On January 29, 2026, the Securities and Futures Commission ("SFC") issued a circular reminding licensed corporations ("LCs") of their statutory obligations during SFC inspections, emphasizing the importance of cooperation and compliance with Section 180 of the Securities and Futures Ordinance ("SFO"). The SFC has observed unsatisfactory practices and behaviors that could impede its supervisory efforts, and non-compliance may result in regulatory actions, including supervisory interventions, enforcement actions, and criminal proceedings.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On January 29, 2026, the Securities and Futures Commission ("SFC") underscored the importance of compliance and cooperation with Section 180 of the Securities and Futures Ordinance ("SFO") during inspections of licensed corporations ("LCs").
The SFC's inspections highlighted instances where LCs engaged in unsatisfactory practices, often due to a lack of understanding of the SFO or inadequate awareness of their statutory obligations. These practices hindered supervisory efforts, compromising market integrity.
The SFC expects LCs to be well-prepared for inspections, promptly retrieving relevant information and responding to inquiries. The Appendix to the circular provides examples of unsatisfactory practices, reiterates statutory obligations, and outlines expected standards of conduct.
Key expectations for LCs during inspections include granting access to requested records, maintaining accurate records, ensuring the availability of responsible officers, remaining fit and proper, and holding accountable external representatives. Non-compliance may result in regulatory actions.
Failure to cooperate or to comply with the SFO's requirements may prompt the SFC to impose conditions on an LC's license, evaluate fitness and properness, or refer concerns to other regulatory authorities. Enforcement actions may involve criminal proceedings or disciplinary actions against the LC and its management.
The Manager-In-Charge ("MIC") of the Overall Management Oversight ("OMO") function and those who impede the SFC’s inspection are held accountable and may face regulatory actions.
The SFC applies consistent principles and standards for inspections under various statutory provisions, including those for virtual asset service providers and Mandatory Provident Fund ("MPF") intermediaries.
The SFC promotes ongoing dialogue with LCs and adopts a pragmatic approach. If additional time is needed for responses, LCs should notify the SFC and propose a new timeline for review and approval.
For any queries, LCs should contact their case officers-in-charge.
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