Under existing rules, responsible officers (RO), usually two at each firm, are accountable when a firm is caught with breaches or failures. New measures will now require all members of a firm’s senior management team to take on the legal liability of the firm, the watchdog said in a note released last week.
These include directors, non-exective directors, ROs, and the newly-introduced concept managers-in-charge of core functions (MIC).
From 18 April next year, firms are required to submit up-to-date management structure information and organisational charts to the SFC.
“All members of the senior management of a licensed corporation (even if they are not licensed) are regulated persons because of their involvement in the management of the business of a licensed corporation,” SFC noted.
It lists eight core functions where an MIC is needed; overall management oversight; key business line; operational control and review; risk management, finance and accounting, information technology; compliance and anti-money laundering and counter-terrorist financing.
“Those who have overall management oversight of the licensed corporations and those in charge of key business line functions are also expected to seek the SFC’s approval as responsible officers,” the commission said.
“Senior managers bear primary responsibility for the effective and efficient management of their firms, and they should be well aware of the obligations currently imposed on them as well as their potential liability if they fail to discharge their responsibilities,” SFC chief executive Ashley Alder said in the statement.
Speaking at the Hong Kong Investment Funds Association annual conference last week, Christina Choi, executive director for investment products at SFC, justified the new move.
“It is intended to let SFC have a better understanding about the management structure and also to improve the governance structure and accountability of the senior management involved in the business of the licensed firms.
“It is all based on the existing legislation, but maybe the awareness is a bit low,” she said.
“We do not ask for the localisation of all the senior managers in Hong Kong, but we need to be conscious of who is responsible for the important core functions of the licensed firms.”
