SFC licensing and compliance hints – Nov 2017

What is the next step after receiving declarations / disclosures? File away?

Regulated entities require staff members to make declarations / disclosures to the company regarding a wide variety of information on an on-going basis. The job for compliance staff is not just to chase staff members to submit their declarations / disclosures on time and then file the piece of paper away. In addition, someone with appropriate experience and authority in the compliance department needs to go through each declaration / disclosure to check whether a notification needs to be made to a regulator or other third party, and to ensure that any actual / or potential conflicts of interest or other potential issues are identified so that appropriate action can be taken. It may also be necessary to involve senior management.

When should one be a licensed representative or a responsible officer?

When an individual wants to conduct regulated activities in Hong Kong, s/he can be licensed either as a “licensed representative” only or as a “responsible officer”. A responsible officer assumes greater responsibilities and has more authority than a representative as s/he is also involved in supervising the regulated activities of the company. Accordingly, the experience and qualifications requirements for responsible officers are significantly more onerous than for representatives. If the individual is a member of the board of directors and carries on or supervises regulated activities, s/he is an “executive director” and must be licensed as a responsible officer. A licensed company is required to have at least two responsible officers per regulated activity and one of them must be an executive director. Details of experience and qualification requirements for a “licensed representative” and a “responsible officer” are set out in the Guidelines on Competence, available here.