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The Licensing Regime under The Securities and Futures Ordinance

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The Licensing Regime under The Securities and Futures Ordinance

11. TEMPORARY LICENCES

Part V of the SFO enables the SFC to grant temporary licences to overseas corporations and representatives to conduct one or more of regulated activities Types 1, 2, 4, 5 and 6 in Hong Kong (Sections 117 and 121).

Temporary licences may be granted for maximum period of 3 months. If the applicant has held a temporary licence before, the total approved period of the respective licences cannot exceed 6 months in any period of 24 months.

Both corporate and individual applicants are prohibited from holding any client assets in conducting any regulated activity.

11.1 Corporate Applicants

The conditions to be satisfied for the grant of a temporary licence to a corporate applicant are as follows:

(a) the applicant must carry on a business principally outside Hong Kong which, if carried on in Hong Kong, would constitute the regulated activity;

(b) it seeks to be licensed for the regulated activity solely in order to carry on such activity in Hong Kong;

(c) the applicant establishes that it has a valid authorisation to carry on its business in the overseas jurisdiction from a regulator in that jurisdiction which the SFC is satisfied:

  1. performs similar regulatory functions to the SFC; and
  2. may investigate and take disciplinary action against the applicant in respect of its conduct in Hong Kong;

(d) it satisfies the SFC that it is a fit and proper person to be licensed for the regulated activity;

(e) it has nominated for approval by the SFC at least one individual to be available at all times to supervise the business of the regulated activity for which the corporation is to be licensed; and

(f) an application has been lodged under Section 130(1) for approval of premises to be used by the applicant for keeping records or documents required under the SFO.

11.2 Individual Applicants

An individual may apply for a temporary licence to carry on one or more of regulated activities types 1, 2, 4, 5 and 6 for:

  1. a corporation licensed under Section 116 to which he is accredited; or
  2. a corporation licensed under Section 117 (i.e. an overseas corporation holding a temporary licence) to which he is accredited.

The conditions to be satisfied for the grant of such a licence are as follows:

  1. the applicant must carry on an activity outside Hong Kong which, if carried on in Hong Kong, would constitute the regulated activity;
  2. the applicant establishes that it has a valid authorisation to carry on that activity in the overseas jurisdiction from a regulator in that jurisdiction which the SFC is satisfied:
    1. performs similar regulatory functions to the SFC; and
    2. may investigate and take disciplinary action against the applicant in respect of its conduct in Hong Kong.
  3. in the case of an applicant for a licence to conduct a regulated activity for a licensed corporation, the licensed corporation must belong to the same group of companies as the corporation for which the applicant is authorised to act outside Hong Kong;
  4. an applicant for a licence to carry on a regulated activity for an overseas corporation holding a temporary licence can only apply to conduct a regulated activity specified in that licence; and
  5. he is a fit and proper person to be so licensed for the regulated activity.It is a condition of a temporary licence granted to an individual that he must at all times keep the SFC informed of his contact details and must notify the SFC of any change to them within 14 days.

12. PROVISIONAL LICENCES

Part V also provides that an individual who has applied for a representative licence may be granted a provisional licence to conduct the regulated activities the subject of his application pending the outcome of his application for a full licence (Section 120(2)).

The individual is still required to demonstrate that he is a fit and proper person to be licensed for the relevant regulated activity. The SFC is entitled to revoke a provisional licence at any time having regard to the interests of the investing public. Otherwise, a provisional licence is deemed to be revoked upon the grant or refusal of the licence applied for (Section 120(9).

13. CONDUCT OUTSIDE HONG KONG

The scope of the licensing regime extends to activities carried on outside Hong Kong. Section 115 provides that:

  • if a person actively markets, whether by himself or through another and whether in Hong Kong or from outside Hong Kong, any services to the public of Hong Kong; and
  • thoses ervices would constitute a regulated activity if provided in Hong Kong,

then the provision of those services is regarded as carrying on a business in that regulated activity and the person marketing such services is regarded as holding himself out as carrying on a business in the regulated activity. The provision and marketing of such services will therefore require a licence under Section 114. Likewise, if the provision of those services involves the performance by an individual of any function which, if performed in Hong Kong in relation to a regulated activity, would constitute a regulated function, that individual is also required to be licensed.

The SFC maintains a register which is open to the public of licensed persons and registered institutions which indicates, among other things, the regulated activities which they are permitted to carry on and the names of their executive officers.

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Posted on

2014-10-16