INTERNATIONAL: SEC Issues Regulations for Cross-Border Offerings of Funds Under HK-TH MRF

Friday June 18 2021

On 17^th June 2021, the Securities and Exchange Commission (SEC) announced that it has issued regulations for cross-border offerings of funds between Hong Kong and Thailand under the Mutual Recognition of Funds between Hong Kong Special Administrative Region of the People’s Republic of China and Thailand (HK-TH MRF). The cross-border offerings of funds to retail investors take effect from 16^th June 2021.

Earlier on 20^th January 2021, the SEC and the Securities and Futures Commission of Hong Kong (SFC) signed a Memorandum of Understanding (MoU) concerning the Mutual Recognition of Funds between Hong Kong Special Administrative Region of the People’s Republic of China and Thailand to facilitate cross-border offerings of funds between Hong Kong and Thailand for asset management companies by recognizing each other’s fund standards.

In this connection, the SEC has issued regulations for such cross-border offerings of funds under HK-TH MRF. Essentially, a fund to be offered to retail investors in the host country through local licensed intermediaries in the host country must be authorized or approved for establishment and offering for sale to the public in the home country and must have the characteristics in accordance with the relevant regulations of the home country and additional requirements specified in the MoU.

A Hong Kong fund to be offered through licensed intermediaries in Thailand under HK-TH MRF is required to disclose information of the fund with material information equivalent to that disclosed by Thai funds to their unitholders. Also, the Hong Kong fund must prepare the factsheet in the format specified by the SEC, and a local representative must be appointed to coordinate in the matter of disclosure and delivery of information to Thai investors as well as handling possible disputes.

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