Hong Kong - Changes To Professional Investor Rules

On 18 May 2018 the SFC published the conclusions of its consultation on proposed amendments to the Securities and Futures (Professional Investor) Rules (PI Rules).

 

The proposed amendments included expanding the categories of persons who will qualify as professional investors; allowing the aggregation of certain assets in determining whether PI asset tests are met; and recognising alternative forms of evidence to show whether a person meets the relevant asset or portfolio thresholds to qualify as a professional investor.

 

The SFC has decided to proceed with the adoption of the proposed changes with the exception of the proposal to allow an individual to count the portfolio held by a corporation if he or she partially owns the corporation when determining whether he or she qualifies as a professional investor. The changes will however allow portfolios held in joint accounts with persons other than associates and the portfolios of investment corporations owned by individuals to be counted to ascertain whether individuals meet the monetary threshold to qualify as professional investors.

 

Suggestions made in responses to the consultation to:-

 

(a)      expand the definition of PI to include individuals who are themselves regulated persons; and

 

(b)      count other portfolio-linked assets such as investment linked assurance schemes and structured deposits were rejected for the time being but the SFC have indicated that these suggestions may be kept under review and included in a future consultation.

 

Whilst the changes are by no means momentous, they should be welcomed by industry participants. The amended PI Rules are expected to come into effect on 13 July 2018.

 

For more see Conventus Law.