17 November 2021
Further to our article on the Securities Futures Commission (the “SFC”)’s Consultation Paper on Amendments to the Code on Pooled Retirement Funds (the “PRF Code”), on 28 October 2021, the SFC published its consultation conclusion on amendments to the PRF Code (the “Consultation Conclusion”).
The key amendments proposed by the SFC in the Consultation Conclusion are as follows:-
1. Obligations of key operators: The SFC will introduce more detailed obligations for each specific type of key operator (product providers, trustees, management companies and insurance companies) in administering and operating a PRF and investment portfolios.
2. Fund operations: The SFC will introduce requirements in relation to fund operations, including valuation and pricing. While it is in the product provider’s discretion to publish prices and documents for a PRF and its investment portfolio publicly, or make this information accessible only to members of the scheme, the information on the website should be true, accurate and not misleading.
3. Trustees’ internal control review: The PRF trustees are no longer required to submit an internal control review report under Appendix E to the PRF Code. The PRF trustees should, however, ensure that adequate policies and procedures for internal controls and systems are maintained for compliance with the amended PRF Code.
4. Disclosure requirements: The information disclosure templates are provided by the SFC to set out the minimum disclosure requirements for each of the four types of investment portfolios in a principal brochure. The four types of investment portfolios are: (i) a fund investing in SFC-authorised funds; (ii) a cash management portfolio; (iii) a guaranteed fund, or (iv) a direct investment fund. Product providers are allowed flexibility for the format of the principal brochure.
5. Specific requirements for different types of investment portfolios: The SFC clarified that an investment portfolio which is classified as a fund investing in SFC-authorised funds should disclose the identities of the underlying funds. A change in the respective proportion of underlying funds within a disclosed range would not require the SFC’s prior approval.
The amended PRF Code is expected to come into force in November 2021 (the “Effective Date”) after gazettal. The SFC will allow a 12-month transitional period from the Effective Date for the key operators of pooled retirement funds and investment portfolios to implement the necessary changes.
