Recent updates to Hong Kong’s professional investor regime have introduced key changes that impact how intermediaries assess and engage with investors. If you advise on financial services or manage compliance, here’s what you need to know.
Key Highlights:
- Code of Conduct Updates: A mandatory suitability clause must now be included in client agreements, ensuring product recommendations align with the client’s financial profile.
- Investor Classification: High-net-worth individuals can no longer opt in as professional investors via a sophistication test. Corporate investors may still qualify under a principles-based assessment.
- Broader Qualification Criteria: Individuals can now count joint portfolios with non-associates and holdings in wholly owned investment corporations toward the monetary threshold.
- Alternative Evidence Accepted: Public filings, custodian certificates, and auditor statements are now valid for verifying investor status.
- Streamlined Approach for Sophisticated PIs: Qualified investors benefit from simplified compliance processes, provided they meet enhanced wealth, experience, and investment criteria.
These changes reflect a shift toward more flexible, risk-based compliance—especially for intermediaries dealing with sophisticated clients.
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