The Securities and Futures Commission (SFC) has issued guidance on the regulatory requirements for family offices which are set up in Hong Kong, typically to manage the financial affairs of single or multiple high net worth families.

Licensing requirements

Hong Kong does not have a specific licensing regime for family offices. The licensing requirements will be determined by the operations and activities undertaken by the family office, rather than the type of family structure it serves. Accordingly, if the services provided by a family office do not constitute any regulated activity or they fall within any of the available carveouts stipulated under Schedule 5 of the Securities and Futures Ordinance (SFO), the family office is not required to be licensed under the SFO.

Single Family Offices

Single family offices may operate in a number of different ways, which will lead to different consequences under the licensing regime. The following examples illustrate common scenarios where no license is required:

  • a trustee appointed by the family operates only as an internal unit to manage the family's trust assets
  • a family office provides asset management services solely to its related entities, namely, its wholly-owned subsidiaries, its holding company that holds all the issued shares and that holding company's other wholly-owned subsidiaries
  • a family office is established as a separate legal entity wholly owned by a trustee or a company that holds the assets of the family

Multi Family Offices

A multi-family office serves more than one high-net-worth family. The type of SFC license required depends on the services to be provided to these families. For example:

  • if a multi-family office provides services to clients who are not related entities in the same way as those for single family offices described above, it may be required to be licensed
  • if a multi-family office is granted full discretionary investment authority, it is likely its asset management activities will need to be licensed for Type 9 regulated activity
  • if a family office has not been granted full discretionary investment authority and only provides securities investment advice and executes securities transactions, it may need to be licensed for Type 1 and Type 4 regulated activities. If the assets include futures contracts, it may need to be licensed for Type 2 and Type 5 regulated activities

Actions to consider

  • Family offices should review their operations and activities to determine whether:
    • a licence may need to be obtained from the SFC
    • any carve-outs under Schedule 5 of the SFO are applicable
  • Family offices which are not licensed under the SFO should ensure they do not hold themselves out as carrying on a business in a regulated activity
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