Fund Management

“Marketing In And From” Hong Kong: A Regulatory Case Study

Cathy Brand 12 April 2023


Cross-border marketing of funds is an important topic that wealth managers, private banks and others must wrestle with. This article examines what happens in Hong Kong.

Here is another article on matters concerning marketing alternative investment funds across specific jurisdictional borders. The article comes from Sales Road Maps Online, a UK-based group that has provided a number of expert commentaries in these pages. The author here is Cathy Brand, the firm’s CEO. The editors are pleased to share this content and invite responses. The usual editorial disclaimers apply. Email

Setting up regional marketing affiliates 
Many alternative investment fund managers/asset managers begin their international fundraising efforts by conducting cross-border marketing from their home office headquarters. As their business develops over time, it makes commercial sense to set up affiliates outside their own home jurisdiction that can conduct marketing and client servicing activities from a regional hub.  

By way of example, clients have asked us over the years: “We want to set up a new office in the Asia region to conduct fundraising in our funds from investors in that region. If we put our sales teams on the ground in Hong Kong to cover region Asia marketing, can the sales team market and sell our funds in Hong Kong and in the surrounding Asia region without licence registration with the local regulator, Hong Kong Securities & Futures Commission?”

To answer this question, we provide a background on licensing as it pertains to fund marketing activities.

Why get a licence to fundraise?  
Marketing funds in any jurisdiction constitutes a regulated activity and is subject to the country’s marketing regulations as well as licensing rules. You need a licence in order to conduct fund marketing/fundraising in any jurisdiction or to operate in that country under exemptions (if available) from the regulator’s fund marketing licence requirements. All licensing regulations should be confirmed in advance of any fund marketing activity. 

We always advise clients to check with local counsel as to which type of licence they may need, depending on their activity set conducted in that jurisdiction. For example, in Hong Kong there are various types of SFC licences available depending on the specific activities of the AIFM/asset manager and their sales teams.  

The “truth” about AIFM/asset manager sales activities
What do sales teams do? They market and sell your funds. That is what they are paid to do.  

It is a myth to think that AIFMs/asset managers can put sales teams on the ground in a new office/affiliate overseas without crossing the line of “fund solicitation,” a regulated activity subject to a licence (or operation under a licence exemption).  

We have heard of some industry players who put sales teams on the ground in foreign jurisdictions, attempting to avoid triggering local licensing registration and compliance by “flying under the regulatory radar”: calling their local sales team’s activities only “investment capabilities presentations,” “brand awareness,” “research,” “client servicing,” “completing Requests for Proposals (RFPs)” and/or conducting “reverse solicitation.”   

It is very difficult to keep sales teams in a box called “general capabilities” without speaking about your fund to potential investors. It is a very easy line to cross. 

Secondly, regulators such as Hong Kong SFC apply the substance test to any activity that is conducted onshore in their jurisdiction. You can say your sales teams on the ground in Hong Kong are only doing “brand awareness” or “reverse solicitation.” However, be prepared for the local regulator to “pierce the veil” and take an in-depth look at the activities conducted by sales teams onshore in their jurisdiction. This is to check whether a regulated activity is conducted or not and whether you need a licence to conduct that regulated activity.   

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