You must be a company incorporated in Hong Kong or an overseas company registered with the Companies Registry of Hong Kong.

You have to satisfy the SFC that you have proper business structure, good internal control systems and qualified personnel to ensure the proper management of risks that you will encounter in carrying on your proposed business as detailed in your business plan. Please refer to the following publications of the SFC for more information:

• “Guidelines on Competence”;
• “Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission” (Code of Conduct); and
• "Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission".

You should appoint not less than two responsible officers to directly supervise the conduct of each regulated activity you apply for.

For each regulated activity you apply for, you should have at least one responsible officer available at all times to supervise the business. The same individual may be appointed to be a responsible officer for more than one regulated activity provided s/he is fit and proper to be so appointed and there is no conflict in the roles assumed.

At least one of your proposed responsible officers must be an executive director as defined under the SFO.

The SFC generally expects that the Managers-In-Charge of the Overall Management Oversight function and the Key Business Line function described in the section of “Senior Management” of this page should seek the SFC’s approval as responsible officers in respect of the regulated activities they oversee. For details, please refer to the “Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management” and FAQ (Measures for augmenting senior management accountability in licensed corporations).

All your executive directors must seek the SFC’s approval as responsible officers accredited to your corporation.

All applications for approval as responsible officers should be lodged with the SFC for consideration together with your licence application.

The senior management of your corporation should bear primary responsibility for ensuring the maintenance of appropriate standards of conduct and adherence to proper procedures by you.

The SFC is of the view that senior management of a licensed corporation includes, among others:

• directors of the corporation,
• responsible officers of the corporation, and
• individuals whom we call the Managers-In-Charge of Core Functions (MICs).

These three categories are not mutually exclusive. For instance, an individual can simultaneously be a director, responsible officer and MIC of a licensed corporation.

When applying for a licence under section 116(1) of the SFO, you are required to provide information regarding your MICs and your organisational chart.

The management structure of a licensed corporation (including its appointment of MICs) should be approved by the Board of the corporation. Furthermore, the Board should ensure that each of the corporation’s MICs has acknowledged her/his appointment as MIC and the particular Core Function(s) for which s/he is principally responsible.

After being licensed, you are required to notify the SFC of any changes in your appointment of MICs or any changes in certain particulars of your MICs within seven business days of the changes. In some situations, you are also required to submit an updated organisational chart in your notification of that change.

For details of the requirements, please refer to the “Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management” and FAQ (Measures for augmenting senior management accountability in licensed corporations).

Your substantial shareholders, officers and any other person who is or is to be employed by, or associated with, you for the purposes of the regulated activity for which the application is made shall be fit and proper. Please refer to section 129 of the SFO for details.

A substantial shareholder not having a “close link” with the corporate licence applicant may be allowed to provide less information in the application form, although the SFC may subsequently require additional information to be submitted if deemed necessary.

Depending on the type(s) of regulated activity that you apply for, you have to maintain at all times paid-up share capital and liquid capital not less than the specified amounts according to the Securities and Futures (Financial Resources) Rules and other regulatory requirements such as the Sponsor Guidelines (Appendix A to the "Guidelines on Competence") and the Code on Open-Ended Fund Companies, where applicable. If you apply for more than one type of regulated activity, the minimum paid-up share capital and liquid capital that you should maintain shall be the highest amount required amongst those regulated activities you apply for.

The following table summarises the minimum paid-up capital and liquid capital that a licensed corporation is required to maintain for each type of regulated activity.

Minimum paid-up share capital and liquid capital requirements

Please refer to the Securities and Futures (Financial Resources) Rules for more information on financial resources requirements, e.g. the computation of liquid capital.

As a newly licensed firm, you are expected to have sufficient financial resources for you to commence and maintain business operations. As such, a corporate applicant is required to provide a projection of its operating expenses to be incurred in the first six months after having been licensed. If its excess liquid capital cannot cover the projected expenses, the applicant would have to provide a plan demonstrating that additional funding would be forthcoming when needed.

The Securities and Futures (Insurance) Rules set out the insurance requirements applicable to licensed corporations. If you wish to apply for Type 1 (dealing in securities) and/or Type 2 (dealing in futures contracts) regulated activity and intend to be an exchange participant, you should be prepared to take out insurance under the approved master policy. Related administrative matters are being dealt with by the appointed insurance broker.

See also FAQ (Insurance requirements applicable to certain licensed corporations).

Please refer to the Securities and Futures (Insurance) Rules for more information.

Given the broader clientele coverage, the complexity of the business activities undertaken, and the need to have day-to-day dealings and communications with the exchanges, the SFC generally expects that an exchange participant of The Stock Exchange of Hong Kong Limited or Hong Kong Futures Exchange Limited to have at least two responsible officers locally available at all times to directly supervise its brokerage business.

To be eligible to act as a sponsor or a compliance adviser, you are required to be licensed for Type 6 regulated activity that (i) can meet the eligibility criteria set out in the Sponsor Guidelines (Appendix A to the "Guidelines on Competence") and (ii) remain fit and proper as a licensee. Your Management and you shall be responsible for ensuring that the firm satisfies all specific and on-going eligibility criteria of the Sponsor Guidelines and paragraph 17 of the Code of Conduct. (The Sponsor Guidelines and the Code of Conduct can be downloaded from the SFC website (http://www.sfc.hk) under the “Rules & Standards” section.)

See also FAQ (Sponsor regime).

To be eligible to undertake activities in connection with matters regulated by the Hong Kong Codes on Takeovers and Mergers and Share Buy-backs (Codes on Takeovers), you are required to (a) be licensed for Type 6 regulated activity; (b) meet the additional competence requirements set out in the TC Adviser Guidelines (Appendix B to the "Guidelines on Competence"); and (c) remain fit and proper as a licensee. Your Management and you shall be responsible for ensuring that individuals appointed by you to advise on any transaction falling within the ambit of the Codes on Takeovers meet the respective eligibility criteria under the TC Adviser Guidelines and are duly licensed.

A REITs management company is required to be licensed for Type 9 regulated activity (asset management). Whether it needs to be licensed for other type(s) of regulated activity depends on its mode of operation. For instance, if the management company will also be involved in the listing application of the scheme itself (without appointing a listing agent), the company will need to be licensed for Type 6 regulated activity (advising on corporate finance). If the company will also be involved in distributing REITs or other securities, it will need to be licensed for Type 1 regulated activity (dealing in securities) in addition to Type 9.

See also FAQ (Companies entering the industry for the purposes of managing real estate investment trusts (REITs)).

Data centres at which licensed corporation’s electronic regulatory records are exclusively kept are also required to be approved by the SFC under section 130 of the SFO regardless of whether they are located in Hong Kong. This requirement applies to data centres used by an electronic data storage provider engaged by a licensed corporation or its affiliate as well as to an affiliate’s own data centres. Approvals may be given subject to any condition imposed under section 403 of the SFO, including the condition that all physical records or documents are kept in approved premises in Hong Kong.

See also “Circular on the use of external electronic data storage” and the FAQ (Use of external electronic data storage) .

You should be carrying on a business principally outside Hong Kong in an activity which, if carried on in Hong Kong, would constitute a regulated activity. You seek to be licensed for a limited period of time (as mentioned below) for the regulated activity solely for carrying on in Hong Kong such business in the activity. In addition, you are authorised by a relevant regulatory organisation in your home jurisdiction to carry on such business in that place.

A temporary licence holder may carry on one or more of the following regulated activities only:

• Type 1 (dealing in securities)
• Type 2 (dealing in futures contracts)
• Type 4 (advising on securities)
• Type 5 (advising on futures contracts)
• Type 6 (advising on corporate finance)
• Type 10 (providing credit rating services)

You cannot hold any client assets in carrying on the regulated activity.

Your temporary licence, if granted, will be for a duration of not more than three months at any one time.

You will not be granted temporary licences for more than 6 months in total within any period of 24 months.

You are required to nominate at least one individual for approval by the SFC for the purposes of section 117(5)(a) of the SFO. That individual shall be available at all times to supervise the business of regulated activity.

Your substantial shareholders, officers and any other person who is or is to be employed by, or associated with, you for the purposes of the regulated activity for which the application is made shall be fit and proper. Please refer to section 129 of the SFO for details.

A substantial shareholder not having a “close link” with the corporate licence applicant may be allowed to provide less information in the application form, although the SFC may subsequently require additional information to be submitted if deemed necessary.

You must be an authorized financial institution.  It is desirable that you notify the HKMA before submitting an application for registration to the SFC.

You should appoint not less than two executive officers responsible for directly supervising the conduct of each regulated activity you apply for.

For each regulated activity, you should have at least one executive officer available at all times to supervise the business.  The same individual may be appointed to be an executive officer for more than one regulated activity provided that s/he is fit and proper to be so appointed and there is no conflict in the roles assumed.

An executive officer is a person who has obtained the consent of the HKMA to act in such capacity under the Banking Ordinance.  The HKMA is obliged to refuse to give that consent unless it is satisfied that the individual is a fit and proper person and has sufficient authority to be an executive officer of the registered institution concerned.

Executive officers are expected to meet the same competence requirements as responsible officers of licensed corporations described in Responsible officers.

Individuals engaged to carry on regulated activity on your behalf are regarded as relevant individuals. They are not required to be registered or licensed with the SFC, but their names and certain particulars have to be entered in the register maintained by the HKMA.

It is a statutory condition of registration for every registered institution that its relevant individuals are fit and proper.  In relation to competence requirements, executive officers are expected to meet the same requirements as responsible officers of licensed corporations while other relevant individuals are expected to meet the same competence requirements as licensed representatives.

Your substantial shareholders, directors, chief executive, managers (as defined in section 2(1) of the Banking Ordinance), executive officers and any other person who will be acting for or on behalf of you in relation to the regulated activity for which the application is made shall be fit and proper.  Please refer to section 129 of the SFO for details.

The SFC generally expects that MICs of two core functions set out in the“Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management”  issued on 16 December 2016, namely the Overall Management Oversight function and the Key Business Line function, should seek the SFC’s approval to be responsible officers in respect of the regulated activities they oversee.

For details of the requirements, please refer to the “Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management” and FAQ (Measures for augmenting senior management accountability in licensed corporations).

Relevant industry experience generally refers to hands-on working experience acquired through the carrying on of regulated activities in Hong Kong or similarly regulated activities elsewhere. The SFC may also accept experience gained in a non-regulated situation where, for example, the experience is relevant to the carrying on of the proposed regulated activities but the related activities are exempted from licensing or registration requirements in Hong Kong or elsewhere. In assessing the “relevance” of an individual’s experience, the SFC will consider whether the substance of the experience is directly relevant or crucial to the regulated activities proposed to be carried on by the individual and the role that the individual will undertake.

The SFC recognises a broader range of industry experience as being relevant when considering responsible officer applications seeking accreditation to private fund managers. For example, experience in proprietary trading, research, and managing alternative investment strategies such as special situations will be considered as industry experience directly relevant to the provision of asset management services which target professional investors only. While the SFC may also consider an individual with experience which is indirectly relevant to asset management such as sales, marketing and risk management of funds, that individual will likely be imposed with the non-sole condition on his or her licence.

See also paragraph 4.1.9(a) of the "Guidelines on Competence". 

The SFC may consider industry experience acquired on a wholly incidental basis as relevant to asset management. For example, the SFC may recognise the discretionary account management experience acquired by a Type 1 licensed individual who conducts such management activities wholly incidental to his or her conduct of dealing activities as relevant industry experience when he or she applies to carry on asset management.

See also paragraph 4.1.9(b) of the "Guidelines on Competence".

The SFC recognises experiences in conducting research, valuation and due diligence of companies in related industries, providing management consulting and business strategy advice to companies in related industries, managing and monitoring a private equity fund’s underlying investments of the best interests of fund investors, and structuring corporate transactions, such as management buyouts and privatisations when assessing relevant industry experience of an individual for carrying on activities relating to private equity.

See also  paragraph 4.1.9(c) of the "Guidelines on Competence".

Another example is that where the regulated activity carried on by a licensed corporation is based on the utilisation of a highly innovative technology, a proposed responsible officer’s direct previous experience in the relevant technology itself may be essential in integrating the technology into the regulated activity carried on by the licensed corporation. If so, the SFC may recognise such technology experience as relevant industry experience.

However, a traditional brokerage firm which provides some dealing services through an online trading platform is unlikely to be considered as conducting regulated activities with the platform being a central element of those activities. As such, the SFC may not recognise this as relevant industry experience.

If an individual has previously led the research, development and maintenance of an algorithmic investment and portfolio management system, such experience may be regarded as relevant industry experience for the purpose of his or her licence application accredited to a corporation which provides robo-advisory services.

See also paragraph 4.1.9(d) of the "Guidelines on Competence".

When assessing the industry experience claimed by an applicant, the SFC will take into account the business activities of the firm to which s/he was accredited. In particular, if the firm was largely or completely dormant for a prolonged period, the industry experience purportedly gained by the applicant may be less effectual for fulfilling the competence requirements.

The SFC will only grant licences to individuals if they will come to Hong Kong to carry on regulated activities on behalf of the licensed corporations they are accredited to.

If a responsible officer will be stationed overseas and come to Hong Kong to carry on regulated activity from time to time, s/he should expect a non-sole condition to be imposed on her/his licence. Her/His principal should ensure that it has sufficient onshore responsible officers who are free from any licensing condition with respect to the regulated activity to supervise the business of regulated activity in Hong Kong.

For details, please refer to the “Circular clarifying the licensing obligations of corporations and individuals and more particularly those conducting business outside Hong Kong”.

Itinerant professionals should not be responsible officers because responsible officers are required to be responsible for overseeing the regulated activity for which their principal is licensed. Itinerant professionals spend only short periods in Hong Kong from time to time and for specific purposes.  This is generally incompatible with the performance of the obligations that are imposed on responsible officers.

The Sponsor Guidelines (Appendix A to the "Guidelines on Competence") set out eligibility requirements for being a sponsor principal of a licensed corporation of Type 6 regulated activity that engages in sponsor work.  In particular, to qualify as a sponsor principal under Options 2 or 3 (see paragraph 3.2.3 of the Sponsor Guidelines), you may have to pass the Licensing Examination Paper 15 administered by the Hong Kong Securities and Investment Institute.

In general, a sponsor principal should be a responsible officer of the sponsor. They should be responsible for supervising the regulated activity at all times and their licence or registration should be free from any condition concerning her/his competence to advise on, or engage in, sponsor work. However, a sponsor can appoint a responsible officer who is subject to the non-sole condition as sponsor principal, provided that s/he is fully competent to act as a sponsor principal and her/his licence is subject to the condition solely because s/he is based outside Hong Kong. Such appointment is subject to the sponsor having at least one other sponsor principal (a) who is eligible to act as a sponsor principal under Option 1 of paragraph 3.2.3 of the Sponsor Guidelines and based in Hong Kong and (b) whose licence is not subject to the non-sole condition or any other condition restricting her/him from advising on, or engaging in, sponsor work. Itinerant professionals are not eligible to act as sponsor principals.

See also FAQ (Sponsor regime).

To be eligible to advise on matters regulated by the Codes on Takeovers, a responsible officer for Type 6 regulated activity is required to additionally satisfy the eligibility criteria set out in the TC Adviser Guidelines (Appendix B to the "Guidelines on Competence"), including possessing sufficient experience in advising on transactions falling within the ambit of the Codes on Takeovers and the required number of years of experience in corporate finance advisory. For details of the eligibility criteria, please refer to paragraph 2.2.1 of the TC Adviser Guidelines. Responsible officers who meet the eligibility criteria are eligible to advise on Codes on Takeovers-related matters in a sole capacity (i.e. TCRO ). If the SFC is not satisfied that a responsible officer has fully met the eligibility criteria under paragraph 2.2.1 of the TC Adviser Guidelines, a licensing condition may be imposed on the individual’s licence such that s/he shall act together with another responsible officer whose licence is not subject to any condition in relation to undertaking activities in connection with matters regulated by the Codes on Takeovers (i.e. “non-sole capacity”). Itinerant professionals are not eligible to act as TCROs.

Fund managers applying to be a responsible officer for Type 9 regulated activity to be accredited to a Real Estate Investment Trust management company are required to demonstrate a track record of at least five yearsin investment management and/or property portfolio management, in addition to the general competence requirements for responsible officers as stipulated in the Guidelines on Competence.

See also FAQ (Companies entering the industry for the purposes of managing real estate investment trusts).

If you intend to be a representative of a licensed corporation of Type 6 regulated activity that engages in sponsor work, you are required to satisfy additional competence requirements. In particular, under paragraph 4.1 of the Sponsor Guidelines (Appendix A to the "Guidelines on Competence"), you may have to pass the Licensing Examination Paper 16 administered by the Hong Kong Securities and Investment Institute.

See also FAQ (Sponsor regime).

If you intend to be a representative of a licensed corporation of Type 6 regulated activity and undertake activities in connection with matters regulated by the Codes on Takeovers, you are required to satisfy additional competence requirement set out in the TC Adviser Guidelines (Appendix B to the "Guidelines on Competence"). Under paragraph 3.1 of the TC Adviser Guidelines, you may have to pass the Licensing Examination Paper 17 administered by the Hong Kong Securities and Investment Institute.

If you intend to be a representative of a licensed corporation of Type 6 regulated activity that engages in sponsor work, you are required to satisfy additional competence requirements. In particular, under paragraph 4.1 of the Sponsor Guidelines (Appendix A to the “Guidelines on Competence” ), you may have to pass the Licensing Examination Paper 16 administered by the Hong Kong Securities and Investment Institute.

See also FAQ (Sponsor regime).

TC Advisers

If you intend to be a representative of a licensed corporation of Type 6 regulated activity and undertake activities in connection with matters regulated by the Codes on Takeovers, you are required to satisfy additional competence requirement set out in the TC Adviser Guidelines (Appendix B to the “Guidelines on Competence”). Under paragraph 3.1 of the TC Adviser Guidelines, you may have to pass the Licensing Examination Paper 17 administered by the Hong Kong Securities and Investment Institute.