Summary: - Date: September 17, 2025 - Agreement: SFC (Hong Kong) and SCA ("UAE") sign MOU for mutual recognition of UAE investment funds and management companies. - Requirements: UAE funds must comply with UAE and Hong Kong laws, meet specific fund types, and adhere to investor protection rules. - Process: SCA provides certification to the SFC, and funds must follow SFC's guidelines for application and authorization. - Key Points: Ongoing supervision by SCA, regular disclosure, and compliance with local and Hong Kong regulations.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On September 17, 2025, the Securities and Futures Commission ("SFC") and the Securities and Commodities Authority ("SCA") signed a memorandum of understanding ("MOU") aimed at facilitating seamless operations and cooperation between the two regulatory bodies for investment funds and management companies (Memorandum).
The agreement outlines key principles and requirements that must be adhered to by UAE Investment Funds seeking or having received authorisation for public offering in Hong Kong.
A UAE Investment Fund is defined as a fund domiciled in the UAE and authorized under the Memorandum, while a UAE Investment Management Company is a management company eligible to manage these funds.
The Memorandum also specifies that the fund must remain authorised by the SCA, comply with relevant laws in the UAE, and be allowed for marketing and distribution to retail investors in the UAE.
For public offering in Hong Kong, the fund must adhere to relevant Hong Kong laws and regulations, including compliance with SFC guidelines and requirements.
UAE Investment Management Companies must ensure fair treatment of investors in both the UAE and Hong Kong and maintain ongoing disclosure of information to investors in both jurisdictions, considering time zones and public holidays.
Funds seeking SFC authorisation must comply with the SFC Handbook for Unit Trusts and Mutual Funds, along with other relevant circulars, guidelines, and Hong Kong laws. If the fund complies with UAE laws, it is generally deemed to have complied with Hong Kong laws.
Eligibility requirements for UAE Investment Funds are detailed in Annex B and include general equity, bond, mixed funds, feeder funds, unlisted index funds, and Exchange-Traded Funds ("ETFs"). The SFC and SCA may extend the MOU to other fund types in the future.
Each UAE Investment Management Company must indicate the eligible fund type(s) to the SFC, ensuring compliance with all requirements and specific types. They must also meet investor protection requirements set out in paragraphs 11-32 and Annex A.
Ongoing supervision requires that UAE Investment Funds and their management companies remain licensed and supervised by the SCA, adhering to relevant laws and offering document provisions. Breaches must be reported to the SCA and SFC, with prompt rectification required in case of non-compliance.
Withdrawal of authorisation follows the SFC's process, with notice provided to Hong Kong investors if the company no longer wishes to maintain the authorisation. The SFC may modify or withdraw authorisation at any time.
Sale and distribution must comply with Hong Kong laws, using intermediaries licensed or registered with the SFC, and offering documents must be accurate, clear, and complete, with additional information for Hong Kong investors approved by the SCA.
Ongoing disclosure and updates must be available to investors in both the UAE and Hong Kong, with financial reports provided in English or Chinese, and advertisements complying with Hong Kong regulations.
The SFC deems a UAE Investment Fund to have substantially complied with the requirements of the UT Code, but each type must also meet specific additional requirements, detailed in Annex A.
The SFC has announced that UAE Investment Funds may now seek authorisation, encouraging applicants to consult the Investment Products Division for clarification or guidance.
The SFC will issue additional guidance, circulars, and other documents on its website. Applicants must request the SCA to provide the SFC with a certificate confirming the eligibility requirements are met. The SFC will not process applications without this certificate.
For detailed information on the application process for a UAE Investment Fund seeking SFC authorisation, applicants should refer to the SFC's website. The SFC's guidelines for compliance requirements are not legally defined categories but serve as indicators for the SCA.
Active Exchange-Traded Funds ("ETFs") must be non-complex investment products, with complexity determined by factors listed in paragraph 6.1 of the Guidelines on Online Distribution and Advisory Platforms. Scheme changes under certain provisions of the UT Code may not require SFC approval if specific requirements are met.
UAE Investment Funds must comply with minimum notice period requirements and content for notices to Hong Kong investors. Disclosure requirements in Annex A are satisfied if relevant disclosure is included in the SCA-approved prospectus, without the need for duplication in the Hong Kong covering document.
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