Currently, Hong Kong regulations do not allow for the listing of business trusts.
SFC chief executive Martin Wheatley also told the news organisation that the regulator is to “launch a consultation in the summer on whether sponsors of initial public offerings (IPOs) should be legally liable for what investors are told in a listing prospectus”.
Wheatley, who has earned a reputation for having beefed up the SFC’s regulatory regime and enforcement operations during his six months at its helm, returns to the UK in September to take up a role as head of Britain’s new Consumer Protection and Markets Authority.
SFC has ‘been looking’ at structures
According to the article, Wheatley – speaking to a Reuters journalist "on the sidelines" of an undisclosed London conference – said: "we have been looking at what structure we would be comfortable with. We are still trying to work out what sort of business trust structure would work.
"The bottom line with all of these things is would it have a commensurate level of investor protection to a listed structure.
"If it does, then we would not have any concerns about people wanting to put their assets into a business structure."
Until recently, there had been “no real investor demand” for business trust listings in Hong Kong, but “there appears to be demand for it now”, Wheatley observed.
An SFC spokesman in Hong Kong said the commission had no additional comments or clarifications to make beyond Wheatley’s remarks on the subjects of business trusts or the possibility of a consultation on whether IPOsponsors should be awarded a degree of liability for statements in their listing documents.
As reported, Hong Kong is in the process of revising its trust law, mainly to make it more attractive for wealthy individuals to make use of trusts there rather than in other, more modern common law jurisdictions.
Business trusts are different, in that their purpose is to enable companies to raise cash from investors without giving up control over the business. The concern, as Wheatley explained, is that this structure can limit the company’s accountability to the investors in the trust.
