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Comprehensive Regulatory Framework for OFCs
2:02
The Code on Open-Ended Fund Companies provides a comprehensive regulatory framework governing the establishment, management, and operation of open-ended fund companies in Hong Kong under the supervision of the Securities and Futures Commission. It sets out clear expectations for compliance with the Securities and Futures Ordinance, subsidiary legislation, and applicable codes and guidelines, emphasizing investor protection, transparency, and sound corporate governance. The Code applies to both public and private OFCs, with additional, tailored requirements for private OFCs, and it extends its application to each sub-fund of an umbrella structure to ensure consistency and segregation of liabilities. Central to the Code are general principles requiring key operators, including directors, investment managers, and custodians, to act honestly, competently, and diligently, manage conflicts of interest, protect scheme property, and maintain high standards of disclosure and regulatory compliance. Detailed provisions address registration requirements, naming conventions, board composition, appointment and oversight of investment managers and custodians, and the safeguarding of assets through robust custody and record-keeping arrangements. The Code also establishes clear standards for financial reporting, auditing, valuation, and disclosure to enable investors to make informed decisions, while imposing strict timelines for the publication and filing of financial reports. In addition, it provides structured procedures for scheme changes, termination, winding-up, and cancellation of registration, ensuring orderly processes that prioritize the fair treatment of shareholders. Overall, the Code plays a critical role in reinforcing Hong Kong’s fund regulatory regime by promoting market integrity, operational clarity, and investor confidence in the OFC structure.
Code on Open-Ended Fund Companies
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