Sequel to domestic private equity destinations，Hong Kong No. 9 License for Private Equity Managers ─ Apply? Not applying?

How to apply for a license：Qualifications and conditions for private equity fund managers to apply for a No. 9 license. There are currently two ways to obtain a license on the market.：First, the fund manager sets up a subsidiary in Hong Kong；The second is that fund managers acquire companies that have successfully held No. 9 license plates.。Because the time and cost spent through acquisition are almost the same as re-applying for a license，And the new establishment is more conducive to brand inheritance，Therefore, it is more common to apply for a new establishment。

However，According to the Securities and Futures Ordinance，Whether applying to become a licensed corporation or a responsible officer or licensed representative，You must have relevant qualifications to be eligible to apply。

1. The conditions for private equity fund managers to apply for No. 9 license are based on Article 116 of the Securities and Futures Ordinance.、118Article 1 and the explanations of the "Licensing Manual" (hereinafter referred to as the "Licensing Manual") formulated by the SFC in April 2017，Private equity fund managers applying for the No. 9 license must meet the following conditions:：
2. The applicant is a "fit and proper person"[7]；
3. The applicant must be a company incorporated in Hong Kong or a non-Hong Kong company registered at the Hong Kong Registry；
4. Applicants must be able to maintain sufficient paid up capital and liquid capital。

9Number plate for this

Require

as follows：

1. If the institution provides asset management while，Subject to licensing conditions not to hold client assets[8]，There is no limit on the minimum paid-in share capital，However, the minimum liquid capital amount is HKD 100,000；
2. In other cases, the minimum paid-in share capital is HKD 5 million.，The minimum liquid capital amount is HKD 3 million；
3. Applicants must have an appropriate business structure、Good internal control systems and qualified personnel，To manage the risks of asset management activities；
4. The applicant has at least 2 responsible persons to oversee the risks of the applicant’s asset management activities，One of them must be an executive director；
5. For individual regulated activities，There should be at least 1 responsible person available to supervise relevant activities at all times，The same person can be appointed responsible officer for more than one regulated activity，Provided that he is a suitable candidate and the relevant duties do not conflict with；
6. Applicant’s major shareholder、Senior managers and relevant persons must meet the fit and proper requirements

Require

。

1. The conditions for licensed representatives to apply for license No. 9 are in accordance with Section 120 of the Securities and Futures Ordinance and Chapter 5 of the Licensing Manual，Licensed representatives applying for No. 9 license must meet the following conditions：
2. The applicant is a "fit and proper person"；
3. Applicants must have academic/industry qualifications、Relevant industry experience、Recognized industry qualifications；
4. Applicants must pass the Hong Kong local regulatory framework papers (local regulatory framework papers，Validity period is within 3 years before the application date[9]）。
5. The conditions for responsible persons to apply for license No. 9 are based on the Securities and Futures Ordinance.，Applicants can apply to be responsible persons for multiple licenses at the same time，And can serve as the responsible officer of multiple licensed corporations at the same time，However, the applicant must explain to SFC，Carrying out multiple regulated activities at the same time or serving as a responsible officer of multiple licensed corporations at the same time，There is no conflict of interest in these circumstances。

The responsible person applying for No. 9 plate must meet the following conditions：

1. The applicant is a "fit and proper person"；
2. The applicant has sufficient authority within the corporation；
3. Applicants must have relevant academic/industry qualifications；
4. Applicants have relevant industry experience (3 or more years of experience within the last 6 years)、5 or more years of experience within the last 8 years、Or have 8 or more years of experience within the last 11 years，Applicable depending on other abilities)；For applicants from the Mainland/or mainly working in the Mainland，For example, there is a high degree of compatibility and similarity between the work experience in the Mainland and the business in Hong Kong.，may also be considered by SFC to have relevant industry experience。

And for plate No. 9，SFC recognizes the applicant’s qualifications obtained from the Asset Management Association of China and the China Securities Regulatory Commission，and experience as a fund manager in a mainland asset management company；

1. Applicants must have at least 2 years of relevant management experience；
2. The applicant has passed the Hong Kong local regulatory framework examination (valid within 3 years before the application date)。

It is worth noting that，Although there have been cases showing that the responsible officer does not necessarily have to have an employment relationship with the licensed corporation，However, in practice it is still recommended that the responsible officer be an employee of a licensed corporation，So as not to cause the SFC to question whether the responsible officer is able to devote sufficient time to the regulated activities of the licensed corporation、energy and whether there is a conflict of interest with the officer's duties to other corporations.。

And generally，Only if the licensed corporations concerned belong to the same group of companies，Only the same person can apply to become the responsible person of multiple licensed corporations at the same time。

at the same time，According to the foregoing，Applicants for licensed corporations must be companies incorporated in Hong Kong or non-Hong Kong companies registered at the Hong Kong Registry，therefore，Except for mainland private equity fund managers registered with the Hong Kong Registry，Not eligible to apply for No. 9 plate directly as a mainland entity，Application is often made by establishing a subsidiary in Hong Kong。However，Mainland natural persons can apply to become responsible persons。

Chapter 5 of the Licensing Manual stipulates the circumstances under which overseas residents may apply to become responsible persons.。According to these regulations，(1) Only if the applicant will carry out asset management activities on behalf of a licensed corporation in Hong Kong，SFC will issue a license to it。

In other words，Only when the applicant actually engages in asset management business in Hong Kong，Only those who are qualified to receive a license；(2) If the applicant will be stationed overseas and will carry out asset management activities in Hong Kong from time to time，then a non-exclusive condition may be imposed on the license obtained by the applicant (i.e. when the responsible person actively participates in or directly supervises the business for which the relevant firm is licensed to operate)，Must act on the advice of another responsible person who is not subject to this condition)。

The process of applying for No. 9 plate. Applicants need to go through the SFC online portal.，according to

Require

Submit relevant materials。Corporations can submit applications through the SFC online portal or follow the SFC’s

Require

Submit paper application materials。Applications for licensed representatives and responsible officers should be submitted at the same time as the application for corporate licensing。

Normally，SFC will：

1. Process applications for temporary licensed representatives within 7 working days；
2. Processing of applications for licensed representatives within 8 weeks；
3. Responsible officer applications processed within 10 weeks；
4. Process corporate licensing applications within 15 weeks。Based on relevant experience，Most fund managers use intermediaries to handle

Application process

，The required time is at least 6 months，Usually 9-12 months。

9Subsequent compliance of number plates

Require

：Continuing obligations SFC except in advance

Require

licensed corporation、Licensed representatives and responsible persons (hereinafter collectively referred to as "licensed entities") must possess appropriate qualifications.，return

Require

A licensed entity must meet the following subsequent compliance requirements at any time after obtaining a license

Require

：

1. Licensed entities should meet the conditions of “fit and proper person”；
2. Licensed entities should report the company license application/use status、Information about directors and major shareholders、Notify SFC of any associated entities or any changes in information related to license application；
3. Licensed corporations and associated entities are required to conduct financial audits on an annual basis，and submit financial audit documents to SFC；
4. The minimum paid-up share capital and liquid capital of a licensed corporation must be maintained at all times throughout the period of holding the license；
5. Licensed corporations should submit financial resource returns/annual returns to the SFC monthly/half-yearly[10]；
6. Licensed entities shall pay annual fees；
7. Licensed entities should submit annual reports to the SFC；
8. Licensed corporations should provide ongoing training to their management personnel；Licensed personnel should receive continuous training and are exempted from applying for a license. The Securities and Futures Ordinance clarifies the circumstances under which the applicant may be exempted from applying for a license.，Exemptions that mainly apply to private equity fund managers include：
9. Immunity for incidental conduct；
10. Exemption for providing advice to group members。
11. Exemption for incidental conduct "Exemption for incidental conduct" refers to licensed corporations and licensed representatives that have obtained one or more types of operating licenses，If it conducts a business activity that is completely incidental to its licensed activities，These incidental regulated activities do not require corresponding licenses。

For example，Private equity fund managers may engage in securities transactions for the purpose of their asset management activities、Securities Consulting (i.e. No. 1、4related regulated activities) or other regulated activities，Generally speaking, there is no need to apply for a corresponding financial license separately for such activities。

1. Exemption for advising group members if the relevant person is a wholly-owned subsidiary of the group、A holding company that holds all of its issued shares or another wholly-owned subsidiary of such holding company (a "group member") provides asset management services with respect to the assets of such group member company，And such services do not involve the client assets of group members，Limited to providing asset management services for group members’ own assets，Then the person usually does not need to apply for No. 9 plate。

that is，If a corporation provides investment advice/or relevant research reports to group members for their own use，Even if the group member may rely in whole or in part on such opinion/research report in servicing its clients (the opinion/research report shall not be specific to the client)，However, if the group member provides opinions/research reports to clients in its own name，and have assessed the corporation’s opinions before providing the relevant opinions/research reports，then the corporation can still enjoy the exemption。

[1] Securities and Futures Ordinance, Cap. 571(Version as of April 20, 2018 and its updated versions from time to time)。[2] According to Section 114(8) of the Securities and Futures Ordinance (Section 114(8)），May face a fine of up to HK$5 million and a prison sentence of up to 7 years (can be punished concurrently)。

[3] See Part 2 of Schedule 5 of the Securities and Futures Ordinance (Schedule 5 – Part 2）。

[4] According to Section 11 of the Companies Ordinance (Section 11)，A company established in Hong Kong is a private company if it meets the following characteristics:：

1. Articles of Association (i) Restrict shareholders’ rights to transfer shares；(ii) Limit the number of shareholders to 50 (inclusive) or less；and (iii) prohibit inviting the public to subscribe for any shares or bonds of the company；and
2. The company is not a company limited by guarantee。

[5]Schedule 5-Part 2 of the Securities and Futures Ordinance。[6] Because only licensed corporations、Only licensed representatives can engage in asset management activities corresponding to the No. 9 license，Therefore, this article does not apply to short-term licensed corporations.、Short-term licensed representative conducts analysis。

at the same time，Because the temporary licensed representative license is a temporary license issued by SFC before deciding to issue a licensed representative license to the applicant.，That

Require

Same as applying for a Licensed Representative License，And when the applicant obtains a licensed representative license，The temporary license will be withdrawn by the SFC，Therefore, there is no special analysis。

[7] According to the "Guidelines on Fit and Proper Persons"，The selection of a suitable candidate must be considered through the following factors：

1. The financial situation and solvency of the person concerned；
2. The academic or other qualifications or experience of the person concerned，This consideration must have regard to the nature of the functions to be performed by the person；
3. Whether the person concerned is capable of performing his duties competently、Conduct relevant regulated activities honestly and fairly；
4. the credibility of the person concerned、character、Reliability and financial soundness。

[8] This means that client assets must be deposited with the custodian。[9] See Appendix B of "Guidelines on Competence"。[10] But for holding 4、5、6、9、10Class licenses and corporations whose licenses are subject to the condition that they are not allowed to hold client assets，Only a financial resources declaration form must be submitted every six months。

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