SFC’s Revised Guidelines on Competence effective on 1 January 2022 – Part II

SFC’s Revised Guidelines on Competence effective on 1 January 2022 – Part II

SFC’s Revised Guidelines on Competence effective on 1 January 2022 – Part II 1401 788 Charing

We return with the second part to our two-part series on the Consultation Conclusions on Proposed Enhancements to the Competency Framework for Intermediaries and Individual Practitioners published on 18 June 2021.  As reported last week, the proposed enhancements will be reflected in the revised Guidelines on Competence (“Competence Guidelines”) and the revised Guidelines on Continuous Professional Training (“CPT Guidelines”).  Both will become effective on 1 January 2022.

This second part of the series will focus on the enhanced competence requirement in relation to advising on the Codes on Takeovers and Mergers and Share Buy-backs (“Takeovers Codes”) matters as well as key changes to the CPT Guidelines.

Responsible Officers (“RO”)

For ROs proposing to advise on Takeovers Codes matters in a sole capacity (“TCRO”), there are two options to satisfy the eligibility requirements:-

Option A Option B
–          Acquired a minimum five years of corporate finance experience in respect of companies listed on the Main Board of GEM Board of the Hong Kong Stock Exchange preceding appointment as a TCRO; and

–          In the five years immediately preceding the appointment, has been substantially involved in advising an offeror or an offeree company in at least two completed transactions falling within the ambit of the Takeovers Code.

Note that Corporate finance experience includes providing advice on one or more of the following:-

o   IPO transactions;

o   Notifiable/connected transactions

o   Rights issues/open offers by listed company;

o   Takeovers and share buy-backs subject to the Takeovers Codes; and

o   any other significant transactions or equity fund raising exercises not listed above.

Further, The five year requirement must be obtained over a continuous five-year period.


Has been a member of the Takeovers and Mergers Panel in Hong Kong for two years within the last five years preceding the appointment as a TCRO.

If the SFC is not satisfied with the competency of the RO to act in a sole capacity, the SFC may impose a licensing condition on the individual’s license such that he must act together with another TCRO when advising clients on matters regulated by the Takeovers Code i.e. he can do so only in a non-sole capacity.

CPT Guidelines

The key changes are summarised as follows:-

  • The CPT requirements will be determined on a hours “per individual” basis instead of “per regulated activity” basis.
  • For LRs and Relevant Individuals[1], they are required to complete a minimum of 10 CPT hours per calendar year. ROs and Executive Officers[2] are to complete two additional CPT hours on regulatory compliance.
  • Within 12 months after an individual first joins the industry in Hong Kong as an LR/ReI/EO/RO, they must undertake 2 CPT hours on ‘ethics’.

Contact us today if you need assistance with your RO/LR application or help with reviewing your compliance with the revised Competence Guideline and CPT Guidelines.

[1] A relevant individual whose name is to be or is entered in the register maintained by the HKMA under section 20 of the Banking Ordinance

[2] A person who applies to the HKMA for consent or who has been given consent to act as an executive officer of an Registered Institution under section 71C of the Banking Ordinance

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