management businesses may carry on certain Type 1 and Type 4 Regulated Activities without being licensed for such activity. At the same time, the SFC has recognised a broad range of experience applicable to private equity practitioners and will accept private equity experience gained in non-regulated situations. Experienced investment professionals will be able to request exemption from taking licensing examinations under the SFC’s pragmatic and risk-based licensing approach.