SFC licensing: update on vetting and disclosures

Hong Kong's Securities and Futures Commission (SFC) has made two sets of changes to licensing forms for individuals. The changes appear within footnotes to the forms and relate to (i) the signing of an SFC Vetting Authorisation Form and (ii) how a person can disclose a spent or expunged matter whilst maintaining confidentiality.

Vetting

Certain licensing applicants are required to sign a Vetting Authorisation Form, which authorises criminal investigatory bodies and regulatory authorities to provide the SFC with relevant information. The form must be completed by individual licensing applicants and also by anyone wishing to be approved as a director or a substantial shareholder of a licensed company or a director of a corporate substantial shareholder.

The signing of the form must be witnessed. Formerly, this could be done by an SFC employee. The new list of eligible witnesses includes practising solicitors and directors or responsible officers of the licensed corporation, but not SFC employees.

Disclosures

The SFC has added a footnote to questions concerning disciplinary actions, investigations and character which appear in three licensing forms. These forms must be completed by individual licensing applicants, directors and substantial shareholders of a licensed company and directors of a substantial shareholder. The three questions relate to whether the individual has ever been:

1. investigated in connection with an offence involving, or found civilly liable for, fraud or dishonesty;
2. charged with an offence (other than a minor one); or
3. convicted of an offence (other than a minor one).

In the case of (i), the question also covers companies with which the individual has been associated in certain specified ways. A minor offence is an offence punishable by a fixed penalty under legislation covering road traffic and public cleanliness infringements.

The new footnote confirms that the individual is obliged to disclose all relevant investigations, civil actions, charges and convictions to the SFC even if they are spent, dismissed or expunged. Anyone wishing to keep such a criminal matter confidential can now answer "No" to the relevant question, provided details are filed separately with the SFC within two business days. A record of the supplemental filing should be kept.

Existing licensees should keep in mind their ongoing disclosure obligations. The SFC expects to be informed of all relevant matters.