Mutual Recognition of Funds (MRF) between Malaysia and Hong Kong

On July 23, 2026, the Securities and Futures Commission ("SFC") and the Securities Commission Malaysia ("SC") executed a Memorandum of Understanding Concerning Mutual Recognition of Covered Funds and Simplified Dual IPO Listing Framework. This agreement expands eligible products under the Mutual Recognition Framework ("MRF") and strengthens regulatory cooperation, superseding the 2009 Declaration on Mutual Cooperation on Development of Islamic Capital Market. The framework establishes a streamlined authorisation process for Malaysian Funds and Management Companies in Hong Kong, provided they meet specific eligibility and compliance standards.

General Principles and Regulatory Framework

The MRF operates on the principle that Malaysian Funds seeking SFC authorisation under Section 104 of the Securities and Futures Ordinance ("SFO") must remain authorised by the SC in Malaysia and comply with both Malaysian and Hong Kong laws. Funds must ensure fair treatment for investors in both jurisdictions, with ongoing disclosure provided simultaneously where practicable. While generally deemed compliant with Hong Kong laws if they meet MRF conditions, additional requirements apply to ensure investor protection. The SFC Handbook and relevant circulars remain applicable, and the SC has issued reciprocal guidelines for Hong Kong funds seeking approval in Malaysia.

Eligibility Requirements and Fund Types

Eligibility requirements are detailed in Annex B to this circular, with provisions for potential future extension to other fund types. All Malaysian Funds must comply with the specific requirements applicable to all funds. Applicants are encouraged to consult the SFC Investment Products Division early for guidance. The SFC will not process applications unless the SC provides a certificate confirming compliance with the Eligibility Requirements listed in Annex B.

Operational and Compliance Requirements

Malaysian Funds must appoint a Hong Kong representative in compliance with the UT Code and maintain ongoing supervision by the SC, including licensing under the Capital Markets and Services Act 2007. Any changes to the fund must comply with applicable laws, be approved by the SC, and be notified to the SFC and investors simultaneously. In the event of a breach or cessation of eligibility, the Management Company must notify the SC and SFC immediately and rectify the breach. Withdrawal of authorisation requires application to the SFC and investor notice. The SFC retains the right to modify or withdraw authorisation conditions at any time.

Marketing, Disclosure and Fees

Sale and distribution in Hong Kong must be conducted by SFC-licensed intermediaries. Offering documents must be accurate, up-to-date, and may utilise SC-registered documents supplemented by a Hong Kong covering document to meet disclosure requirements. All disclosure, including financial reports and notices, must be made available to investors in both jurisdictions simultaneously, in English and Chinese. Advertising must comply with the SFC Advertising Guidelines, and applicable application, authorisation, and annual fees must be paid by the Management Company.

Definitions and Regulatory References

For the purposes of this circular, a Malaysian Fund is a Malaysia-domiciled fund eligible for SFC authorisation under the MRF, and a Malaysian Management Company is eligible to manage such funds. Footnotes clarify that Islamic CIS refers to Shariah-compliant schemes, equal treatment applies to notice periods, and disclosure duplication is not required if already in the SC prospectus. The Advertising Guidelines referenced are those applicable to Collective Investment Schemes Authorised under the Product Codes. This circular was last updated on 23 July 2026.