As you may be aware, the Securities and Futures Commission in Hong Kong (“SFC”) has now released amendments to the Fund Manager Code of Conduct (“FMCC”) and accompanying FAQs on the requirements for fund managers to adhere to take into consideration climate-related risks during the investment and risk management processes.
A summary of key takeaways is below:
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The requirements apply to all funds managed by Managers based in Hong Kong, regardless of whether the funds are authorised by the SFC for distribution in Hong Kong or not. This means Managers of funds incorporated in the Cayman Islands or other offshore jurisdictions are within the scope of the amendments.
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These requirements do not apply to Managers who exclusively manage discretionary segregated or managed accounts.
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The SFC has specifically stated that a “comply or explain” approach will not be considered for the purpose of the proposed requirements.
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There are enhanced obligations for Larger Fund Managers with funds with an AUM of HK$8 billion or above regardless of whether they manage ESG strategies or not.
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Smaller Managers have until 20 November 2022 to comply with the baseline requirements.
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Larger Managers have until 20 August 2022 to comply with the baseline requirements and until 20 November 2022 to comply with the enhanced standards.
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Our detailed assessment sets out the baseline requirements, who is in scope, initial actions to take and a summary of what a full review of compliance policies and procedures to take into account this important development will mean for a variety of asset management business models.
Singapore
As you may also be aware, the Monetary Authority of Singapore (“MAS”) has also issued its Guidelines on Environmental Risk Management for Fund Managers which are also now in effect. If you have operations in both Hong Kong and Singapore, there is certainly room to adopt a regional policy incorporating the requirements of both the SFC and the MAS and we are well placed to assist clients with this using our offices in both Hong Kong and Singapore.
ComplianceAsia has prepared a detailed analysis of the changes for our clients, per below.
