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Authored by: Fiona Fong
Every open-ended fund company (OFC) must appoint and maintain a registered office situated in Hong Kong, pursuant to the requirements in the Securities and Futures Ordinance Chapter 571 (SFO), the Securities and Futures (Open-ended Fund Companies) Rules Chapter 571AQ (OFC Rules) and the Securities and Futures Commission’s (SFC) Code on Open-ended Fund Companies (OFC Code).
This article outlines what is an OFC’s registered office and its duties, and the steps involved in changing a registered office, and comments on common market practice.
What is a registered office?
A registered office is where all communications and notices to the OFC may be addressed.
During an application for registration of an OFC, the address of the place which is to be the OFC’s registered office must be specified on the Application Form to be submitted to the SFC and the OFC Incorporation Form (OFCNC1) to be submitted to the Companies Registry (CR). The address stated on the OFCNC1 form is automatically regarded as the address of the registered office. Non-Hong Kong addresses, ‘care of’ addresses or post office box numbers are not acceptable.
Shareholders of an OFC may also find that the registered office is typically stated in the OFC’s Instrument of Incorporation (or at least a statement that the registered office of the OFC is situated in Hong Kong) and the OFC’s offering documents. The registered office address must be disclosed on every letter from the OFC, in each agreement entered into by the OFC, in every other document issued by the OFC in the course of its business, and on any website of the OFC.
The registered office of an OFC is searchable at the CR on the Register of Open-ended Fund Companies. The public can order image records or certified copies of image records of the OFCNC1 form that contains such information.
What does a registered office do?
Receipt of service of notices
Communications and notices may be addressed to the OFC’s registered office. For example, the Inland Revenue Department will send a renewal demand note for the OFC’s business registration to the OFC’s registered office. The registered office will receive a renewal demand note from the Inland Revenue Department approximately two weeks before the Business Registration Certificate needs to be renewed.
Subject to any agreement or overriding provisions to the contrary, any written notice, direction or document served on the OFC would be regarded as duly served if it is left at or posted to the registered office in Hong Kong.
Safekeeping of registers and records
The OFC Rules outline that the OFC’s register of shareholders, register of directors and all records of resolutions and meetings must be kept at its registered office, or an alternative place in Hong Kong notified to the CR. A Notice of Location of Registers and Records (OFCR2) must be in the specified form (which can be downloaded from the CR’s website) and delivered to the CR for registration within 15 days after the change. If the registers and records are kept at the registered office at all times since the OFC’s inception, the OFC is not required to notify the CR.
Failure to comply with the above requirements is an offence and is liable on conviction to a fine. A further daily fine may also be imposed in the case of a continuing offence.
The OFC Rules further provide that a shareholder of an OFC is entitled, on request and without charge, to inspect entries of the OFC’s register of shareholders (in respect of information relating to such shareholder) and the register of directors.
Change of registered office
If the address of an OFC’s registered office is changed, the OFC must deliver to the CR for registration a Notice of the Change of Address of Registered Office (OFCR1) in the specified form (which can be downloaded from the CR’s website), within 15 days after the change.
Failure to do so is an offence and is liable on conviction. A further daily fine may also be imposed in the case of a continuing offence.
For an overseas corporate fund re-domiciling to Hong Kong and registering as an OFC, the registered office of the re-domiciled OFC will need to be moved from its place of incorporation to an address in Hong Kong. The new Hong Kong address must be stated in the re-domiciliation form (i.e. Application Form for Registration of a Non-Hong Kong Fund Corporation as a Re-domiciled Open-ended Fund Company to be submitted to the SFC), which will be regarded as the address of the registered office of the fund upon the re-domiciliation taking effect.
All current registers and past records of resolutions and meetings of the re-domiciled OFC must be transferred from its place of incorporation to Hong Kong.
Based on our observations, most private OFCs appoint the address of its investment manager (OFC Manager) as the registered office. This arrangement is different from the market practice for offshore funds, where the registered office function is often outsourced to local service providers in the offshore fund’s domicile. One of the benefits of reducing the need to outsource is to save operating costs otherwise payable to service providers. Keeping the registered office at the same address as the OFC Manager also means that the OFC Manager will have timely access to notifications sent to the OFC, its registers and other statutory records. This arrangement facilitates the operation of the OFC by the OFC Manager as a key operator.
Having said that, it is not uncommon for fund administrators to continue maintaining registers of shareholders for OFCs. If an OFC Manager would like professional help in the custody of documents and other general corporate services, Deacons offers a cost-effective solution.
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