FAQs – Publicly offered investment products: Code on Unit Trusts and Mutual Funds

The Securities and Futures Commission of Hong Kong (SFC) has published a revised version of its frequently asked questions (FAQs) on the Code on Unit Trusts and Mutual Funds. The FAQs cover nearly all aspects (requirements) set out in the Code, including the following:
– basic requirements for fund authorization;
– fund’s structure and domicile and obligations relating thereto;
– fund managers‘ eligibility requirements;
– general obligations of trustee/custodian;
– provisions for a waiver from the UT (Unit Trust) Code requirements;
– authorization of Index Funds, Leveraged Funds, ETFs/Listed Funds, structured funds, and others; and
– requirements with respect to the disclosure of information to investors regarding the fund’s distribution policy.
In this latest edition, various amendments were made as follows (please note that the affected FAQs are cited from the document):
(1) Addition of new FAQ 19A: Can an SFC-authorized fund invest in debt securities issued or guaranteed by Mainland policy banks? Can these securities be considered Government and other public securities as referred to under paragraphs 7.4 and 7.5 of the UT Code?
Answer to FAQ 19A: Yes, an SFC-authorized fund may invest in debt securities issued or guaranteed by the three Mainland policy banks (the Agricultural Development Bank of China, the China Development Bank and The Export-Import Bank of China), subject to the investment restrictions under paragraphs 7.4 and 7.5 of the UT Code.
(2) FAQ 20B as regards permissible investments in virtual assets was removed
(3) Modification of FAQ 27: If a fund has a master offering document prepared outside Hong Kong, may I submit a Hong Kong Offering Document instead of the full version of the master offering document?
Answer to FAQ 27: The basic disclosure requirements for a fund’s offering document are set out in Appendix C of the UT Code. The Hong Kong Offering Document must satisfy the UT Code requirements. If the Hong Kong Offering Document relies on references or information in the master offering document to form a complete disclosure document, the SFC may require that the master offering document also be authorized.
A fund should not circulate to the Hong Kong public its master offering document, which is prepared for distribution outside Hong Kong, if the document has not been authorized by the SFC.
(4) Modification of FAQ 34A: Does the SFC require the Dividend Composition Information to be disclosed in a particular manner?
These modifications are only editorial, non-material in nature for clarification purposes (e.g. „such“ is replaced with „the Dividend Policy“, etc.). Please see the answer on page 27 of the document.