The fund market in Hong Kong is well known for its established presence, offering a diverse range of over 2,000 publicly offered funds. These funds include options from both local and overseas sources. Among the various structures available, unit trusts and corporate funds play a prominent role. Unit trusts operate based on a trust model, while corporate funds follow a mutual fund approach.
What is an open-ended fund company (OFC fund)?
In Europe and US, it is common for funds to be established in forms of companies. Therefore, many overseas funds recognised by the Securities and Futures Commisssion (SFC) are structured are structured as corporations. However, in Hong Kong, due to restrictions imposed by the Companies Ordinance on reducing share capital and making distributions out of capital, funds in Hong Kong have traditionally been established as units trusts rather than corporations. In 2018, Hong Kong introduced a new fund structure called the "open-ended fund company" (OFC) under the Securities and Futures Ordinance. This framework provides an alternative corporate fund structure alongside the existing unit trust option for investment funds based in Hong Kong. The OFC structure became effective on July 30, 2018. An Open-Ended Fund Company (OFC fund) functions as its own legal entity, distinct from unit trusts. It has its own board of directors who hold the crucial responsibility of upholding fiduciary and statutory duties towards the OFC. The assets owned by the OFC are safeguarded and held separately from other assets by a custodian. Furthermore, an investment manager with proper licensing or registration from the SFC is appointed by the OFC to carry out Type 9 regulated activity, specifically asset management. An Open-Ended Fund Company (OFC fund) can have sub-funds. Each sub-fund operates under a "protected cell" regime. This regime ensures that the assets and liabilities of each sub-fund remain separate from others, reducing the risk of one sub-fund's insolvency impacting others. It is important to note that this concept is relatively new. The recognition of liability separation may vary among overseas courts based on jurisdiction. The Company Registry will offer a comprehensive selection of information about OFCs (Open-Ended Fund Companies) that can searched. This includes details such as names of OFCs, instruments of incorporation, directory of directors, registered office address, and more. Additionally, the SFC’s website provides a list of OFCs that have been duly registered.
Benefits of open-ended fund company (OFC fund)
Open-ended fund companies (OFC Funds) established under a favorable regulatory environment offer you benefits. Compared with offshore fund companies, there are cost savings compared to traditional offshore jurisdictions. Overseas investors' familiarity with corporate structures facilitates global distribution. Open-end fund companies (OFC Funds) are suitable for public and private funds, including public and private funds, listed and unlisted funds, hedge funds, private equity funds and closed-end funds. Another advantage is easy management. Open-end fund companies (OFC Funds) do not need to submit annual reports, and there is no mandatory annual general meeting. They only need to comply with basic ongoing regulatory requirements. Government grant of up to HK$1 million per newly-incorporated or re-domiciled OFC. Open-ended fund companies (OFC funds) can also enjoy benefit from Hong Kong profits tax exemptions.
What CityLinkers can help for open-ended fund company (OFC fund)?
The experts at CityLinkers offer the knowledge and support you need. Drawing on our extensive experience and deep understanding of the business landscape, we have successfully guided numerous open ended fund companies through their challenges. Regulatory compliance holds utmost importance in the operation of any business, particularly within the financial sector. Our dedicated team will provide guidance to help you understand intricate regulations, ensuring that your company conducts its affairs within the boundaries set by governing bodies. We offer comprehensive assistance, encompassing understanding and implementation of new regulations, meticulous documentation maintenance, and accurate reporting. We acknowledge the unique challenges and intricate nature involved in managing an open-ended fund company. Consequently, our expertise is specifically tailored to cater to your requirements for clear and compliant operations within this domain. CityLinkers has the expertise to meet your needs. We provide a comprehensive range of services tailored to address the specific challenges faced by businesses in the financial sector. Our knowledgeable team excels in regulatory compliance, investor relations, and operational strategies, ensuring we can effectively navigate any obstacles that may arise in these areas. CityLinkers aim to go beyond the mere provision of services. They are committed to fostering enduring relationships with their clients, comprehending their distinctive challenges and aspirations. Leveraging their extensive expertise and profound understanding of the business landscape, CityLinkers have successfully assisted numerous open-ended fund companies in surmounting obstacles and attaining remarkable accomplishments.