The Securities and Futures Fee (the “SFC”) launched a brand new initiative to warn the general public in opposition to unauthorised funding preparations that are suspected to be collective funding schemes (“CIS”).
The definition of a CIS encompasses a broad vary of devices, and is outlined beneath Half 1 of Schedule 1 of the Securities and Futures Ordinance (“SFO”). A CIS typically has the next 4 components:-
- it includes preparations in respect of any property;
- traders don’t have day-to-day management over the administration of the property even when they’ve the appropriate to be consulted or to offer instructions in regards to the administration of the property;
- the property is managed as a complete by or on behalf of the individual working the preparations, and/or the contributions of the traders and the earnings or revenue from which funds are made to them are pooled; and
- the aim or impact of the preparations is for the traders to take part in or obtain: (i) earnings, revenue or different returns from the acquisition, holding, administration or disposal of the property, or (ii) funds or different returns from: the acquisition, holding or disposal of, the train of any proper in, the redemption of, or the expiry of, any curiosity within the property.
To offer flexibility to handle altering market circumstances and the event of recent funding merchandise, the Monetary Secretary is empowered beneath Part 393 of the SFO to prescribe by discover within the Gazette whether or not sure merchandise are or artwork to not be considered a CIS.
A CIS might not be provided to the general public in Hong Kong with out the SFC’s authorisation beneath Part 104 of the SFO. Generally, a CIS could also be bought by an middleman licensed or registered with the SFC. Unauthorised CIS could typically be bought to skilled traders solely.
It’s also offence beneath Part 103 of the SFO to difficulty an commercial, invitation or doc which is or incorporates an invite to the general public to put money into a CIS until such issuance is authorised by the SFC, or an exemption applies.
Buyers are thus urged to be extraordinarily cautious in the event that they plan to put money into any unauthorised funding scheme. With a view to help traders’ choice making, funding preparations which have come to the SFC’s consideration and show sure traits of a CIS can be included on a brand new Suspected Unauthorised CIS Alert List (non-exhaustive). These preparations could contain abroad actual property or non-conventional belongings and investments equivalent to digital tokens and preliminary coin choices (ICOs).
Along with the above, the SFC additionally maintains a search list of funding merchandise authorised by the SFC for public providing which additionally features a record of authorised CIS, and a public register of licensed individuals and registered establishments.