SFC licensing and compliance hints: points to note for your annual regulatory filings

The year is coming to an end. A corporation licensed with the Securities and Futures Commission (SFC) which adopted 31 December as its financial year-end and common anniversary date will need to file certain documents with the SFC (Annual Filings) by the following deadlines:

Deadline

Required action

31 January 2020

File annual returns for itself and its licensed individuals

Pay annual licensing fees for itself and its licensed individuals (see further paragraph below)

30 April 2020

Submit its financial statements and business and risk management questionnaire (BRMQ) for the period from 1 January 2019 to 31 December 2019

When preparing for the Annual Filings, licensed corporations should take into account the SFC’s new regulatory initiatives in 2019. Below are some points to note. 

Annual returns (and notifications)

Effective 11 April 2019, all licensed corporations must submit their annual returns (and notifications) electronically through the Online Portal. Paper submission will not be accepted, unless the SFC’s prior consent is obtained under an exceptional circumstance.

A licensed corporation must notify the SFC of a change in any of the events listed in the Securities and Futures (Licensing and Registration) (Information) Rules. These changes must be notified to the SFC within seven business days after the change occurs. If during the preparation of the annual returns, a licensed corporation identifies any changes that have not yet been notified to the SFC, it will need to notify the SFC of these changes before submitting the annual returns. Typically, the easy to forget events include the following (by way of example):

  • Addition or cessation of exchange membership / licence registration with an overseas regulator
  • Closing or opening of bank accounts
  • Outsourcing of a new function to a third party / termination of an existing outsourcee (Please refer to the SFC’s FAQ 1 on outsourcing of back office function for details.)

Annual licensing fees

On 4 December 2019, the SFC announced a waiver of annual licensing fees for the new financial year from 1 April 2020 to 31 March 2021. However, for annual licensing fees payable before 1 April 2020, a 50% concession rate will continue to apply.

Please refer to the following SFC publications for more guidance:

BRMQ

The SFC issued a revamped BRMQ on 4 January 2019.  Licensed corporations and associated entities with a financial year ending on or after 31 March 2019, are required to submit the new BRMQ electronically via the Online Portal. On 11 February 2019, the SFC also issued new licensing forms and following a two month transition period, use of the new forms became compulsory on 11 April 2019.

Some of the questions in the BRMQ are similar to the SFC licensing forms: Questionnaire A and Questionnaire B. If a licensed corporation has recently obtained a licence or added a new type of regulated activity with use of the new licensing forms, it should ensure that its answers in the BRMQ are consistent with the answers in the licensing forms previously submitted to the SFC.

For more details on the revamped BRMQ, please refer to our newsletter article of 7 March 2019.