Global Trustee and Fiduciary Services News and Views Issue 48

17 / 64

Global Trustee and Fiduciary Services News and Views | Issue 48 | 2017 15
the licensed corporation will need to apply for
approval of the individual as an RO, if he or
she is not currently an RO. For this purpose,
the FAQs indicate that the SFC will take into
account industry experience in operations,
compliance and other back-office roles, in
addition to direct experience in regulated
activities such as asset management or dealing
in or advising on securities.
Whether an individual will be considered as
exercising overall management oversight is
likely to be determined by the extent to which
such individual is responsible for directing and
overseeing the effective management of the
overall operations of a licensed corporation
on a day-to-day basis.
The key responsibilities of such individual may
include the development and implementation of
business models, objectives and strategies, and
the promotion of sound corporate governance
practices. Hence an individual occupying the
position of chief executive officer (or equivalent)
is likely to be considered as exercising overall
management oversight.
Whether an individual is likely to be considered
as someone assuming responsibility for a
licensed corporation’s key business line will
depend on the extent to which such individual
is responsible for directing and overseeing
one or more of the licensed corporation’s
regulated activities. An individual occupying
the position of chief investment officer, head of
equity or equivalent is likely to be considered as
responsible for the key business-line function.
Personal liability of MICs
Pursuant to Part XI of the Securities and Futures
Ordinance, the SFC’s disciplinary powers extend
to a regulated person.3 The term “regulated
person” means a person who is or at the relevant
time was any of the following types of person:
• A licensed person (i.e. individual licensed
representative of a licensed corporation).
• An RO of a licensed corporation.
• Or a person involved in the management
of the business of a licensed corporation
(regardless of whether he or she is licensed).
Where a licensed corporation is found guilty of
misconduct that is attributable to any act or
neglect on the part of an individual involved
in such corporation’s management, then such
individual is also guilty of misconduct.
While there has been no change to the definition
of “regulated person”, the industry has tended
to assume that the SFC’s focus is on those
individuals licensed by it as ROs or representatives
rather than those individuals who, while not
licensed, play a significant role in the licensed
corporation’s management.
The MIC regime does not therefore create any
additional liabilities or give the SFC any additional
enforcement powers. What it does, however,
is clarify what roles or individuals should be
regarded as part of the management of a licensed
corporation and ensures that the SFC has
additional information about licensed corporations
and the individuals responsible for each of the Core
Functions. It also imposes an obligation on licensed
corporations to keep this information up to date.
Identifying MICs
of a licensed
corporation within
an international
organisation with
multiple reporting
lines can present
some challenges.
The SFC does not approve or license MICs. However,
an individual appointed as the MIC responsible
for either the overall management oversight or
a key business-line function is expected to be
licensed as an RO of the licensed corporation.
Reviewing organisational structure,
reporting lines
The MIC regime will require licensed corporations
to review their organisational structure to
ensure it reflects the Core Functions and the
SFC’s expectations of reporting lines of the MICs.