SFC issue consultation conclusion on the proposed amendments to the PI Rules

1 June 2018

PI rules

The SFC have issued a consultation conclusion on the proposed amendments to the Securities and Futures (Professional Investor) Rules (PI Rules) in May 2018. The amended PI Rules are expected to be effective on 13 July 2018. 

The main amendments to the PI Rules are:

1. Aggregation of certain assets for individuals

  • For a joint account held with a non-associate, the SFC now allows the individual’s share to be counted towards the PI threshold. The individual’s share is based on either the share specified in the written agreement between the account holders or an equal share of the portfolio (if no written agreement). Intermediaries should enquire whether there is a written agreement in place.
  • For an individual who wholly owns a corporation which the principal business is to hold investments, the portfolio held by the corporation can be counted towards that individual’s PI threshold.

2. Expanded definition of corporation to qualified as PI

  • A corporation which the principal business is to hold investments and is wholly owned by one or more of the persons where each of them is PI.
  • A corporation which wholly owns another Corporate PI.

3. Evident requirements

  • Public filings and certificates issued by auditors, certified public accountants or custodians which are submitted within 12 months before the relevant date can be used as evidence for PI assessment.

PI rules moving forward

‘The SFC is of the view that implementation of the Revised PI Rules is in the best interest of the industry to ensure a level-playing field and consistent application of the PI Rules’

The amendment of the PI Rules will potentially increase the number of individuals and corporations required to meet the qualification of PI and may also bring changes to your existing PI assessment procedures. Bovill can help clients with reviewing and revising their PI assessment procedures and ensure they comply with the SFC’s requirements.

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