As China's financial reform and global engagement deepen, the demand for cross-border investment and financing is growing. Domestic asset management institutions are increasingly expanding their operations abroad, with Hong Kong emerging as a primary destination due to its prominence as an international financial hub.
According to Hong Kong’s Securities and Futures Ordinance, entities engaging in asset management activities within the territory must obtain a Type 9 licence (asset management) from the Hong Kong Securities and Futures Commission (SFC), unless specific exemptions apply.
Many major players in China's financial sector, including state-owned conglomerates, large and medium-sized brokerage firms, and publicly offered fund management companies, have long held Type 9 licences. Recently, a growing number of private equity fund managers and professional investment institutions are also acquiring these licences to strategically position themselves for overseas expansion.
Advantages of a Type 9 Licence
Holding a Type 9 licence provides significant advantages. It leverages Hong Kong’s reputation for rigorous financial regulation, facilitating the establishment of accounts with banks and brokerage firms and enhancing recognition from domestic regulatory bodies. Furthermore, the licence requires a tangible operational presence in Hong Kong, including personnel and physical premises, which helps mitigate onshore tax implications associated with foreign business revenue.
Qualifications for Application
To obtain a Type 9 licence, applicants must be local limited companies registered under the Hong Kong Companies Ordinance or registered non-Hong Kong companies. They need a suitable organisational structure, robust internal control systems, and qualified personnel to manage business risks effectively. An internal control system questionnaire is required to ensure readiness for SFC compliance inspections. Additionally, a comprehensive compliance manual tailored to specific circumstances must be prepared.
Preparation for Application
Structure: Establishing the appropriate structure involves analyzing the applicant’s situation and business objectives, considering factors like shareholder composition, intermediary companies, and overseas ventures.
Personnel: The SFC has detailed requirements for staffing, including directors, responsible officers, licensed representatives, and support staff. For mainland China-based private equity fund managers, deciding whether to use a mainland executive team or recruit local professionals in Hong Kong is crucial.
Business: Applicants must submit a detailed business plan questionnaire to the SFC, covering aspects like business nature, asset categories, investment strategies, and client distribution.
Budget: Financial criteria include HKD100,000 (USD12,800) in liquid capital for entities without client assets or HKD5 million in paid-up share capital and HKD3 million in liquid capital for those with client assets. Applicants must demonstrate financial readiness to cover operating expenses for the first six months.
Workplace: The SFC requires licensed asset management companies to operate from secure, independent office spaces and review office floor plans.
Intermediary Service Provider: Engaging a reputable intermediary service provider can facilitate the application process and strategic planning for future business expansion, offering comprehensive legal services covering fund establishment, project investments, transactions, and ongoing legal compliance.
Once the preparatory phase is complete, applicants must submit various forms, questionnaires, and supporting documentation. The SFC will provide feedback and may conduct inquiries. Close cooperation between applicants and intermediary service providers is essential for a successful application process.
About MVG
Morgan Vantage Group (MVG) is a distinguished consulting platform headquartered in Singapore with global offices in Hong Kong, New York, San Francisco, Singapore, Tokyo, Dubai, and Zurich. MVG specializes in providing comprehensive services related to financial licensing, regulatory compliance, and international business operations.
Our HongKong office offers expert assistance with regulatory business plans, financial models, internal capital adequacy assessment processes, policy preparation, and regulatory application submissions. We emphasize our unique focus on next-generation education and global resource support, including private banking support and digital banking solutions.
For more information or to discuss how MVG can support your financial and business objectives, please contact us at:Email: info@mvgtrust.com
