Business Premises

Last week SFC released a FAQ about business premises. The question is whether SFC allows licensed firms to carry out their business in business centres or shared offices.

This is an interesting question. I immediately recalled S.130 of SFO regarding suitability of business premises. SFC replied that in general the firm should satisfy itself that the premises are reasonably secure and that confidential / non-public information (such as price sensitive information) and client privacy will be sufficiently safeguarded against unauthorized access or leakage.

SFC further specified the following factors suggesting that the premises are not suitable for a firm’s business:

• There does not exist any secured and properly segregated office area (under lock), which is designated for the corporation’s own use.
• Its essential office equipment and telecommunication systems are not situated within an enclosed area accessible only by its staff and authorized personnel.
• No or insufficient actions / measures are taken to prevent confusion to its clients that might be caused by the co-existence of other corporations in the same premises.
• The nature of business of the firm demands frequent face-to-face dealings / meetings with clients at the premises where clients’ information and instructions will be exchanged and there are practical difficulties for the firm to preserve secrecy in respect of clients’ information.
• The firm has not ensured that its office premises will always be accessible for all regulatory visits and investigatory searches conducted under the law.

I think the above list of unsuitable factors in substance prohibit the use of business centres or shared offices.