On 20 March 2015, the Hong Kong Court of Final Appeal (CFA) allowed the appeal by Pacific Sun Advisors Limited and its Chief Executive Officer, Mantel, Andrew Pieter, which effectively confirmed their earlier acquittal by the Magistrate of offences relating to the issuing of advertisements to promote a collective investment scheme (CIS) without the authorization of the Securities and Futures Commission (SFC) contrary to section 103 of the Securities and Futures Ordinance (SFO).
The CFA decision will affect how the SFC continues to regulate CIS as well as the issuance of advertisement regarding all investment products in general. Since it is not an offence to launch or sell a CIS that has not been authorised, the law attempts to protect the investing public by regulating the advertising of the investment products as distinct from their subsequent sale. The CFA decision is relevant in that it concerns the interpretation of an exclusion under section 103(3)(k) of the SFO which applies if the securities (or CIS) are or are intended to be disposed of only to professional investors. Our bulletin gives a summary of the CFA decision and its implication for businesses.
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