[HONG KONG] [REGULATORY UPDATE] A New Licensing Regime for Trust or Company Service Providers

[HONG KONG] [REGULATORY UPDATE] A New Licensing Regime for Trust or Company Service Providers

A new licensing regime for trust or company service providers (“TCSPs”) commences operation on 1 March 2018.

Under the new licensing regime, TCSPs are required to apply for a licence from the Registrar of Companies and satisfy a “fit-and-proper” test before they can provide trust or company services as a business in Hong Kong. Any person who carries on a trust or company service business in Hong Kong without a licence commits an offence. TCSP licensees are also required to comply with the statutory customer due diligence and record-keeping requirements as set out in Schedule 2 to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap. 615.

Who is required to apply for a licence?
A person who carries on or wishes to carry on a trust or company service business in Hong Kong is required to apply for a licence.

What is a trust or company service business?
A trust or company service means the provision in Hong Kong by a person, by way of business, of one or more of the following service to other persons:
(a) forming corporations or other legal persons;
(b) acting, or arranging for another person to act—
(i) as a director or a secretary of a corporation;
(ii) as a partner of a partnership; or
(iii) in a similar position in relation to other legal persons;
(c) providing a registered office, business address, correspondence or administrative address for a corporation, a partnership or any other legal person or legal arrangement;
(d) acting, or arranging for another person to act—
(i) as a trustee of an express trust or a similar legal arrangement; or
(ii) as a nominee shareholder for a person other than a corporation whose securities are listed on a recognized stock market.

Transitional arrangement

A person will be deemed to have been granted a licence to carry on a trust or company service business in Hong Kong if immediately before the commencement of operation of the licensing regime (“commencement date”), namely, 1 March 2018, he or she was carrying on a trust or company service business in Hong Kong and for that purpose held a valid business registration certificate.

If the deemed licensee does not apply for a licence to carry on a trust or company service business during the transitional period of 120 days from the commencement date, the deemed licence will end on the expiration of the said transitional period or upon the occurrence of the specified termination events (whichever is earlier).

If the deemed licensee applies for a licence to carry on a trust or company service business during the said transitional period, the deemed licence will end when the application is granted, rejected or withdrawn or upon the occurrence of the specified termination events (whichever is earlier).

The specified termination events referred to in the preceding paragraphs are as follows:-

  • the deemed licensee ceases to carry on its trust or company service business in Hong Kong;
  • the deemed licensee ceases to hold a valid business registration certificate;
  • if the deemed licensee is an individual carrying on business as a sole proprietor – the death of the individual;
  • if the deemed licensee is a partnership – the dissolution of the partnership;
  • if the deemed licensee is a corporation – the commencement of the winding up of the corporation

Are there any licensing exemptions?
Yes, the TCSP licensing requirement (including the fit and proper test) does not apply to :

  • the Government
  • an authorized institution (under the Banking Ordinance);
  • a licensed corporation (under the Securities and Futures Ordinance) that operates a trust or company service business in Hong Kong that is ancillary to the corporation’s principal business;
  • an accounting professional;
  • a legal professional; or
  • a person of a class or description prescribed by the Secretary for Financial Services and the Treasury by regulation.

About Edtoma Corporate Services Limited
CWCC provides corporate services to clients through Edtoma Corporate Services Limited (“ECSL”).  ECSL has applied TCSP licence accordingly to the new legislation.  We shall inform clients once the application is approved.