Press Releases

Securities and Futures (Amendment) Ordinance 2016 gazetted

The Government published in the Gazette today (June 10) the Securities and Futures (Amendment) Ordinance 2016 (the Amendment Ordinance), which enables the introduction of a new open-ended fund company (OFC) structure in Hong Kong.

The Amendment Ordinance mainly amends the Securities and Futures Ordinance (Cap. 571) (SFO) to provide for a legal framework for the registration and incorporation of OFCs and the regulation of such companies and their businesses. Its main provisions will commence operation on a date to be appointed by the Secretary for Financial Services and the Treasury by notice published in the Gazette.

A Government spokesman said, "The new OFC structure will diversify our fund domiciliation platform and create a more flexible business environment for fund managers, which will attract more funds to choose to domicile in Hong Kong.

"The introduction of the OFC regime in Hong Kong is consistent with our policy objective to diversify fund types, expand the fund distribution network and promote fund origination. It will in turn be conducive to Hong Kong's further development as an international asset management hub."

Currently, an open-ended investment fund may be established under the laws of Hong Kong in the form of a unit trust, but not in corporate form due to various restrictions on capital reduction under the Companies Ordinance (Cap. 622) (CO).

An OFC is an open-ended collective investment scheme set up in the form of a company, but with the flexibility to create and cancel shares for investors' subscription and redemption in the funds, which is currently not enjoyed by conventional companies. Also, OFCs will not be bound by restrictions on distribution out of share capital applicable to companies formed under the CO, and instead may distribute out of share capital subject to solvency and disclosure requirements.

Given that OFCs are set up as an investment fund vehicle, the Securities and Futures Commission (SFC) will be the primary regulator responsible for the registration and regulation of OFCs under the SFO. The Companies Registry will be responsible for the incorporation and statutory corporate filings of OFCs.

The detailed operational and procedural matters will be set out in a new piece of subsidiary legislation, the OFC Rules, to be made by the SFC under the SFO.