News & Insights

SFC compliance and licensing hints – Jul 2017

Licensed individuals being MICs of unregulated core functions

All licensed companies should have submitted their MIC information to the SFC by now. Some of our clients have received follow up questions from the SFC in relation to their licensed individuals who assume the role as MIC for unregulated core functions (such as Compliance, Accounting and Finance or Operational Control): the SFC wants to know the individual’s roles and duties and time allocation as an MIC for the unregulated core function; it also wants to know whether the company has any internal control policies and measures in place to prevent and / or control potential and /or actual conflicts arising from the individual’s dual roles in carrying out regulated activities as well as operational functions. Even if the SFC has not contacted your company in relation to this situation, you should consider whether the company’s existing internal control policies and measures are sufficient to prevent / control such conflicts.

Misleading notifications

We always remind our clients that it is very important to ensure each statement is correct and complete before they submit any information to the SFC as it takes inaccurate or misleading notifications very seriously.

The SFC issued a press release on 30 June 2017 concerning the conviction of a licensed company and its former responsible officer for making false or misleading representations when notifying the SFC of the reason for the cessation of a licensed representative. This is not the first time licensed individuals have been convicted and fined for this kind of incident. We wrote about it in our newsletter of May 2016 in relation to licence applications. Licence applicants and existing licensees need to read and check before they sign any forms. Directors or responsible officers signing documents on behalf of the company need to do the same as the forms form part of the declaration they make to the SFC.

What is in the new Licensing Handbook

The new Licensing Handbook clarified that the SFC will only grant licences to overseas residents if they conduct regulated activities in Hong Kong on behalf of a licensed company. The SFC will impose a “non-sole” condition on the licence of overseas ROs who come to Hong Kong to conduct regulated activities from time to time. The licensed company should ensure that it has a Hong Kong based responsible officer that is not subject to the same condition to supervise its regulated activities.

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