The Securities and Futures Commission of Hong Kong has expressed a general expectation that certain senior managers at the firms it regulates should ask for its approval to be 'responsible officers.'

Its latest circular aims to outline certain jobs and responsibilities belonging to licensed corporations’ boards of directors and to provide more guidance to do with the information that a licensed corporation (or corporate applicant for a licence) should submit to it in respect of its human resources and organisational structure. The SFC intends to commence its "information collection initiative" on 18 April 2017.

Company directors

The board of every licensed corporation has the ultimate responsibility for its conduct, operations and financial soundness. The board works with senior managers (including MICs, managers in charge of 'core functions') to run the corporation well and those senior managers are accountable to it.

The SFC's Internal Control Guidelines state that a licensed corporation should establish, document and maintain an effective management and organisational structure. To this end, the SFC expects that every licensed corporation should draw up a formal document, approved by the board, that sets out its management structure, including the jobs, responsibilities, accountability and reporting lines of its senior management personnel. If it designates more than one person to be the "manager(s) in charge of core function(s)," the document ought to contain enough details regarding the specific responsibilities of each MIC concerned. The SFC may request the corporation to provide the document for its perusal.

Applications for licences

When applying for a licence under section 116(1) Securities and Futures Ordinance, a corporation is required to provide information about its human resources and organisational structure that shows that it is capable of carrying out its regulated activities competently.

In respect of each of its MICs, the corporation should submit his/her full name, identifying information, job title, place of residence, the 'core function(s)' of which he or she is in charge, the job title(s) of the person(s) to whom he or she reports. It should also submit an organisational chart depicting its management and governance structure, business and operational units and key human resources and their respective reporting lines.  The chart should capture all MICs engaged by the corporation, their respective reporting lines and the job titles of the people who reporting to them directly in relation to the operations of the corporation.

Implementation

The SFC understands that some firms may need time to revisit their management structures and 'responsible officer' appointments, so it has set a commencement date of 18 April 2017. It expects firms to submit all MIC-related information and organisational charts within three months from that date, i.e. on or before 17 July.