Hong Kong Relaxes Professional Investor Rules
Tuesday, December 20, 2011
Hong Kong’s Securities and Futures Commission (SFC) has announced that
the Securities and Futures (Professional Investor) (Amendment) Rules 2011 have
come into effect.
The amendment rules implement the SFC’s proposals to enable firms to
use alternative methods to prove that an investor qualifies as a
high-net-worth professional investor under the Securities and Futures (Professional
Investor) Rules (PIR). However, the existing methods for proving that investors
qualify as professional investors have also been preserved.
The SFC has taken the view that it would not be desirable to seek to prescribe
all the possible ways that an investor could demonstrate that they have the
relevant assets so as to qualify as a professional investor under the new PIR.
The SFC will rely on the firms’ professional judgement to decide the methods
by which they can satisfy themselves that their clients have the required assets
or portfolio levels at the relevant date.
It therefore expects firms to keep proper records of their assessment process
so as to demonstrate that they have exercised professional judgement and have
reached a reasonable conclusion that their clients meet the relevant thresholds,
for example, keeping copies of the documents they have relied on to assess clients’
means.
Under the previous PIR, there are four types of high-net-worth professional
investors: a trust corporation with total assets of not less than HKD40m (USD5.1m),
or its equivalent; an individual with a portfolio of not less than HKD8m; a
corporation or partnership with either a portfolio of not less than HKD8m or
total assets of not less than HKD40m; or a corporation the sole business of
which is to hold investments and which is wholly owned by an individual who
has a portfolio of not less than HKD8m.
The proposals were subject of a public consultation, which was launched in
October 2010, and the conclusions of which were published in February this year.
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