FAQs – Publicly offered investment products: Revamped Post Authorization Process of SFC-authorized Unit Trusts and Mutual Funds

On December 22, 2023, the Securities and Futures Commission of Hong Kong (SFC) published revised Frequently Asked Questions on Revamped Post Authorization Process of SFC-authorized Unit Trusts and Mutual Funds. Generally speaking, these cover issues such as the types of applications handled under the „revamped process“, the time limit to submit all relevant documentations to the SFC, or the channels via which documents must be submitted. „Post authorization“ means any filings in relation to post authorization changes to the fund (i.e. fund merger, relocation, change in investment strategy, etc.)
Having applied a text comparison tool, we found the following FAQs updated as compared to the most previous version of 2020.
—
FAQ 2: What should I submit in order for the SFC to start processing my application(s) under the Revamped Post Authorization Process?
Answer: Under the Revamped Post Authorization Process, an application will only be processed by the SFC when all relevant documents that meet the applicable requirements and are of good quality have been submitted. These documents include:
– properly completed new application form(s) (posted on the SFC’s website);
– duly executed confirmations (standardised templates for confirmations are set out in the List of Confirmations of Compliance related to Application for Approval of Scheme Change(s) pursuant to 11.1 of the Code on Unit Trusts and Mutual Funds (UT Code) and in respect of Recognised Mainland Funds (as defined below), the List of Confirmations of Compliance related to Application for Change(s) that Require SFC’s Prior Approval in relation to Recognised Mainland Funds; and
– all the necessary supporting documents.
To apply for the authorization of revised offering documents, the following documents should be submitted to the SFC:
– a covering letter identifying the changes to be made in the current offering documents, the authorization date of the current version and other references (where applicable);
– a marked-up version of the draft revised offering documents;
– proper annotation for revised sections;
– properly completed new application form(s) (posted on the SFC’s website);
– confirmation of compliance signed by a senior executive of the management company (or an appropriate person designated by the senior executive) with
overall responsibility for the application; and
– fees are required for authorization of changes only if they involve the authorization of a new fund.
Where applicable, applicants may make reference to the Guide on Practices and Procedures for Application for Authorization of Unit Trusts and Mutual Funds,
which contains disclosure guidance for the funds’ offering documents to facilitate applicants’ preparation of their funds’ revised offering documents. For funds that have made substantial amendments or a series of changes to its offering documents, you are advised to consolidate these amendments in one single offering document and seek authorization for the consolidated version for ease of understanding by investors.
Our requirements for processing amendments to a fund’s constitutive documents are substantially the same as above. If the SFC is not satisfied with the completeness or sufficiency of the information contained in the first submission package, or does not consider the documents submitted to be in good order or suitable for clearance, the submission will be returned to the applicant and the application will not be processed. The SFC also reserves the right not to process an application if its accompanying documents do not in any material aspect meet the requirements of:
– the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products (SFC Handbook);
– the UT Code;
– the SFC Code on MPF Products (only applicable to approved pooled investment funds offered to retail investors); and/or
– the Circular entitled “Mutual Recognition of Funds between the Mainland and Hong Kong” issued by the SFC on 22 May 2015 as may be amended from time to time and related guidance (only applicable to SFC-authorized Mainland funds (Recognised Mainland Funds) under the Mainland-Hong Kong mutual recognition of funds arrangement).
The SFC reserves the right to require further information and/or confirmation(s) where necessary and appropriate.
—
FAQ 3A: In general, what types of applications will be processed under the “Complex Applications” stream and the “Simple Applications” stream?
Answer: “Complex Applications” are intended to cover applications which may require longer processing time. The following post authorization applications will
generally be processed as a Complex Application:
i. new and/or change in appointment of:
(a) management company; and/or
(b) trustee / custodian, each of which is not currently acting in the relevant capacity for any SFC-authorized funds;
ii. change in place of domicile of SFC-authorized funds;
iii. merger of SFC-authorized funds;
iv. termination of SFC-authorized funds involving specific issues, considerations and/or circumstances (eg, a fund to be terminated is subject to unresolved tax issues or pending tax clearance or the underlying investments cannot be liquidated due to trading suspension); and
v. there are material issues and/or policy implications (eg, a material change in the extent of investment in financial derivative instruments, a change in an index which is not currently adopted by any existing SFC-authorized unlisted index funds or index-tracking exchange-traded funds (ie, passive ETFs)) relating to the application.
In general, all applications which are not deemed to be Complex Applications will be processed as Simple Applications.