Hong Kong Open-ended Fund Company
Updated: Mar 28
Open-ended Fund Company (“OFC”)
“Open-ended Fund Company” (“OFC”) is a new form of company in Hong Kong.
The introduction of an open-ended fund company (OFC) structure in Hong Kong is part of the SFC's move to strengthen market infrastructure to further develop Hong Kong as a full-service international asset management center and preferred fund domicile.
This additional option helps diversify Hong Kong's fund domiciliation platform and build up our fund manufacturing capabilities, thereby further developing Hong Kong's asset management industry.
The OFC structure allows an open-ended investment fund in Hong Kong to be set up in the form of a company with limited liability and variable share capital. Investors can trade funds flexibly through the creation and cancellation of shares. The main purpose of an OFC is to act as an investment fund vehicle and manage investments for the benefit of its shareholders.
OFC, whether it is a public offering or a private offering, needs to be registered with the Securities and Futures Commission. Like other publicly offered funds, publicly offered OFCs also require prior approval from the SFC, unless an exemption applies.
The Securities and Futures Commission (SFC) acts as the main regulator and is responsible for the registration and supervision of OFCs. The Companies Registry (CR) is responsible for OFC formation and statutory corporate filings.
As an investment vehicle, OFC is not intended to engage in activities such as commercial trade and business carried on by a conventional company incorporated under the Companies Ordinance (Cap. 622). OFC is incorporated in or re-domiciled to Hong Kong under the Securities and Futures Ordinance (Cap. 571).
If you want to set up a limited company for commercial trade and business purposes, please refer to Forming a Limited Company in Hong Kong.
Cost savings over offshore structures - no duplication of service providers or fees
Facilitating international fund distribution - a corporate structure familiar to overseas investors
Caters to public and private funds – including listed and unlisted funds, hedge funds, private equity funds and closed-end funds
Easy to manage - no annual returns or mandatory AGMs
OFC grant scheme – Government grants of up to HK$1 million for each newly established or re-domiciled OFC
Tax incentives – OFC benefits from Hong Kong profits tax exemption
Open-ended Fund Company Grant Scheme
The SFC administers a grant scheme funded by the Hong Kong Special Administrative Region Government to provide subsidies to eligible open-ended fund companies (OFCs) set up in Hong Kong. The grant scheme covers eligible expenses related to the incorporation or re-domiciliation of OFCs and paid to service providers in Hong Kong.
The grant scheme is accepting applications from May 10, 2021 to May 9, 2024. Details, including eligibility criteria and application process, are set out here.
Applicants may email to email@example.com or contact the relevant case officer in charge to consult the SFC about their eligibility before making an application.
Incorporation of Open-ended Fund Company
OFC will be incorporated by registration with the Securities and Futures Commission (“SFC”) and obtaining a certificate of incorporation from the Registrar of Companies (“Registrar”). This is done through a "one-stop" approach, whereby the SFC notifies the Registrar of the OFC's registration, and the SFC's registration becomes effective upon the issuance of the certificate of incorporation by the Registrar.
Under this “one-stop” approach, applicants only need to submit to the SFC (firstname.lastname@example.org) all the requisite documents and fees required for company incorporation and business registration with the Registrar and the Commissioner of Inland Revenue (“CIR”). After the CSRC approves the registration of the open-ended fund company, the Registrar will register the relevant documents at one go and issue the "Certificate of Incorporation of Open-ended Fund Company" and the "Business Registration Certificate" (on behalf of the Commissioner).
The following documents are required to form an OFC:
1. Open-ended Fund Company - Incorporation Form (OFCNC1(SFC));
a. Open-Ended Fund Company Company Names
The Securities and Futures Commission (“SFC”) is responsible for reviewing and approving OFC’s company name.
In general, the name of the OFC must:
not, in the SFC's opinion, misleading or otherwise undesirable;
be different from the name of another existing OFC; and
end with "Open-ended Fund Company" or "OFC" for the English company name, and end with "開放式基金型公司" for the Chinese company name.
b. Situation of Registered Office of Open-Ended Fund Company
OFC's registered office must be in Hong Kong.
c. Director of Open-ended Fund Company
Section 112U(1) of the SFO requires that an open-ended fund company must have at least two directors.
Non-Hong Kong residents may be appointed as directors of OFCs. However, he/she must have a Process Agent. See Process Agent.
Directors of OFCs whose ordinarily resident address is outside Hong Kong (“non-resident directors”) must appoint a process agent. A process agent is one authorized to receive the services of any process or notice required to be served on a non-resident director.
All the first directors of an Open-ended Fund Company (“OFC”) must sign the statement on "Consent to Act as Director" in the Incorporation Form.
The incorporation form must be signed by one of the first directors of the OFC.
A body corporate cannot act or be appointed as a director of an open-ended fund company. Section 112V(1) of the SFO sets out restrictions on corporate directorships in open-ended fund companies.
2. A copy of Instrument of Incorporation; and
The "Instrument of Incorporation"
The requirements regarding the contents of the Instrument of Incorporation are specified in section 112K of the Securities and Futures Ordinance (Cap. 571) and rule 13 of the Securities and Futures (Open-ended Fund Companies) Rules (Cap. 571AQ). You may refer to Templates for the Instrument of Incorporation.
3. Notice to Business Registration Office (IRBR3).
The Incorporation Form must be an original one. The Instrument of Incorporation delivered together with the Incorporation Form can be a copy. They must be delivered to the Companies Registry (“CR”) for registration through the Securities and Futures Commission (“SFC”).
Certificates of Incorporation and Business Registration (“Certificates”) for OFCs can only be collected in person at the Companies Registry's office by the presenters named on the Incorporation Form. If the presentor sends a representative to collect the certificate, the representative must present the presentor's written authorization (including the representative's identity details) for their records. The person collecting the certificate must present his/her identity card (if he/she is the presentor or an authorized representative) or company chop (if he/she is the representor on behalf of a company or firm ) to collect the certificates.
The Companies Registry will not issue a certificate to those who fail to produce the required identity document/company chop.
Private OFCs – Successful applications are typically approved within a month of SFC taking up of the application.
Public OFCs – As with other public offering funds seeking SFC authorization, processing applications for public OFCs usually takes one to three months, depending on their complexity. The SFC will also handle the registration and authorization of public OFCs in tandem.
Registration with the SFC will take effect upon the issuance of the Certificate of Incorporation by the Companies Registry (CR). After the Registrar receives the application documents and fees from the SFC, it usually takes three working days to issue OFC’s Certificate of Incorporation.
Statutory Corporate Filings of an Open-ended Fund Company
The main purpose of an OFC is to operate as an investment fund. OFC is not required to:
report share capital information to the Companies Registrar (“CR”);
have a company secretary;
report charge details to CR; and
file annual returns with CR.
Fees required to Set Up an Open-ended Fund Company
1. Fees payable to the SFC for registration of an OFC.
a. For private OFCs, the application and registration fees are as follows:
b. For public OFCs, an application for authorization is subject to the fees for (a) application for authorization and (b) authorization.
2. Fees payable to the CR for incorporation.
The fees for incorporation of an OFC are HK$3,034. The lodgment fee of HK$479 is non-refundable.
Please refer to CR's website for the correct amount of fee payable.
3. Fees payable to the CR for business registration.
Furthermore, under section 5A of the Business Registration Ordinance (Cap. 310), any person who applies for the establishment of an OFC is deemed to have made a concurrent application for business registration (“BR”). Appropriate BR fees and levies must be delivered with OFC's incorporation documents.
For applying for business registration, different fees and levies apply to the one-year business registration certificate and the three-year business registration certificate. Please refer to the Business Registration Fees and Levy Table website for the correct amount of fee payable.
Please contact Bestar for enquiries on the documents and fees required for application for registration of an OFC.