The Securities and Futures Commission said it has reduced the amount of time allowed for the application process from 12 months to six, in order to “further enhance the authorisation process” and because of delays caused by applicants in the process.
The new rules will include applicants seeking approval for unit trusts and mutual funds, unlisted structured investment products and real estate investment trusts and investment-linked assurance schemes.
As such, all applications for authorisation of SFC-authorised investment products received on or after 1 January 2014 will be processed according to the following revised timeline:
- If, for any reason, six months have elapsed from the “take-up date” and no authorisation has been granted, the application will lapse. The application fee will not be refunded to the applicant.
- If, for any reason, four months have elapsed from the take-up date and no authorisation has been granted, the SFC will issue a letter reminding and informing the applicant that the application will in general lapse at the expiry of six months from the take-up date.
- Once an application has lapsed, if the applicant wishes to seek authorisation of the SFC-authorised investment products, it shall make a new application, also pay the application fee for the new application and repeat the application procedures.
The new policy will not apply to applications for pooled investment funds which are made pursuant to both the Code on unit trusts and mutual funds and SFC Code on Mandatory Provident Fund products.
Also, existing applications which were received by the SFC before 1 January 2014 will continue to be subject to the current 12-month application lapse policy.
‘Far from optimal’
Interestingly, the SFC said part of the reason it is introducing the new six month process is because of the time it spent waiting for details from applicants.
The City watchdog said of the 111 funds authorised from January to July, only 28% of the total processing time was attributable to the SFC, while 72% was attributable to the applicants.
“This situation is far from optimal,” the regulator said in a statement.
“It could also adversely impact other applicants who are ready and able to launch their products but whose applications could not be processed speedily because the SFC’s resources are taken up by applications that are not ready.
“Importantly, a long processing time discourages potential applicants from obtaining authorisation in Hong Kong, and could damage the reputation of Hong Kong as an international asset management centre.”
SFC had introduced a 12-month application lapse policy in June 2010 with a view to weeding out applications where there was no serious intention to proceed.
