OFAC revokes so-called U-turn authorization for Cuba-related financial transactions
OFAC published a final rule that modifies the Cuban Assets Control Regulations to revoke the so-called "U-turn" authorization.
Currently, open-ended investment funds may be established in Hong Kong as unit trusts, but not in corporate form due to restrictions on capital reduction under the Companies Ordinance (CO).
The Securities and Futures (Amendment) Bill 2016 (Bill), which was gazetted on January 15, 2016, seeks to amend the Securities and Futures Ordinance (SFO) to introduce an open-ended fund company (OFC) structure in Hong Kong. The Bill provides the framework and enabling provisions for the new OFC structure. Detailed operational and procedural matters will be set out in new subsidiary legislation under the SFO and will be supplemented by rules, codes and guidance to be issued by the Securities and Futures Commission (SFC). The Bill also provides for consequential incidental changes to other Ordinances.
A three-month public consultation on OFCs was held in 2014, the conclusions of which were published by the the Financial Services and the Treasury Bureau (FSTB) on the same day as the Bill (January 15, 2016). The FSTB noted that respondents to the consultation were generally supportive of the introduction of a Hong Kong OFC, with specific comments focussing on technical aspects.
The Bill, which aims to diversify the fund types available in Hong Kong, to expand the existing fund distribution network and to promote fund origination in Hong Kong, will be introduced at the Legislative Council meeting of January 27, 2016.
An OFC is an open-ended collective investment scheme set up in the form of a company, with limited liability and variable share capital, which will have flexibility not enjoyed by companies formed under the CO. Pursuant to the Bill, it will be possible to structure them using an umbrella fund structure so that there could be multiple separate sub-funds each of whose assets are managed in accordance with its own investment objectives and policies and are for the benefit only of that sub-fund rather than the umbrella fund or other sub-funds.
As investment vehicles, OFCs are not designed to engage in commercial trade and business. OFCs will not be bound by restrictions on the reduction of share capital which apply to ordinary companies so they will be able to vary their share capital to create and cancel shares in order to meet investor redemption requests. Nor will they be restricted from distributing out of share capital, subject to solvency and disclosure requirements. OFCs will also benefit from the disapplication of certain corporate filing requirements due to the nature of OFCs as investment funds, for example, simplified annual returns.
An OFC could be a publicly or privately-offered fund. The investment scope of privately-offered funds should align with that applicable to existing type 9 regulated activity (managing a portfolio of securities, futures contracts, real estate investment schemes and, in due course, over-the-counter derivatives) with a 10% exemption threshold for other asset classes. Publicly-offered funds will mainly be able to invest in securities, futures and over-the-counter derivatives (asset classes in accordance with the SFC’s product code requirements and authorisation conditions). If an OFC will be publicly-offered it will need to be SFC-authorised in the same way as other SFC-authorised products.
An OFC will not be required to be licensed as a licensed corporation under the SFO but will need to be registered with the SFC before it can be incorporated by the Companies Registry. It will also be required to delegate investment management to an investment manager approved by its board of directors and licensed by or registered with the SFC to carry out type 9 regulated activity (asset management).
Submissions in response to the public consultation included comments relating to:
On 5 September 2019, Professor John McMillan AO’s Final Report (Report) on the operation of the Narcotic Drugs Act 1967 (ND Act) was tabled in Parliament. Section 26A of the ND Act required the Minster to cause a review of the operation of the ND Act to be undertaken.