SFC Licensed Corporation Services in Hong Kong

Licensed corporations are obligated to submit their audited accounts and other prescribed documents—including audit disclosure documents, the Business Review Management Questionnaire (“BRMQ”), and the Financial Resources Return (“FRR”)—within four months after the end of each financial year, in accordance with section 156(1) of the Securities and Futures Ordinance (“SFO”).

Furthermore, if a licensed corporation ceases to carry on all of the regulated activities for which it is licensed, it is required to submit to the Securities and Futures Commission (“SFC”) its audited accounts and all other required documents, made up to the date of cessation, no later than four months after the cessation date.

Failure to meet these statutory deadlines may result in regulatory action, highlighting the importance of timely and accurate submissions to maintain compliance with the SFO.

In accordance with section 56 of the Securities and Futures (Financial Resources) Rules, licensed corporations are required to submit monthly Financial Resources Returns (“FRR”) to the Securities and Futures Commission (“SFC”). However, corporations licensed only for Type 4, Type 5, Type 6, Type 9, and/or Type 10 regulated activities, and whose licenses are subject to the condition that they shall not hold client assets, are only required to submit FRRs on a semi-annual basis.

Auditor Responsibilities:

• • • Audit Opinion on FRR: Auditors must provide an opinion on whether the FRRs submitted to the SFC have been correctly compiled from the licensed corporation’s records. If not, auditors must report the nature and extent of any discrepancies. This involves verifying the corporation’s compilations against the FRR requirements.

    • Compliance with Record-Keeping Rules: Auditors are required to assess whether the licensed corporation has satisfied the requirements of the Securities and Futures (Keeping of Records) Rules. This assessment includes evaluating whether adequate accounting control systems have been maintained.

    • Client Asset Considerations: For licensed corporations that do not receive or hold client money or securities—either by choice or as a licensing condition—auditors generally do not reference the Client Asset Rules in the Compliance Report. However, auditors must ensure that robust procedures are in place to prevent the inadvertent receipt or holding of client assets.

Scope of Audit Work:
Our audit involves:

• • 1. Expressing an opinion on whether the financial statements comply with the Securities and Futures (Keeping of Records) Rules and the Securities and Futures (Accounts and Audit) Rules.

    2. Compiling the Compliance Report to determine whether your licensed corporation has met the requirements relating to record-keeping, accounts and audit, and the handling of client money or securities (where applicable).

    3. Reviewing documentation prepared by your licensed corporation, including the Business Review Management Questionnaire (“BRMQ”), Financial Resources Returns (“FRR”), audit questionnaires, and account disclosure documents.

Key takeaway: Licensed corporations must ensure timely submission of accurate FRRs and maintain comprehensive record-keeping systems to demonstrate ongoing compliance with the SFO and related subsidiary legislation.

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