Securities & Futures Commission of Hong Kong

Ongoing obligations

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General

Licensed corporations, licensed representatives (including responsible officers) and registered institutions must remain fit and proper at all times. They have to comply with all applicable provisions of the SFO and its subsidiary legislation as well as the codes and guidelines issued by the SFC.  This page highlights certain ongoing statutory obligations imposed on licensed corporations, licensed individuals, registered institutions and associated entities of intermediaries. 

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Exhibition of licence or certificate of registration 

For licensed corporations and registered institutions, you should exhibit your licence or certificate of registration in a prominent place (such as the client reception area) at your principal place of business.  If you have more than one place of business, a certified copy of your licence or certificate must be exhibited in a prominent place at each of your other places of business (section 3 of the Securities and Futures (Miscellaneous) Rules).

If your place of business consists of more than one floor in the same building, it may not be necessary to display your licence or certificate at each of the floors if all the floors share a common client reception area and your licence or certificate is displayed therein. 

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Availability of responsible officers

The SFO requires that there must be at least one responsible officer available at all times to supervise the licensed corporation’s business of carrying on a regulated activity. If all responsible officers are out of Hong Kong on a business trip or on leave, the licensed corporation complies with such requirement so long as the responsible officer(s) can be contacted (preferably by telephone) whenever necessary and proper internal controls are in place. However, this should be regarded as an interim measure only and the out of town period of the responsible officers should be reasonable for the proper discharge of their duties.

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Cessation of business

Licensed corporations

  • The SFC has the power to revoke or suspend your licence (in related to all or certain regulated activity(ies)) under section 195(1)(c) of the SFO, if you do not carry on all or some of the regulated activity(ies) for which you are licensed.  
     
  • In any event, if you intend to cease to carry on any regulated activities, you should notify the SFC as mentioned below, and should also request a revocation, under section 195(1)(d) of the SFO, of either (i) your licence (if all regulated activities under your licence are to be ceased) or (ii) the regulated activity(ies) to be ceased.  

  • Notifications should be made to the SFC through the SFC Online Portal (or by completing Form 5) of your intended cessation (as well as the related cessations of your licensed individuals) as soon as reasonably practicable and in any event not later than 7 business days before such intended cessation (section 135(1) of the SFO).

  • If you have ceased to carry on all or any regulated activities for more than one month, you should return the licence certificate to the SFC for cancellation or amendment (as the case may be) within 37 days after the cessation unless the SFC has approved a longer period for such purpose (section 4 of the Securities and Futures (Miscellaneous) Rules).
     
  • If you cease to carry on all regulated activities, you are also required to submit audited accounts to the SFC within 4 months after the date of cessation (see Submission of audited accounts, etc.).

Registered institutions

  • If you intend to cease to carry on any regulated activity, you should notify the SFC through the SFC Online Portal (or by submitting Form 5) of your intended cessation as soon as reasonably practicable and in any event not later than 7 business days before such intended cessation.  You should also notify the same to the HKMA in writing within that time limit (section 135(1) of the SFO).

  • After you cease to carry on all or any of your registered regulated activities for more than one month, you should return your certificate of registration to the SFC for cancellation or amendment (as the case may be) within 37 days after the cessation unless the SFC has approved a longer period for such purpose (section 4 of the Securities and Futures (Miscellaneous) Rules)  
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Notification by licensed corporations, licensed individuals and registered institutions 

Apart from notifying the SFC of any intended cessation of business, licensed persons and registered institutions are required to notify the SFC of certain changes in the information that they have provided to the SFC in their initial applications.  In the case of registered institutions, the notification should be made to both the SFC and the HKMA.  

The changes requiring notification by licensed persons and registered institutions are specified in section 135 of the SFO and Parts 1 to 3 of Schedule 3 to the Securities and Futures (Licensing and Registration) (Information) Rules.  

In the case of entities belonging to the same group of companies, a licensed corporation or registered institution may make a notification on its behalf and on behalf of other group entities in respect of the same change. The notification should state clearly on whose behalf it is made, and the represented entities should be aware of the notification. 

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Notification by directors and substantial shareholders of licensed corporations

A director of a licensed corporation is required to notify the SFC of his/her becoming or ceasing to be a director of the corporation within 7 business days after the event takes place (section 135(6) of the SFO).

A substantial shareholder of a licensed corporation is required to notify the SFC of changes in his/her particulars as detailed in Part 4 of Schedule 3 to the Securities and Futures (Licensing and Registration) (Information) Rules. 

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Notification by associated entities of intermediaries

An associated entity of an intermediary is required to notify the SFC within 7 business days of its becoming an associated entity and ceasing to be an associated entity (section 165 of the SFO). The particulars required for notification are set out in sections 3 and 4 of the Securities and Futures (Associated Entities – Notice) Rules.  Where there is any change in the particulars notified, the associated entity shall within 7 business days thereafter notify the SFC of such change through the SFC Online Portal (or by completing Form 6).

An associated entity is also required to notify the SFC of its financial year end within one month after becoming an associated entity (section 155(1)(b) of the SFO).  This requirement does not apply to an associated entity which is an authorized financial institution.

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Summary of notification requirements

Some of the more common change events that require notification are shown in the table below.  For details of the notification requirements, you should refer to relevant provisions of the SFO (e.g. sections 123 and 135) and the Securities and Futures (Licensing and Registration) (Information) Rules.  For licensed individuals, notifications must be made through the SFC Online Portal.

Types of change / events

Applicable to

Notification time limit

Cessation of business

LC, LR, RI

At least 7 business days before the intended cessation of business

Ceased to act as a licensed representative

LC, LR

Within 7 business days

Ceased to act as a responsible officer

LC, RO

Within 7 business days

Change in name

LC, LR, RI, SS

Within 7 business days

AE

Within 7 business days

Change in business address

 

LC, RI

At least 7 business days before the intended change in business address

AE

Within 7 business days

Change in director or his/her particulars

 

LC, RI

Within 7 business days

AE

Within 7 business days

Change in complaints officer or his/her particulars

LC, RI

Within 7 business days

Change in emergency contact person or his/her particulars

LC, RI

Within 7 business days

Change in share capital or shareholding structure

LC, RI, SS

Within 7 business days

AE

Within 7 business days

Change in contact information

 

LC, LR, RI, SS

Within 7 business days

AE

Within 7 business days

Significant changes in nature of business carried on and types of services provided

LC, RI

Within 7 business days

Significant changes in business plan

LC, RI

Within 7 business days

Changes in Managers-In-Charge of Core Functions (MICs) (including any new appointment and cessation of appointment)

LC

Within 7 business days

Changes in certain particulars of MICs

LC

Within 7 business days

Change in bank accounts

 

LC

Within 7 business days

AE

Within 7 business days

Change in associated entity or its particulars

LC, RI

Within 7 business days

AE

Within 7 business days

Change in insurance policy maintained under the Securities and Futures (Insurance) Rules

LC

Within 7 business days

Change in auditor’s name

LC, RI

Within 7 business days

Give notice of a motion to change auditor in a general meeting, etc. (see section 154 of the SFO)

LC

Within 1 business day

AE which is not an authorized financial institution

Within 1 business day

Change in executive officer or his/her particulars

RI

Within 7 business days

AE

Within 7 business days

Change in status of any authorization to carry on a regulated activity by authority or regulatory organization in Hong Kong or elsewhere

LC, LR, RI

Within 7 business days

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Submission of audited accounts, etc.

Licensed corporations and associated entities of intermediaries (except those which are authorized financial institutions) are required to submit their audited accounts and other required documents within 4 months after the end of each financial year (section 156(1) of the SFO).

If a licensed corporation ceases carrying on all of the regulated activities for which it is licensed, it should submit to the SFC its audited accounts and other required documents, made up to the date of cessation, not later than 4 months after the date of the cessation.  The same requirement applies to an associated entity (which is not an authorized financial institution) of an intermediary upon its ceasing to be an associated entity of the intermediary (section 156(2) of the SFO).

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Submission of financial resources returns

Licensed corporations are required to submit monthly financial resources returns to the SFC. However, corporations that are licensed only for Type 4, Type 5, Type 6, Type 9 and/or Type 10 regulated activities and whose licences are subject to the condition that they shall not hold client assets, are only required to submit semi-annual financial resources returns (section 56 of the Securities and Futures (Financial Resources) Rules).  

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Payment of annual fees


Annual fees are waived until 31 March 2018.  Please see “Circular Regarding Waiver of Annual Licensing Fees”.

All licensed persons and registered institutions should pay annual fees within one month after each anniversary date of their licences or registrations (section 138(2) of the SFO).  The annual fee amounts are shown in the table below. 

Types of intermediary

Types of regulated activity (RA)

Annual fee amount

LC

RA other than Type 3

$4,740 per RA

Type 3

$129,730

LR (not approved as RO)

RA other than Type 3 

$1,790 per RA

Type 3

$2,420

LR (approved as RO)

RA other than Type 3

$4,740 per RA

Type 3

$5,370

RI

RA other than Type 3 and Type 8

$35,000 per RA

Failure to make full payment of the annual fee before the due date will attract a surcharge on the outstanding amount and possible suspension and revocation of a licence or registration (sections 138(3) and 195(4)(a) and (6) of the SFO).  Details are set out in the table below.

Overdue period

Penalty

Less than 1 month

10% surcharge

Over 1 month but less than 2 months

30% surcharge

Over 2 months but less than 3 months

50% surcharge

Over 3 months but less than 4 months

Suspension of licence or registration

Over 4 months

Revocation of licence or registration

 
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Submission of annual returns

Licensed corporations and licensed individuals are required to submit annual returns to the SFC within one month after each anniversary date of their licences (section 138(4) of the SFO). For licensed individuals, annual returns must be submitted through the SFC Online Portal. For licensed corporations, submission through the SFC Online Portal is preferred, but a paper form (Form 7) is also available.

Failure to submit annual return before the due date could result in suspension and revocation of the licence (sections 195(4)(b) and (6) of the SFO). Details are set out in the table below.

Overdue period

Penalty

Over 3 months but less than 4 months

Suspension of licence or registration

Over 4 months

Revocation of licence

 
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Continuous professional training (CPT)

Licensed corporations and registered institutions are primarily responsible for designing and implementing a continuous education programme best suited to the training needs of the licensed representatives or relevant individuals they engage.  Such programmes should enhance the individuals’ industry knowledge, skills and professionalism.  The firms have to perform due diligence to ensure CPT compliance by the individuals concerned. 

Licensed individuals and relevant individuals of registered institutions are generally required to complete 5 CPT hours per calendar year for each regulated activity which they may carry out, except for Type 7 regulated activity (providing automated trading services).  

The CPT requirement for a responsible officer is no different from that of a representative In terms of the number of CPT hours. However, in terms of the content, please refer to paragraphs 7.1 and 7.2 of the "Guidelines on Continuous Professional Training" for examples relevant to each level.  The important point to note is that the training topics must be relevant to the functions to be performed by the person.

Further to paragraph 6.2 of the "Guidelines on Continuous Professional Training", the taking of online courses will be considered as self-study. Provided that there are independent assessments, such as evaluation or test results, and sufficient records to demonstrate fulfilment and duration of training, they can be counted towards acceptable CPT activities.  Those online courses have to be of relevance to the licensees’ functions.

Licensed corporations and registered institutions should keep sufficient records on the programmes and the CPT activities undertaken by the individuals for a minimum of 3 years and be made available for inspection upon request by the SFC or the HKMA. Individuals should also retain their own CPT compliance records for a minimum of 3 years.

For details, please refer to the “Guidelines on Continuous Professional Training”. 

Please note that you are not required to attend courses offered by the approved CPT providers to fulfil CPT requirements. A CPT provider approved by the SFC is just one option.

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