SFC Code of Conduct for Corporate Finance Advisors

The Securities and Futures Commission (SFC) in Hong Kong maintains a robust regulatory framework for corporate finance advisors. Central to this framework is the Code of Conduct for Persons Licensed or Registered with the Securities and Futures Commission (the “Code”). This Code outlines the ethical and professional standards expected of individuals and firms engaged in corporate finance advisory activities, ensuring the integrity and fairness of Hong Kong’s capital markets.

A core principle underpinning the Code is integrity. Advisors must act honestly and fairly in all dealings, avoiding conflicts of interest and disclosing any potential conflicts promptly and transparently. This includes providing objective and unbiased advice, free from personal or financial inducements that could compromise their judgment. The Code emphasizes the importance of independent thinking and requires advisors to exercise due skill, care, and diligence in their work.

Competence is another vital component. Advisors must possess and maintain the necessary knowledge, skills, and experience to provide sound and reliable advice. They are expected to stay abreast of relevant regulations, market developments, and industry best practices. The SFC expects advisors to continuously enhance their professional capabilities through ongoing training and development.

Confidentiality is paramount. Advisors are entrusted with sensitive and non-public information. The Code strictly prohibits the misuse of confidential information for personal gain or the benefit of others. Advisors must establish and maintain robust internal controls to safeguard confidential information and prevent its unauthorized disclosure. This includes policies and procedures regarding data security, access controls, and employee training.

Objectivity and Independence are essential for maintaining investor confidence. The Code requires advisors to act in the best interests of their clients, avoiding any situations that could compromise their objectivity. They must disclose any relationships or connections that could potentially impair their independence, allowing clients to make informed decisions about engaging their services. This includes disclosing any fees, commissions, or other benefits they may receive from third parties.

Compliance and Reporting are critical. Advisors are obligated to comply with all applicable laws, rules, and regulations. They must establish and maintain effective systems and controls to ensure compliance. The Code mandates timely and accurate reporting to the SFC, including any breaches or suspected breaches of the Code or other regulatory requirements. Whistleblowing mechanisms must be in place to encourage employees to report concerns without fear of reprisal.

Failure to adhere to the Code can result in disciplinary action by the SFC, including fines, suspension, or revocation of licenses. The SFC actively monitors compliance and takes enforcement action against individuals and firms that violate the Code. The Code is regularly reviewed and updated to reflect changes in market practices and regulatory requirements, ensuring its continued relevance and effectiveness in maintaining the integrity of Hong Kong’s corporate finance industry.