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Financial institutions & securities companies

We provide high impact advice to financial institutions and securities companies, including sponsors, financial advisors, securities dealers, fund managers and hedge funds. Our lawyers have significant experience representing clients on a broad range of transactional and regulatory compliance issues. We advise across several practice areas, including M&A, capital markets, private equity, hedge funds and other areas of Hong Kong corporate finance law.

We also advise financial institutions on the development and introduction to market of new and innovative products and services, in particular on licensing or regulatory requirements, and ongoing compliance matters. We have a dynamic capital markets practice with extensive experience in representing sponsors and other financial institutions in connection with listings on both the Main Board and the Growth Enterprise Market (GEM) of the Hong Kong Stock Exchange. We also regularly advise financial institutions on both public and private M&A deals, including takeovers of public companies and international auction processes.

In addition, Charltons advises angel and strategic investors, venture capital / private equity funds and investment banks providing finance to start-up, early stage and growing companies. We also advise financial institutions and securities companies on SFC licensing requirements, approval criteria and application procedures, and on ongoing obligations of licensed persons.

Charltons can offer securities companies and financial institutions legal advice and has experience in Hong Kong corporate finance law.

 

Hong Kong’s financial markets are regulated by two principal authorities, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA).  The SFC is the regulator of Hong Kong’s securities and futures markets and derives its powers from the Securities and Futures Ordinance (Cap. 571). The HKMA, on the other hand, is responsible for banking stability and regulates financial institutions under the provisions of the Hong Kong Banking Ordinance (BO). Where a financial institution regulated by the HKMA conducts activities in Hong Kong’s securities and futures markets, it is additionally required to be registered with the SFC as a registered institution to conduct the relevant SFC-regulated activities.

Regulation of the Securities and Futures Markets

As the principal regulator of the securities and futures markets in Hong Kong, the SFC is responsible for authorising companies and their employees to conduct 10 types of “regulated activities”. These are:

  • Type 1    Dealing in Securities
  • Type 2    Dealing in Futures Contracts
  • Type 3    Leveraged Foreign Exchange Trading
  • Type 4    Advising on Securities
  • Type 5    Advising on Futures Contracts
  • Type 6    Advising on Corporate Finance
  • Type 7    Providing Automated Trading Services
  • Type 8    Securities Margin Financing
  • Type 9    Asset Management
  • Type 10  Providing Credit Rating Services

Companies other than authorised financial institutions must be licensed by the SFC as a licensed corporation in order to carry on any of the above regulated activities. Their employees who conduct such activities are also required to be licensed as licensed representatives of the licensed corporation. A licensed corporation is additionally required to appoint at least two responsible officers to supervise the conduct of each regulated activity it conducts. All executive directors of a licensed corporation must obtain SFC approval as responsible officers and at least one responsible officer for each activity must be an executive director. Licensed corporations are required to maintain specified amounts of paid-up share capital and liquid capital, the amounts of which vary depending on the type(s) of regulated activity conducted. Where  more than one activity is carried on, the highest amount applies. Persons applying to be licensed as representatives, or approved as responsible officers, must meet certain “fitness and properness” criteria in terms of academic qualifications, industry experience and regulatory knowledge.

An application for a new licensed corporation typically takes 15 weeks to be processed. The ongoing obligations of SFC-licensed corporations include an obligation to submit monthly financial resources returns to the SFC in the case of corporations licensed for regulated activities Types 1, 2, 3, 7 and 8.

An authorised financial institution (see regulation of financial institutions below) which proposes to conduct any regulated activity(ies) must register with the SFC as a registered institution. Employees who conduct regulated activities for registered institutions must have their names registered in the register maintained by the HKMA, but are not licensed by or registered with the SFC.

Regulation of Financial Institutions

Hong Kong operates a three-tier banking system which comprises licensed banks, restricted licence banks (RLBs) and deposit taking companies (DTCs), which are collectively referred to as “authorised institutions” (AIs). Hong Kong’s banking industry is principally regulated by the Hong Kong Monetary Authority (HKMA) which  is responsible for the authorisation and supervision of financial institutions in Hong Kong .

Only licensed banks can carry on banking business, which is defined as the business of receiving from the general public money on current, deposit, savings or other similar account on terms that it is repayable on demand or within less than 3 months or at call or less than 3 months’ notice or paying or collecting cheques drawn by or paid in by customers.

Restricted licence bank typically engage in capital markets transactions and merchant banking. They are allowed to take call, notice or time deposits of amounts exceeding HK$500,000 without any restriction on maturity.

Deposit taking companies generally conduct specialised activities such as consumer finance and securities business. They are restricted to taking deposits of over HK$100,000 with a maturity, or call or notice period, of 3 months or more.

Charltons can offer securities companies and financial institutions legal advice and has experience in Hong Kong corporate finance law.

Financial institutions legal advice

Securities companies

Hong Kong corporate finance law

Hong Kong Financial institutions legal advice

Financial securities companies

Legal advice for securities companies

Main Board of the Hong Kong Stock Exchange

Growth Enterprise Market GEM

Hong Kong Monetary Authority HKMA

Hong Kong financial law

Securities and Futures Ordinance Cap. 571
Hong Kong three-tier banking system
Legal financial services
Hong Kong financial center
Financial lawyer