On 17 June 2016, the Securities and Futures Commission (SFC) published an updated set of Frequently Asked Questions on “Offers of Investments” under the Securities and Futures Ordinance (FAQs).
The FAQs now include a new Appendix 1 which provides guidance on collective investment schemes involving interests in real property, as well as updated answers to certain existing questions in the FAQs. The new Appendix 1 explains how collective investment schemes are regulated in Hong Kong, the features of real estate projects that may constitute a collective investment scheme and the consequences of promoting or offering interests in a collective investment scheme relating to real property.
Unlicensed real property investment structures are clearly an area of increased focus for the SFC, this is evident not only through the issue of the revised FAQs, but also the SFC’s recent unsuccessful attempt in the case of HKSAR v IPFUND Asset Management Limited and Sin Chung Yin DCCC 23/2015 to prosecute parties for carrying on unlicensed regulated activity in respect of a real property collective investment scheme. Parties setting up real property investment structures should be mindful of this, and ensure they carefully navigate the regulatory regime.
The updated FAQs can be accessed here.