I. Common Licence Types and Their Uses
Under the Securities and Futures Ordinance (SFO), the Hong Kong Securities and Futures Commission (SFC) classifies financial services into 10 types of regulated activities, each corresponding to a specific licence. Below are the common licence types and their purposes:
Licence | Regulated Activity | Main Purpose |
Type 1 | Dealing in securities | Providing broking/dealing services for securities such as stocks, bonds, mutual funds (equivalent to a securities firm in mainland China) |
Type 2 | Dealing in futures contracts | Providing broking/dealing services for index or commodity futures contracts |
Type 4 | Advising on securities | Providing investment advice on securities transactions and issuing securities research reports |
Type 5 | Advising on futures contracts | Providing investment advice on futures contracts and issuing futures research reports |
Type 6 | Advising on corporate finance | Acting as IPO sponsors for listing applicants, advising on mergers and acquisitions, and advising on Listing Rules compliance matters |
Type 9 | Asset management | Managing securities or futures contract portfolios on a discretionary basis for clients (equivalent to a private fund licence in mainland China) |
The most popular licence combination in the market is "Types 1 + 4 + 9" (securities dealing + securities advising + asset management). This combination accounts for a significant proportion of both licensed corporations and licensed individuals.
II. "Unrestricted" vs. "Restricted" Licences ("Big Licence" vs. "Small Licence")
The terms "big licence" and "small licence" are not official SFC terminology but are common market jargon referring to whether the licence is subject to conditions or restrictions.
Core difference: whether the licensee can hold client assets:
- Unrestricted ("Big") licence: can hold client assets – client funds/assets can be pooled into the company's account for unified management.
- Restricted ("Small") licence: cannot hold client assets – a separate account must be established for each client.
Specific differences by licence type:
Type 6 (Big 6 vs. Small 6):
- Small 6: licence carries a condition "not permitted to act as a sponsor" – can only provide general advice on Listing Rules.
- Big 6: no sponsor restriction – can act as an IPO sponsor and post‑listing compliance adviser in Hong Kong.
- Minimum paid‑up share capital for a Big 6 is generally not less than HKD 10 million.
Type 9 (Big 9 vs. Small 9):
- Small 9: cannot hold client funds – can only serve professional investors (PIs).
- Big 9: can hold client funds – can manage public funds; minimum liquidity/capital requirement is at least HKD 5 million.
III. Application Process and Timeline
The application process for a licensed corporation licence can be divided into the following stages:
Stage 1 (Months 1–2) – Preliminary Preparation
- Establish a Hong Kong company (approximately 2–3 weeks)
- Determine the board of directors
- Appoint a company secretary and auditor
- Assess and confirm the qualifications of Responsible Officers (ROs)
- Prepare RO resumes and confirm examination qualifications
- Each regulated activity must have at least two ROs directly supervising the activity
- At least one RO must be an executive director resident in Hong Kong
- Prepare application documents
- Certificate of Incorporation, Business Registration Certificate
- Shareholder structure chart, organisational chart
- Business plan and operational flowcharts
- Internal compliance manual
- Open a Hong Kong bank account
- Complete SFC application forms (approximately 2–4 weeks)
Stage 2 (Months 3–4) – Submission
- Submit the licence application to the SFC via the WINGS system
- The SFC's target processing time for a licensed corporation application is 15 weeks
- Select suitable office premises and handle fit‑out matters
- Recruit other staff (management, sales, finance, operations, compliance, etc.)
- Arrange employee compensation insurance and MPF contributions
Stage 3 (Months 5–6) – Regulatory Enquiries
- Respond to SFC queries (typically 4–5 rounds of questions)
- Questions cover compliance and internal control measures
- RO experience and shareholder funding sources, etc.
- Sign AIP (Approval‑in‑Principle) documents
- Submit supplementary documents
- Shareholders inject capital
Stage 4 (After Month 6) – Licence Obtained and Business Launch
- Receive the SFC licence
- Finalise account opening documents, compliance manual and operations manual
- Attend compliance training provided by the compliance consultant
- Commence business officially
Overall time estimate: The SFC's service pledge for processing a licensed corporation application is 15 weeks (about 3.5 months). However, including preliminary preparation and subsequent regulatory queries, the actual full application cycle is generally 6 to 12 months.
IV. Application Costs
Based on the cost information provided and the SFC's official fee schedule, the main costs for applying for a licensed corporation licence are as follows:
Item | Amount (HKD) | Remarks |
One‑year office rent (HKD 30,000/month) | 360,000.00 | Office lease |
SFC application fee for 2 ROs | 14,220.00 | RO application fee - Per regulated activity |
SFC application fee for the licensed corporation | 4,740.00 | Per regulated activity |
Incorporation of a Hong Kong holding company and a Hong Kong limited company | 7,890.00 | Companies Registry fees |
Opening a bank account for the licensed corporation | 12,000.00 | Bank account setup |
Subtotal (basic costs) | 398,850.00 |
Official SFC fee details:
- Licensed corporation application fee: HKD 4,740 per regulated activity (Type 3 is HKD 129,730)
- Responsible Officer (RO) application fee: HKD 4,740 per regulated activity
- Annual licence fee: HKD 4,740 per regulated activity for licensed corporations (Type 3 excepted)
Other potential costs (to be aware of):
- Consultant/compliance service fees: Engaging a compliance consultancy to assist with the licence application generally costs around HKD 400,000–600,000.
- RO remuneration costs: During the application period, RO salaries are generally about HKD 30,000–35,000/month per person.
- Capital requirements:
- Type 1 (holding client assets): minimum paid‑up share capital HKD 10 million, liquid capital HKD 3 million
- Type 9 (holding client assets): minimum paid‑up share capital HKD 5 million, liquid capital HKD 3 million
- Type 4 (not holding client assets): minimum liquid capital HKD 100,000
- Trading system and official website development: costs vary depending on business scale.
- Staff recruitment and operating costs: including management, sales, finance, compliance, middle/back‑office personnel, etc.
V. Summary
Applying for an SFC licensed corporation licence in Hong Kong is a systematic process involving company incorporation, RO appointment, document preparation, regulatory enquiries, and other steps. Common licence types include Type 1 (securities dealing), Type 2 (futures dealing), Type 4 (securities advising), Type 5 (futures advising), Type 6 (corporate finance advising), and Type 9 (asset management). The core difference between "big" and "small" licences lies in whether the licensee may hold client assets – "big" licences offer a broader business scope but require higher capital. The application cycle generally takes 6 to 12 months, and the basic costs (including rent, SFC fees, company incorporation and bank account opening) start at around HKD 400,000, with additional provisions needed for consultancy fees, RO remuneration, and meeting capital requirements.
