Key Messages
- Managers of authorised funds must always act in the best interests of the fund's investors
- A fund's assets must be held by a trustee or custodian who is independent of the fund manager and acceptable to the SFC or suitable authority in your own country.
- Additionally, the assets of the fund must be segregated from the assets of the trustee or custodian, and neither the fund manager nor the trustee/custodian can use the fund's assets for their own benefit or to repay their own debts.
- These rules are in place to protect the interests of investors in the fund and ensure that their assets are managed in a responsible and transparent manner.
In order for a fund to be authorized, it must have a fund manager, trustee, and/or custodian who are acceptable to the SFC or suitable authority in your own country. This means that the SFC or suitable authority in your own country must review and approve the individuals or organizations that will be responsible for managing the fund and overseeing its assets. This is done to ensure that the fund will be managed by experienced and qualified individuals who are capable of acting in the best interests of the fund's investors. The presence of an independent trustee or custodian also helps to ensure that the fund's assets are properly safeguarded and managed in accordance with the rules and regulations set forth by the SFC or suitable authority in your own country.
Who are these fund managers?
A fund manager must meet several requirements in order to be acceptable to the SFC or suitable authority in your country. These requirements include being engaged primarily in the fund management business, having sufficient financial resources, proper internal controls, and written compliance procedures, and ensuring that the company's directors and key personnel have sufficient experience in managing the same kind of fund. These requirements are in place to ensure that the fund manager has the necessary expertise, resources, and controls to effectively manage the fund and act in the best interests of its investors.
How are fund managers supervised?
If a fund manager is based in Hong Kong, they may be required to be licensed by the SFC depending on the nature of their business. A licensed fund manager must comply with the relevant provisions of the Securities and Futures Ordinance and the Fund Manager Code of Conduct. These regulations provide guidance on the organization structure, staff ethics, fund management, operations, and client dealings of the fund manager. Agreements between foreign authorities and the SFC also ensure that there is timely exchange of information related to overseas-domiciled fund managers who manage authorised funds. Overseas fund managers without branch offices in Hong Kong must appoint Hong Kong representatives to act as a liaison with Hong Kong investors and the SFC. Additionally, individuals who manage the subscription and redemption activities of funds in Hong Kong must also be licensed by the SFC.
Remember that the authority supervising it will be different in each country of origin where the businesses are being held.