Global Trustee and Fiduciary Services News and Views Issue 48

Global Trustee and Fiduciary Services News and Views

| Issue 48 | 2017

Licensed corporations will need to designate an

individual as the MIC for each Core Function, and

will need to report information about its MICs,

and any changes in this information, to the SFC.

The Circular identifies several reasons for the

SFC to introduce the MIC regime. The MIC regime

is intended to ensure that persons who are MICs

for the overall management oversight and key

business-line functions of a licensed corporation

become ROs of the licensed corporation, if

they are not already ROs. The MIC regime is

also intended to promote awareness of the

responsibilities, accountability and regulatory

obligations of the individuals identified as MICs.

Although not expressed in the Circular, over

time the MIC regime is also likely to increase the

The MIC regime is a change to the way in which

the SFC seeks to exercise regulatory oversight

of licensed corporations. It seeks to add clarity

as to which individuals, by reference to their

roles and responsibilities, qualify as senior

management of a licensed corporation in the

eyes of the SFC. The consequences being that

a person involved in the management of the

business of a licensed corporation is considered

to be a regulated person over whom the SFC

may exercise its disciplinary powers, regardless

of whether such person is actually licensed with

the SFC.

For licensed corporations that are part of a

wider group, the MIC regime may also require

licensed corporations to identify and report

information about individuals from other group

companies (within or outside Hong Kong) who

qualify as an MIC even though they are not

licensed by the SFC.

The MIC regime will impose new reporting

obligations on all licensed corporations and will

require ongoing reporting of information about

people in middle- and back-office roles who

may not be licensed with the SFC. We explore

requirements of the proposed MIC regime below

in more detail.

Overview of the MIC regime

In the Circular, the SFC sets out its view that the

senior management of a licensed corporation

includes MICs, in addition to directors and

responsible officers (ROs). An MIC is an

individual appointed by a licensed corporation

to be principally responsible, either alone or

with others, for managing any of the “Core

Functions” of the licensed corporation. There

are eight Core Functions, as shown in the

diagram opposite.

HONG KONG MANAGER-IN-CHARGE

REGIME: WHAT SFC-LICENSED

CORPORATIONS NEED TO DO

On 16 December 2016, the Hong Kong Securities and Futures Commission

(SFC) introduced its new Manager-In-Charge of Core Functions (MIC)

regime, with details set out in its Circular Regarding Measures for

Augmenting the Accountability of Senior Management (Circular)

and a related series of 41 Frequently Asked Questions (FAQs).

Overall

management

oversight

Finance and

accounting

Key business

line

Information

technology

Operational

control and

review

Compliance

Risk

management

AML and

counter-terrorist

financing

MICs and Core Functions