HONG KONG SAR, CHINA Law and Practice Contributed by: Doos Choi, Pierre Dzakpasu, Ester Chow and Aditya Kurtakoti, Mayer Brown
2. Regulatory Environment 2.1 Licensing and Regulatory Approval Lending in Hong Kong There are three main pieces of legislation in Hong Kong which regulate the activities of banks, money brokers and money lenders: • the Banking Ordinance (Cap. 155); • the Securities and Futures Ordinance (Cap. 571); and • the Money Lenders Ordinance (Cap. 163). The extent to which a private credit lender is required to be licensed will depend on the types of activities which they wish to engage in and the extent to which they can rely on exemptions specified within the relevant ordinances. Whilst not specific to private credit funds, reg - istration requirements under the following ordi - nances may also be relevant: • the Business Registration Ordinance (Cap. 310); and • the Companies Ordinance (Cap. 622) (“CO”). Taking of Security Situated in Hong Kong There is no general requirement for a lender to obtain a licence or regulatory approval solely by reason of taking the benefit of security over assets located in Hong Kong. 2.2 Regulators of Private Credit Funds The Hong Kong Monetary Authority (HKMA) is the main regulatory body overseeing banking activities in Hong Kong and regulating institu - tions involved in credit markets, especially from the perspective of managing financial stability and ensuring prudent lending practices. The Securities and Futures Commission (SFC) is the
1.8 Deal Sizes, Fund Sizes and Fundraising
It is difficult to speak of typical size limits for private credit transactions in Hong Kong, Singa - pore and other parts of Asia. Most of the volume lies in the mid-market where a bilateral loan by a single private credit fund (or a small club) is most common. That said, given the right opportunity, large cheques can be written and although there are a handful of funds which may have the fire - power to take on these larger situations by them - selves, they will typically be syndicated across a number of investors. A correlation can be drawn between deal sizes and the size of the relevant economy where the investment opportunity resides. The PRC repre - sents the biggest regional economy so it is no surprise that (until its recent economic malaise), the biggest deals were being transacted there. The other regional economies are smaller by comparison so it is more rare to come across similarly sized investments in issuers based in those other economies. The regional fundraising environment has remained challenging with macro-economic headwinds, the prevailing geopolitical environ - ment and the downturn in the regional property market weighing on investor appetite. Generally speaking, there has been a flight towards the larger fund managers operating global strate - gies. 1.9 Impending Regulation and Reform See 2.2 Regulators of Private Credit Funds .
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