SFC licensing and compliance hints

Can overseas compliance officers handle online SFC submissions?

The answer is yes. Since 23 November 2018, any person authorised by the board can submit corporate notifications and corporate annual returns to the SFC for the company through the SFC’s online portal (see SFC circular and our December 2018 newsletter).

Once an overseas compliance officer has set up a personal account on the SFC portal, they can:

  1. complete and submit notifications and annual returns for the HK firm;
  2. complete and submit licensing application forms for the firm and its individuals; and
  3. complete (but not submit) notifications and annual returns for licensed individuals.

It is also possible in this regard for the board to give all the members of the legal and compliance department the same powers that a responsible officer has to make these online submissions and our Corporate Services Department can assist as required.

Making Code of Conduct paragraph 12.5(a) notification using the WINGS mobile app

Under paragraph 12.5(a) of the Code of Conduct, firms are required to notify the SFC immediately upon the occurrence of certain regulatory breaches. These notifications can be submitted via “WINGS”, the SFC’s e-submission platform which sits on the SFC portal.

“WINGS” also has a mobile app (which can be freely downloaded from Google Play and the Apple Store). Accordingly, SFC portal account users can now submit these notifications by mobile phone at any time and they do not have to be in front of a computer to do so.

If a shareholder of a licensed corporation has made an SFC approved subordinated loan to the company and the company will bring on new shareholders, when should the loan be repaid?

It will usually make sense for any shareholder loans to be repaid before new shareholders come in. However, these loans cannot be repaid without the prior written consent of the SFC and unless the SFC is satisfied with the financial situation of the company, it is likely to refuse to approve any repayment unless accompanied by a new capital injection. In considering whether or not to approve, the SFC will usually consider whether expected income flows will be sufficient to meet the minimum liquid capital requirements if the loan is repaid. Sometimes therefore shareholders cannot obtain repayment until the SFC licence is revoked.