SFC Licensing Basics: What is a Responsible Officer (RO)?
When applying or maintaining an SFC license, a Responsible Officer (RO) is one of the key roles within a licensed corporation.
Understanding the basic requirements applicable to ROs can help licensed corporations better plan their licence applications and ongoing regulatory arrangements.
What Is a Responsible Officer (RO)?
A Responsible Officer (RO) is a licensed representative who has been approved by the Securities and Futures Commission (SFC) to supervise the regulated activities of the licensed corporation to which they are accredited.
In simple terms, an RO is a licensed representative who assumes supervisory responsibility for the regulated activities of the licensed corporation.
How Many ROs Does a Licensed Corporation Need?
For each regulated activity for which it applies to be licensed, a licensed corporation must appoint at least two Responsible Officers (ROs) to directly supervise the relevant business. At least one RO must be available at all times to supervise the relevant business.
Provided that the individual is fit and proper and the arrangement does not create any conflict of roles, the same RO may be appointed to supervise more than one regulated activity.
When Is a Person Required to Apply to Become an RO?
All executive directors of a licensed corporation must seek the SFC’s approval to become Responsible Officers of the corporation.
If a director actively participates in, or is responsible for directly supervising, the corporation’s regulated activities, the director will be regarded as an executive director under the Securities and Futures Ordinance and must apply to become an RO for the relevant regulated activities.
In addition, the SFC generally expects Managers-In-Charge (MICs) responsible for the Overall Management Oversight and Key Business Line core functions to seek approval as ROs for the regulated activities they supervise.
What Requirements Must an RO Applicant Meet?
An applicant for approval as a Responsible Officer must first satisfy the SFC’s fit and proper requirements. The SFC will consider factors including the applicant’s financial status or solvency, ability to carry on the relevant regulated activities competently, honestly and fairly, as well as their reputation, character, reliability and financial soundness.
In terms of competence, the applicant must also meet the applicable requirements relating to academic or professional qualifications, relevant industry experience, recognised industry qualifications or additional CPT, management experience, and local regulatory framework examinations.
In addition, an RO must have sufficient authority within the licensed corporation to supervise the relevant regulated activities. An RO is not necessarily required to be a member of the corporation’s board of directors.
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– The comments raised within this article do not form a legal opinion nor should they be construed as being legal advice –
