Companies entering the industry for the purposes of managing real estate investment trusts (REITs)
(Q1, Q2, Q4, Q5 and Q7 were updated on 26 January 2022)
(Q3, Q6, Q8, Q9 and Q10 were superseded since 26 January 2022)

Q1 : Does a REIT management company need to obtain a licence from the SFC?

A:

A REIT 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 business scope and mode of operation. For instance, if the management company also undertakes matters in relation to 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), or if the company also involves 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.

For property developer intending to engage in REITs management business, it is suggested that it establishes a new company to carry out the proposed business. The new company shall be either incorporated in Hong Kong or an overseas company registered with the Companies Registry of Hong Kong.

For further information about the licensing requirements and procedures, please refer to the Licensing Handbook published by the SFC.

Q2 : What form of business structure is preferable for a REITs management company set up by a property developer?

A:

To obtain a licence, the new company should have proper business structure, adequate internal control systems and qualified personnel to ensure the proper management of the proposed business. For more information, please refer to the following publications issued by the SFC:-

  • Code on Real Estate Investment Trusts;
  • Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the SFC;
  • Guidelines on Competence;
  • Fund Manager Code of Conduct;
  • Corporate Finance Adviser Code of Conduct; and
  • Code of Conduct for Persons Licensed by or Registered with the SFC.

It is expected that the new company engages professional services in setting up the business and it shall appoint qualified management personnel, including its responsible officers and Managers-In-Charge of Core Functions (see SFC's circular regarding Measures for Augmenting the Accountability of Senior Management dated 16 December 2016) to oversee the entire process.  Such personnel should be familiar with the local regulatory framework, the fund management industry and able to oversee issues arising out of the listing of the REIT concerned and the property management team.

Such listing matters and the day to day property management functions can be either carried out by the new company internally or delegated to external parties.

Q3 : Superseded since 26 January 2022

A:

Q4 : What experience is expected of an individual proposed to become a responsible officer of a REIT management company?

A:

In addition to the general competence requirements (see paragraph 4.2 of the Guidelines on Competence), the individual should possess at least 5 years’ track record in investment management and/or property portfolio management.

Q5 : Is it necessary that all directors of a REIT management company be approved as responsible officers by the SFC?

A:

Only executive directors as defined under the Securities and Futures Ordinance (see the next paragraph) are required to be approved as responsible officers of the company.  However, the company should have at least one responsible officer being an executive director of the company.

“Executive director”, in relation to a licensed corporation, means a director of the corporation who -

  1. actively participates in; or
  2. is responsible for directly supervising,

the business of a regulated activity for which the corporation is licensed.

Q6 : Superseded since 26 January 2022

A:

Q7 : Will the SFC impose any licensing condition on a new company set up to become a REIT management company?

A:

For a new company set up solely for managing REITs, the SFC is likely to impose a licensing condition to confine its business activity to REITs management only.  In other words, the company would not be allowed to carry out any other business activities. 

Q8 : Superseded since 26 January 2022

A:

Q9 : Superseded since 26 January 2022

A:

Q10 : Superseded since 26 January 2022

A:

Last update: 26 Jan 2022

We use cookies to improve the website performance and user experience. If you continue to use this website, you are agreeing to their uses. Learn more about our privacy policy.