SFC Type 9 licence: who needs it, requirements, fees

For a private equity or venture manager in Hong Kong, the Type 9 licence decides whether the firm may run a fund at all^1,3. The rules sit in the Securities and Futures Ordinance (SFO), the SFC’s Licensing Handbook, and a 2020 circular written for private equity firms^1,3. This page follows them in the order a manager meets them. The regulation section collects the neighbouring rule pages, including the Hong Kong limited partnership fund, a vehicle a Hong Kong manager can use.

What a Type 9 licence covers

Schedule 5 to the SFO stipulates 13 types of regulated activity and defines each one¹. Under it, Type 9 regulated activity, asset management, means real estate investment scheme management or securities or futures contracts management¹. For a corporation seeking Type 9, the SFC generally expects it to be able to exercise discretionary investment authority to make investment decisions for its clients, and that authority must be properly delegated to it¹. The table lists the types a fund manager meets most often.

Anyone carrying on regulated activities in the securities and futures markets in Hong Kong has to be licensed or registered with the SFC, unless a specific exemption applies¹. A corporation carrying on a business in a regulated activity in Hong Kong needs a licence under section 114¹. A corporation that actively markets such services to the public, in Hong Kong or from outside it, needs one under section 115¹. Section 115(1) extends the prohibition to the provision and marketing of relevant services from a place outside Hong Kong to the public².

Individuals are licensed separately. An individual performing a regulated function for a licensed principal has to be a licensed representative accredited to that principal¹. An executive director must also be approved as a responsible officer under section 125(1)(a)¹, and a responsible officer is a licensed representative approved under section 126 to supervise the regulated activity¹.

The sanction is criminal. It is a serious offence to carry out a regulated activity in Hong Kong, or to actively market one to the Hong Kong public, without the required licence¹. Section 114(8), as set out in a Legislative Council paper, makes a person who contravenes section 114(1) liable on conviction on indictment to a fine of HK$5 million and imprisonment for seven years². The SFC keeps a public register of licensed corporations, licensed representatives and registered institutions¹.

Does a private equity firm need one?

Usually the general partner does. It is common for a private equity fund to be constituted as a limited partnership³. The general partner assumes ultimate responsibility for managing and controlling the fund³. In light of that role, it is generally required to hold a Type 9 licence if it conducts fund management business in Hong Kong, provided the activities fall within the definition of asset management³. Individuals who perform asset management for the general partner in Hong Kong must be licensed as representatives and, where appropriate, approved as responsible officers³. The table sets out the situations the SFC has addressed.

Three of these deserve a closer look.

Discretion is the dividing line. To tell Type 9 apart from advising on securities or futures contracts, the SFC takes the view that licensed asset managers must be granted full discretionary investment authority over the funds they manage³. For a private equity firm it looks at the investment decision-making process, the roles of the licensed individuals and their involvement, and whether the delegation of authority is properly documented³. A responsible officer with sufficient authority and seniority to make investment decisions throughout the life cycle of each fund is an example of discretion³.

The portfolio is looked at as a whole. Shares or debentures of a private company within the meaning of section 11 of the Companies Ordinance are excluded from the definition of securities¹. A firm that manages a portfolio of private equity or venture capital that involves no securities may therefore not, by itself, attract a licensing requirement¹. In many other cases, where a firm manages shares of private offshore companies that fall outside the definition of private company, it is likely to need a licence¹. Many funds hold investments through special purpose vehicles³. The SFC considers the composition of the entire portfolio, and if the underlying investments, or the vehicles themselves, are securities, it treats the management as asset management and the firm must be licensed³.

Calling yourself a manager is regulated too. Section 114 also prohibits an unlicensed person from holding itself out as carrying on a regulated activity, so an unlicensed general partner should not tell prospective investors that it manages a fund in Hong Kong³.

Exemptions and exceptions for fund managers

Licensing is activity-based, and several carve-outs follow from that¹. A Type 9 licensee does not need separate licences for dealing in securities, dealing in futures contracts or advising on securities or futures if those activities are carried out solely for its asset management business¹. The exemption normally covers fund managers who place trade orders or provide research in managing their own clients’ portfolios¹. The same logic runs the other way for a Type 1 licensee: it does not need Types 4, 6 and 9 if they are wholly incidental to its securities dealing business¹. The circular applies it to funds: a Type 9 firm may offer co-investment and market its funds without a Type 1 licence if the activity is conducted solely for the purpose of Type 9, for example as an integral part of the fund’s fundraising³.

Two limits matter. A temporary licence cannot be granted for Type 9¹. And a family office is not required to be licensed if its services are not a regulated activity or fall within a carve-out, but a company or family office set up as a business to manage assets that include securities may need a Type 9 licence¹.

Profits tax exemption for managed funds

Tax is a separate question that touches the licence. Under Hong Kong’s profits tax exemption for funds, set out in the Inland Revenue Department’s practice note 61, a fund’s qualifying transactions must be carried out in Hong Kong by or through, or arranged in Hong Kong by, a specified person, unless the fund is a qualified investment fund⁷. A specified person is a corporation licensed, or an authorised financial institution registered, to carry on a regulated activity⁷. “Arranged in Hong Kong by” covers a case where a qualifying transaction is not carried out by a specified person but arranged in Hong Kong by one, to be carried out by another person⁷. The note is dated June 2020, and the current text of the Inland Revenue Ordinance should be checked before relying on it⁷. Private equity funds might not necessarily be managed by corporations that are licensed⁷.

Requirements for the firm

The SFC must refuse a licence if the applicant fails to satisfy it that it is fit and proper¹. Section 129 of the SFO points the SFC to the applicant’s financial status or solvency, qualifications or experience for the functions, ability to carry on the activity competently, honestly and fairly, and reputation, character, reliability and financial integrity¹.

The board should approve the management structure, including the appointment of managers-in-charge¹. The licence-condition route matters for cost: a Type 9 firm subject to the condition that it shall not hold client assets faces only the HK$100,000 liquid capital floor, while any other case faces the larger HK$5,000,000 and HK$3,000,000 pair¹. A firm must also maintain paid-up share capital and liquid capital at all times, not just on the day of application¹.

Requirements for the people

Under the Guidelines on Competence, the SFC assesses a responsible officer on ability, skills, knowledge and experience to manage and supervise the corporation’s proposed activities⁴. The competence criteria cover academic or professional qualifications, relevant industry experience, a recognised industry qualification or extra continuing professional training, management experience and a local regulatory framework paper¹.

An individual re-entering the industry needs five CPT hours per regulated activity for each year of absence⁸. Applicants should generally pass the local regulatory papers within three years before applying⁸.

Private equity gets specific treatment. The SFC recognises a broader range of industry experience for responsible officers of private fund managers⁴. For private equity, relevant experience includes conducting research, valuation and due diligence of companies in related industries, managing and monitoring a fund’s underlying investments for the best interests of fund investors, and structuring corporate transactions such as management buyouts and privatisations⁴. The SFC also accepts private equity experience gained in a non-regulated situation, including overseas where the activities are not regulated³. Experience that is only indirectly relevant, such as sales or risk management of funds, will likely bring the Non Sole Condition on the licence⁴. Management experience means hands-on supervision of essential regulated functions, including the staff who carry them out, and the SFC would not normally accept management experience that is purely administrative⁴. Experience at a firm that was largely dormant for a prolonged period is critically reviewed⁴.

Residence matters. The SFC grants licences to individuals only if they will come to Hong Kong to carry on regulated activities for the licensed corporation¹. A responsible officer stationed overseas should expect a non-sole condition¹. Itinerant professionals should not be responsible officers, because responsible officers are required to oversee the regulated activity for which the principal is licensed¹.

How to apply, how long it takes and what it costs

The application goes through the SFC’s WINGS platform, and once it is accepted the applicant receives a message requesting payment of the fee¹. The licensed corporation application fee is HK$4,740 per regulated activity¹. Timing follows the person applying.

Processing varies with the quality and completeness of the application, changes made during it, and the time taken for capital injection to meet the financial resources requirements¹. Before refusing an application, the SFC gives the applicant an opportunity to be heard under section 140¹. An applicant that is refused may, within 21 days, apply to the Securities and Futures Appeals Tribunal for a review¹.

Worked example (our arithmetic)

Take a new fund manager with one regulated activity (Type 9), two responsible officers and three other licensed representatives. The Handbook’s annual fees are HK$4,740 per activity for a licensed corporation, HK$4,740 per activity for a representative approved as responsible officer and HK$1,790 per activity for a representative who is not¹. The table adds the totals ourselves.

The sum leaves out the one-off application fees for individuals and any fee waiver the SFC announces for a period¹. It also leaves out the capital floors above.

After the licence: what a licensee must keep doing

A missed fee is expensive. The surcharge is 10% when the fee is less than a month overdue, 30% from one to two months and 50% from two to three months, then suspension and eventually revocation¹. Failure to pay attracts a surcharge on the outstanding amount and possible suspension and revocation¹. Licensed corporations and individuals confirm CPT compliance for the previous year when filing their annual returns¹.

The SFC’s Fund Manager Code of Conduct sets the conduct standards on top. It applies to persons licensed by or registered with the SFC whose business involves managing collective investment schemes or discretionary accounts⁵. A fund manager should ensure its business is properly incorporated and its people properly licensed⁵, and maintain adequate financial and human resources⁵. On conflicts, it should have arrangements to identify, prevent, manage and monitor actual or potential conflicts of interest, and disclose material conflicts to fund investors⁵. Fund assets must be segregated from the manager’s own assets⁵, and the manager should have policies that allow a proper and independent valuation of the fund’s assets⁵. Where the manager’s group also undertakes corporate finance, banking or broking, functional barriers, “Chinese Walls”, should be in place⁵. A breach reflects on the manager’s fitness and properness and may lead to disciplinary action⁵. The Code itself does not have the force of law⁵.

Where Type 9 sits in the Hong Kong market

The SFC’s asset and wealth management survey counts the firms. The number of firms licensed for Type 9 in Hong Kong increased by 4%, from 2,127 to 2,212, during 2024⁶. Asset management and fund advisory assets rose 13% to HK$25,960 billion at the end of that year⁶, with private funds at HK$5,042 billion, 20% of the total and up 16% on the year⁶. The survey counts values in Hong Kong dollars⁶. Assets managed in Hong Kong were 58% of asset management AUM⁶.

Private equity sits partly outside those counts. AVCJ Research data quoted in the survey rank Hong Kong second in Asia after Mainland China in 2024 by capital under management in private equity funds, excluding real estate funds, at US$229 billion⁶. Some private equity firms in Hong Kong are neither licensed corporations nor registered institutions⁶. The Handbook, circular and Code above are the rules that decide on which side of that line a manager stands. For what the licence is for, how a private equity fund works, the roles of GP and LP and what private equity is cover the structure it regulates. The Licensing Handbook and the circular are working documents that the SFC revises, so read the current versions before an application.

This page explains how the rules work and is not legal advice or an offer.