On December 20, 2024, the Securities and Futures Commission ("SFC") and the China Securities Regulatory Commission ("CSRC") signed a Memorandum of Regulatory Cooperation concerning Mutual Recognition of Funds ("MRF") between the Mainland and Hong Kong (Memorandum) on 22 May 2015. The Memorandum provides a framework for mutual recognition of publicly offered funds between the CSRC and the SFC so that these recognised funds could be offered to the public in both markets.
MRF operates on the principles that a fund authorised in one jurisdiction (Home Jurisdiction) and seeking or having received authorisation in the other (Host Jurisdiction) must: meet eligibility requirements of the Host Jurisdiction; remain authorised in the Home Jurisdiction; operate and be managed according to Home Jurisdiction laws; comply with Host Jurisdiction laws and additional rules; and ensure fair treatment for holders in both jurisdictions.
Funds seeking SFC authorisation must comply with the SFC Handbook and any circulars, guidelines, or requirements. Recognised Mainland Funds enjoy a streamlined process if they comply with Mainland laws and regulations. However, there are additional requirements to ensure investor protection and consistency with Hong Kong funds.
Eligible funds under MRF include general equity funds, bond funds, mixed funds, unlisted index funds, physical index-tracking exchange traded funds, and other types accepted by the SFC. These funds must be established, managed, and registered in the Mainland, have a minimum fund size, and not primarily invest in the Hong Kong market. The value of shares sold to Hong Kong investors must not exceed 80% of the fund’s total assets.
This article was generated using SAMS, a proprietary artificial intelligence technology under development by Timothy Loh LLP and its affiliates. This article does not constitute legal advice and should not be relied upon by any person. Only the original text, which is hyperlinked to this article, should be regarded as definitive.
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