SFC Type 9 Licence: Asset Management

Type 9 regulated activity is asset management: managing portfolios of securities or futures contracts, and real estate investment scheme management. The distinguishing feature is discretion. Where investment decisions do not require the client's approval transaction by transaction, and that discretionary authority has been properly delegated, a Type 9 licence is required.

Non-discretionary advisory work sits elsewhere: Type 4 for advising on securities, Type 1 for dealing. Getting this boundary right at the outset avoids applying for the wrong activity.

Exemptions exist. Managing only wholly owned group subsidiaries falls within the intra-group exemption. Solicitors advising incidentally to legal practice, trust companies where asset management is not the main business, and certain professional investor arrangements where the service is wholly incidental to another regulated activity can also fall outside the requirement. Family offices managing family or trust assets are exempt; those managing third-party assets, or presenting themselves as asset managers, are not.

The usual causes are predictable: a responsible officer who does not clear the fit-and-proper test, a business plan that does not stand up to questioning, or liquid capital estimates that do not credibly cover the first six months of operating expenses.

We have prepared SFC applications since 1987 as a licensed trust and company service provider: business plans, internal control frameworks, responsible officer registration and capital resource estimates presented as one coherent submission. Preparation and SFC review together typically take four to six months, and the way to protect that timeline is to avoid the back-and-forth entirely.

Hedge funds, private equity and venture capital managers, REIT management companies, and firms with virtual asset exposure. Virtual asset fund managers are subject to the SFC's VAFM terms and conditions, which we work through with the client rather than presenting as a footnote.

Our team works directly from the SFC Licensing Handbook, the Code of Conduct, the Financial Resources Rules and the Guidelines on Competence, and tracks changes to them, including the July 2024 circular on internal controls for liquid capital monitoring, which required clients to adjust their internal control frameworks.

The team works in English, Cantonese and Mandarin, which matters when responsible officers are based in the mainland and compliance documentation has to be bilingual.

We can help with continuous professional training monitoring, coordination with fund accounting and fund administration teams, making license modifications, and preparation for SFC inspections.