HONG KONG: Securities and Futures Commission Implements Open-Ended Fund Companies Regime

Friday August 3 2018

On 27th July 2018, the Securities and Futures Commission (SFC) announced the implementation of the new open-ended fund companies (OFC) regime with effect from 30 July 2018. This will enable investment funds to be established in corporate form in Hong Kong, in addition to the current unit trust form.

The Code on Open-ended Fund Companies and relevant forms for the implementation of the OFC regime, both gazetted today, will take effect on 30 July 2018. The final form of the Code on Open-ended Fund Companies was set out in the Consultation Conclusions on Securities and Futures (Open-ended Fund Companies) Rules and Code on Open-ended Fund Companies published on 18 May 2018.
Following the completion of the legislative process, the legislation for OFCs will come into effect on the same day.

The four pieces of legislation are the Securities and Futures (Amendment) Ordinance 2016, which provides a legal framework for the OFC regime and empowers the SFC to issue codes and guidelines in relation to the regulation of OFCs, the Securities and Futures (Open-ended Fund Companies) Rules, which set out detailed statutory requirements concerning an OFC, the Securities and Futures (Open-ended Fund Companies) (Fees) Regulation, which sets out the fees charged by the SFC for privately offered OFCs and by the Registrar of Companies for all OFCs, and the Inland Revenue (Amendment) (No. 2) Ordinance 2018, which extends the profits tax exemption to privately offered OFCs. From the effective date of the regime, all OFCs (privately or publicly offered) can enjoy profits tax exemption under the Inland Revenue Ordinance.

The SFC will publish frequently asked questions to provide further guidance to the industry.

Click on the link above for further information.