FAQs – Publicly offered investment products: MPF products

The Securities and Futures Commission of Hong Kong (SFC) has published revised „Frequently Asked Questions relating to MPF Products“. The FAQs address – among others – issues such as the application process for a MPF product, documents to be provided along with the application form, time limits for supplying relevant documentation, fees to be paid in this context, or the authorization of marketing material.
In comparing this latest revised version with the previous one, we have identified the following changes:
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##### (1) the revision of FAQ 7B under Section 2 (Others) of the document which reads as follows – as quoted:
Do scheme changes involving (a) an appointment of investment delegate(s) which are currently managing other existing SFC-authorized fund(s) and (b) the removal of investment delegate(s) require prior approval from the SFC pursuant to paragraphs 6.9, 6.12 and/or 8.2(b) of the MPF Code? Would prior notice be required to be provided to investors regarding these changes?
Answer: The SFC adopts a streamlined approach in respect of certain changes of investment delegate(s) of SFC-authorized MPF products. Under the streamlined approach, prior approval is not required from the SFC under paragraphs 6.9, 6.12 and/or 8.2(b) of the MPF Code in respect of the following types of changes in investment delegate(s), subject to the following applicable requirements being met:
(a) Replacement of existing investment delegate(s)/ appointment of new investment delegate(s)
– The new investment delegate(s) is/are currently managing other existing SFC-authorized fund(s); and belong(s) to the same corporate group as the (i) investment manager or (ii) (in the case of delegation by the immediate delegate of the investment manager to the new subinvestment delegate(s)) the immediate delegate of the investment manager; and
– Confirmation(s) and undertaking(s) as set out in the Compliance Checklist which are applicable to the change(s) are duly completed and properly executed and submitted to the SFC.
(b) Removal of investment delegate(s)
– The investment manager confirms that the confirmation(s)/undertaking(s) previously provided remain(s) valid; and
– The investment delegate(s) to be removed was/were not appointed and delegated at all times with the investment management functions subject to the authorization conditions imposed by the SFC.
For the avoidance of doubt, the above streamlined arrangements do not apply to changes in investment delegate(s) which will involve newly proposed all-time investment management delegation arrangement or result in a change in any all-time investment management delegation arrangement currently adopted by the MPF product(s).
Although the SFC’s prior approval is not required under the above streamlined approach, it is generally expected that one month’s prior written notice should be provided to the scheme participants. As part of the filing of the scheme changes, the investment manager is required to file the “Filing Form for Notice of Scheme Change(s) falling within 8.2B of the SFC Code on MPF Products (MPF Code) and Do Not Require SFC’s Prior Approval” together with the duly completed and properly executed confirmation(s) and undertaking(s) as set out in the Compliance Checklist which are applicable to the changes. These changes will be subject to post-vetting by the SFC.
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##### (2) the addition of FAQ 14A under same Section 2 (Others) of the document which reads as follows – as quoted:
Under what circumstance(s) may MPF issuers shorten the written notice period to scheme participants or fund holders for 8.2 Scheme Change(s)?
Answer: Normally, one month’s prior written notice is expected to be provided to scheme participants or fund holders for 8.2 Scheme Change(s), whereas a shorter notice period may be permitted where the proposed scheme changes are of demonstrable benefit to scheme participants or fund holders as provided under 8.3 of the MPF Code (with respect to Note (2) to 11.2 of the UT Code) or otherwise agreed by the SFC. A shorter notice period is acceptable for 8.2 Scheme Change(s) if the MPF issuer has obtained written consent from all of the scheme participants or fund holders. In case of doubt, early consultation with the SFC is encouraged.