Mutual Recognition of Funds Between Luxembourg and Hong Kong


The Securities and Futures Commission (“SFC”) of Hong Kong and the Commission de Surveillance du Secteur Financier (“CSSF”) of Luxembourg have entered into a Memorandum of Understanding (“MoU”) on Mutual Recognition of Funds (“MRF”) on 15 January 2019. The MoU will allow eligible Hong Kong public funds and Luxembourg UCITS funds to be distributed in each other’s market through a streamlined process.


Eligibility requirements

To be eligible for SFC’s authorisation under the MRF (a “Luxembourg Covered Fund”), the Luxembourg fund has to meet certain requirements, including without limitation:

  1. being established, domiciled and managed in accordance with Luxembourg laws and regulations and its constitutive documents;
  2. being a formally authorised UCITS fund;
  3. being (a) a general equity fund, bond fund or mixed fund, or (b) a feeder fund, where the underlying fund falls within one of the fund types in (a);
  4. not using leverage exceeding 100% of the fund’s net asset value;
  5. not investing in
    1. physical commodities,
    2. crypto-assets or crypto-currencies, or
    3. certificates representing the assets referred to under a. or b.;
  6. not having share classes with hedging arrangements other than currency hedging;
  7. having a depositary that qualifies to act as a depositary;
  8. managed by a Luxembourg management company (the “Luxembourg Covered Management Company”) which has a minimum paid-up share capital and non-distributable capital reserves of HK$10 million or its equivalent in Euro; and
  9. the management and officers of the Luxembourg Covered Management Company are not subject to disciplinary action taken by CSSF in the past 3 years.

Ongoing requirements

There are also certain ongoing requirements that have to be met, including without limitation:

  1. the Luxembourg Covered Fund must:
    1. appoint a Hong Kong licensed trust company, which is in compliance with certain requirements in the SFC’s Code on Unit Trusts and Mutual Funds, as its representative;
    2. remain authorised by the CSSF for offering to the public in Luxembourg;
  2. changes made to the Luxembourg Covered Fund require prior approval by SFC and/or filing with SFC, and investors in Luxembourg and Hong Kong must be notified of the changes at the same time; and
  3. sale or distribution of the Luxembourg Covered Fund must be conducted by intermediaries properly licensed by or registered with SFC.

Application process

Application documents include:

  1. application form;
  2. information checklist;
  3. draft of the offering document in English;
  4. constitutive documents of the Luxembourg Covered Fund in English or Chinese;
  5. application fee; and
  6. certificate directly provided by the CSSF to SFC confirming all the eligibility requirements are met.

It will take SFC 5 working days to assess whether all the documents are properly submitted. If affirmative, the authorisation process of the application will take 1 to 3 months. Once the application is authorised, SFC will notify CSSF. Any application not being authorised will be lapsed after 6 months, subject to SFC’s right to grant an extension at its sole discretion. 


Eligibility requirements

The public fund in Hong Kong also needs to meet similar eligible requirements as that of the Luxembourg Covered Fund to enter the Luxembourg market. The major differences include:

  1. Hong Kong Covered Fund must be authorised by SFC and managed by a management company (“Hong Kong Covered Management Company”) licensed with SFC for type 9 regulated activity (asset management); and
  2. depositary and UCITS-related requirements and minimum paid-up share capital and reserve requirements are not relevant in Hong Kong.

Ongoing Requirements

The ongoing requirements are very similar to that of the Luxembourg funds. The major differences include:

  1. a trustee/custodian which is a licensed bank, a subsidiary of such bank, or a trust company approved by the Mandatory Provident Fund Schemes Authority must be appointed;
  2. a credit institution in Luxembourg must be appointed as a paying agent; and
  3. changes made to the Hong Kong Covered Fund require prior approval from SFC except that changes in offering documents require CSSF’s approval, and any changes approved shall be notified by SFC to CSSF within one week from the date of approval.

Application Process

Application documents include:

  1. constitutive documents of the Hong Kong Covered Fund;
  2. prospectus / issuing documents;
  3. specific marketing information;
  4. latest annual report of the Hong Kong Covered Fund;
  5. key information document for investors as required by the European Regulation;
  6. draft agreement to be entered between the Hong Kong Covered Fund and the Luxembourg paying agent;
  7. if applicable, information on the master fund; and
  8. certificate directly provided by SFC to CSSF confirming that all the eligibility requirements are met.

CSSF will take 5 working days to assess whether all the documents are properly submitted. If affirmative, it will take 1 month to authorise the application.


Retail funds in Hong Kong and Luxembourg can now easily access each other’s market in view of the streamlined authorisation process. Such new cooperation framework expands Hong Kong’s MRF network and facilitates the retail offering of the funds in Luxembourg and Hong Kong and further enhances Hong Kong as one of the asset management hubs in the world.