According to S.130 of SFO, a licensed corporation must obtain SFC's pre-approval before keeping records at a particular premise. In recent years, some firms have outsourced their back office functions to third parties located at overseas countries. However, SFC recently released a FAQ to clarify that it would not approve overseas premises for the keeping of records or documents under S.130.
The reason why the SFC will only approve premises located in Hong Kong is that while SFC is empowered by SFO to enter an intermediary's premises to inspect the records, it may be precluded from exercising this power in the event of the premises being located outside HK.
Accordingly, if an intermediary enters into an overseas outsourcing arrangement, it must ensure that all relevant records or documents, which are kept by an overseas third party, are also contemporaneously kept by the intermediary at the HK premises approved by SFC under S.130.
If records at overseas premises are maintained in electronic format, then it would not be a big problem making a copy to the intermediary's local office. But it could be a hardship for the overseas third party to remit hard copy records back to HK.
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