Subsidiary legislation for open-ended fund companies gazetted
- the Securities and Futures (Amendment) Ordinance 2016 (Commencement) Notice (the Commencement Notice);
- the Securities and Futures (Open-ended Fund Companies) Rules (the OFC Rules); and
- the Securities and Futures (Open-ended Fund Companies) (Fees) Regulation (the Fees Regulation).
The Inland Revenue (Amendment) (No. 2) Ordinance 2018, which extends profits tax exemption to onshore privately offered OFCs, will also take effect on July 30, 2018.
"With the commencement of the OFC regime, fund managers will have the option of setting up a fund in the form of a company, in addition to the form of a unit trust. This additional choice should help diversify Hong Kong's fund domiciliation platform and build up our fund manufacturing capabilities. This will in turn help further develop Hong Kong's asset management industry," a government spokesperson said.
An OFC is a collective investment scheme with variable capital set up in the form of a company, but with the flexibility to create and cancel shares for investors' subscription and redemption in the fund. Also, an OFC will not be bound by restrictions on distribution out of capital applicable to a conventional company, and instead may distribute out of capital subject to solvency and disclosure requirements. The SFC will be the primary regulator responsible for the registration and regulation of OFCs under the Securities and Futures Ordinance (Cap. 571). The Companies Registry will oversee the incorporation and statutory corporate filings of OFCs and the Official Receiver's Office the winding-up procedure.
The three pieces of subsidiary legislation will be tabled before the Legislative Council on May 23, 2018, for negative vetting.