FAQs – Publicly offered investment products: Paper Gold Schemes

On December 22, 2023, the Securities and Futures Commission of Hong Kong (SFC) published revised Frequently Asked Questions on „Paper Gold Schemes“ which facilitate investments in gold, but do not involve the physical purchase or storage of actual gold bars. Instead, these schemes typically involve the sale of paper certificates or other financial instruments that represent ownership of gold. The gold may thereby be held by a third party, such as a bank or custodian, or it may exist only on paper.
The FAQs address – among others – issues such as the application process for a „Paper Gold Scheme“, the requirements for seeking authorization, time limits for supplying relevant documentation, corresponding filing fees, and the filing of the offering documents with the SFC.
This latest revised version contains one revised FAQ, namely FAQ 3, which reads as follows – as quoted:
FAQ 3: How do I apply for authorization of a PGS? (Page 3)
Answer: Applicants are required to submit the following documents upon submission of an application:
i. a duly signed letter of application setting out the subject application matter for authorization under Part IV of the SFO and details of nominated approved person (Application Letter);
ii. the PGS’s draft offering documents and constitutive documents;
iii. a duly signed and completed undertaking for: (a) compliance with the OP Section of the Handbook and the Advertising Guidelines Applicable to Collective Investment Schemes Authorized under the Product Codes; and (b) nomination of approved person (a form of which can be accessed via: https://www.sfc.hk/web/EN/forms/products/forms.html);
iv. a duly signed and completed confirmation as required by the SFC’s Circular to Product Providers of SFC-authorized unit trusts and mutual funds, SFC-authorized investment-linked assurance schemes and SFC-authorized unlisted structured investment products entitled “Guidance on Internal Product Approval Process”, as amended from time to time (a form of which can be accessed via: https://www.sfc.hk/web/EN/forms/products/forms.html);
v. any other relevant confirmations, undertakings and certifications, as the case may be, duly signed and completed by the relevant part(ies); and
vi. a cheque made payable to “Securities and Futures Commission”, or other means of payment acceptable to the SFC, in the amount of the applicable application fee (please refer to information on fees below).
A draft or proof of each document must be submitted in good order and suitable for the SFC’s prior vetting before the relevant authorization may be granted. During the application process, all changes to any subsequent draft documentation must be properly and comprehensively marked up to facilitate review by SFC staff.
A PGS must issue bilingual offering documents. The Chinese offering documents could be submitted when the English offering documents are in an advanced form before final authorization and they should be accompanied by a written confirmation regarding the truth and accuracy of the Chinese translation (please see Q.5 below).