On 15 May 2019, the Securities and Futures Commission (SFC) and the Autoriteit Financiële Markten (AFM) signed a memorandum of understanding establishing a bilateral framework for mutual recognition of cross-border offerings to retail investors in Hong Kong and the Netherlands. The Dutch fund must be a UCITS fund approved by the AFM for public offering in the Netherlands. It must be managed by a Dutch management company approved by the AFM to manage UCITS under Dutch laws. At the moment, only the following types of funds are eligible:
a) general equity funds, bond funds and mixed funds; and
b) index funds (other than exchange traded funds).
To access the Dutch market, the Hong Kong-domiciled fund (Recognised Hong Kong Fund) must be authorised by the SFC and managed by a Hong Kong management company licensed to conduct Type 9 regulated activity (asset management). It must also appoint a Dutch representative and keep the AFM informed of the address of its place of business in the Netherlands. The Recognised Hong Kong Fund’s offering documents should be prepared in Dutch, whilst its financial reports and constitutive documents may be made available to investors in the Netherlands in either English or Dutch.
The mutual recognition of cross-border retail offerings between Hong Kong and the Netherlands is the latest addition to the mutual recognition schemes that the SFC have previously announced with Mainland China, France, Switzerland, the United Kingdom and Luxembourg.
Further information is available in the SFC’s circular and FAQs which can be accessed here: