August 22 2006
In the past few months the Hong Kong financial services market has generally been moving towards greater liberalization while at the same time attempting to apply higher standards of risk management.
The Securities and Futures Commission (SFC) has recently been flexible in applying the Real Estate Investment Trust (REIT) Code in a number of key areas:
On January 1 2007 the SFC will introduce new eligibility criteria and ongoing obligations for corporate finance sponsors in its guidelines for sponsors and compliance advisers. The changes are likely to have a greater impact on smaller players in the market, which should review their internal systems and controls and create documentary records to ensure compliance with ongoing requirements.
Amendments to the Inland Revenue Ordinance have extended the exemption from Hong Kong profits tax to a broader range of offshore funds. Non-resident funds can be exempt even if they are not authorized by the SFC, regulated by overseas regulatory authorities or genuinely widely held.
The SFC has the power to fine brokers and other licensed persons up to HK$10 million. There are plans to extend the SFC's powers by allowing it to fine companies and directors for breaches of the Hong Kong Stock Exchange's listing rules. The Market Reform Bill, which will include these proposed changes, is scheduled to come before the Legislation Council in October 2006.
For further information on this topic please contact Matthew Barnard or Daniel Yeo at Allens Arthur Robinson by telephone (+852 2840 1202) or by fax (+852 2840 0686) or by email (firstname.lastname@example.org or email@example.com).
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