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The Securities and Futures (Professional Investor) (Amendment) Rules 2018, gazetted as L.N. 99 of 2018, took effect on 13 July 2018. They replaced relevant modifications previously granted by the SFC under section 134 of the Securities and Futures Ordinance.
What the consultation covered
The consultation opened on 1 March 2017 and closed on 3 April 2017. The SFC received 17 written submissions before publishing its conclusions.
The main purpose was not to create a new wealth category or raise the thresholds. Instead, the SFC codified modifications it had previously granted on a case-by-case basis and standardised the evidence and ownership arrangements that could be used to establish professional-investor status.
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The key monetary thresholds remain:
| Investor type | Qualification threshold |
|---|---|
| Trust corporation | At least HK$40 million in total assets entrusted under one or more trusts |
| Individual | At least HK$8 million portfolio |
| Corporation | At least HK$8 million portfolio or at least HK$40 million in total assets |
| Partnership | At least HK$8 million portfolio or at least HK$40 million in total assets |
Foreign-currency amounts may be counted by reference to their Hong Kong-dollar equivalent.
1. Individuals can count their share of some joint accounts
An individual may count the individual’s share of a portfolio held in a joint account with people who are not the individual’s associates. For this rule, an associate remains the individual’s spouse or child.
The calculation works in this order:
- Use the individual’s share stated in a written agreement between the account holders.
- If there is no written agreement, use an equal share of the portfolio.
For example, if three unrelated people hold a HK$12 million portfolio jointly and a written agreement gives one person a 50% interest, that person may generally count HK$6 million—not the full HK$12 million—towards the HK$8 million individual threshold. If there is no agreement, the deemed share would be HK$4 million each.
The SFC made clear that equal division should not be applied mechanically. An intermediary should make a reasonable enquiry about whether a written agreement exists before relying on equal shares. The rules do not prescribe a particular format or set of clauses for the agreement, but the intermediary should retain records supporting its assessment.
The deemed equal share is used to test professional-investor status. It does not necessarily decide who is ultimately entitled to withdraw money from the joint account or receive its proceeds.
A different result generally applies to a joint account with an associate. An individual may generally count the whole portfolio in a joint account held with a spouse or child.
2. A wholly owned investment company can count for an individual
An individual may count a corporation’s portfolio if, at the relevant date:
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- the corporation’s principal business is holding investments; and
- the corporation is wholly owned by the individual.
This is important for people who hold investments through a personal investment company. It does not, however, create a pro-rata look-through rule for partial ownership.
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The SFC also did not give “principal business” an exhaustive numerical definition. Intermediaries are expected to make a principles-based assessment and keep records explaining why the company’s main business is investment holding. Merely pointing to the fact that a company owns some investments may not be enough.
3. More corporate structures can qualify
The amended rules broaden the corporate professional-investor categories in two important ways.
Investment-holding corporations owned by qualifying investors
A corporation may qualify where its principal business is holding investments and it is wholly owned by one or more qualifying professional investors. The qualifying owners can include specified trust corporations, qualifying individuals, qualifying corporations, qualifying partnerships and certain institutional professional investors listed in Part 1 of Schedule 1 to the Securities and Futures Ordinance.
Holding companies that wholly own a qualifying corporation
A corporation may also qualify by wholly owning another corporation that meets the relevant HK$8 million portfolio or HK$40 million total-assets test.
This second route can be useful in offshore or multi-level holding structures. A parent holding company may be able to qualify through its wholly owned qualifying subsidiary, even where it would have difficulty demonstrating the threshold using its own consolidated audited accounts.
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The ownership condition matters. A company does not automatically qualify just because a subsidiary somewhere in the wider group is a professional investor. The final rules do not extend the treatment to fellow subsidiaries merely because they share a common parent.
The SFC’s implementation guidance also highlights corporate governance. Directors and shareholders should understand the consequences of the company being treated as a professional investor, including who makes investment decisions and when shareholder consultation or consent may be needed. Intermediaries should obtain confirmation that shareholders have been informed before providing services to such a holding company as a professional investor.
4. Alternative evidence is permitted
The amendments give intermediaries more than one way to verify the required assets or portfolio. Depending on the investor type and the test being used, acceptable evidence can include:
- the most recent audited financial statement prepared within 16 months before the relevant date, for a trust corporation, corporation or partnership;
- a statement of account or certificate issued by a custodian within 12 months before the relevant date;
- a certificate issued by an auditor or certified public accountant within 12 months before the relevant date; or
- a qualifying public filing made within 12 months before the relevant date.
The final rules allow auditor or certified-public-accountant certificates for trust corporations, individuals, corporations and partnerships—not only corporations and partnerships.
A “public filing” means a document submitted under Hong Kong or overseas legal or regulatory requirements to a person or body that must publish it or make it available for public inspection. The filing may be made by, or for, a trust corporation, individual, corporation or partnership.
Evidence timing can decide the outcome
The relevant-date requirement is more than an administrative detail. A document can be genuine and still fall outside the permitted period.
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For example, an audited statement prepared 17 months before the relevant date would be outside the 16-month window. A custodian statement issued 13 months before the relevant date would be outside the 12-month window. The SFC considered the 12-month period for public filings appropriate and did not adopt a longer period.
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A practical evidence checklist is:
- Identify the professional-investor category being used.
- Identify the relevant date for the assessment.
- Check whether the assets qualify as portfolio assets or total assets under the applicable test.
- Confirm the document’s preparation or issue date.
- Verify ownership, account interests and any investment-holding business conditions.
- Keep the agreement, certificate, filing and internal assessment together in the client file.
What counts as a portfolio?
The HK$8 million portfolio test is not a general net-worth test. The SFC describes a portfolio for these purposes as comprising:
- securities;
- certificates of deposit issued by banks; or
- money held by custodians for a person.
The SFC declined to expand the definition to include assets such as real estate, art, investment-linked assurance schemes, structured deposits or other non-securities wealth-management products.
Someone with HK$8 million in property, artwork or general personal assets does not therefore automatically have an HK$8 million portfolio under the PI Rules. The correct investor category, asset type and supporting evidence must all be established.
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Proposals the SFC rejected
The final outcome did not adopt several proposals that would have expanded eligibility further. The SFC rejected proposals to:
- allow an individual to count a pro-rata share of a partly owned investment corporation;
- allow individuals to count portfolios held through partnerships or trusts;
- recognise foundations, unincorporated associations or additional legal structures;
- qualify licensed investment professionals solely because of their work experience or employment;
- add more asset classes to the definition of portfolio;
- accept public filings older than 12 months; or
- create a broader, exhaustive list of acceptable certificates or public filings.
Common mistakes when assessing PI status
| Mistake | Correct approach |
|---|---|
| Counting an entire joint account with unrelated co-holders | Count only the individual’s agreed share, or an equal share if no agreement exists after reasonable enquiry. |
| Assuming a partly owned investment company qualifies | The individual-owned-company route requires wholly owned status. |
| Using equal division without asking about an agreement | Make and record a reasonable enquiry first. |
| Treating all company investments as proof of principal business | Make a documented, principles-based assessment of the company’s principal business. |
| Using old financial evidence | Check the 16-month audited-statement limit and 12-month limit for the other specified evidence. |
| Using net worth instead of portfolio assets | Apply the defined portfolio concept and the relevant threshold. |
| Assuming a group company qualifies because another group company does | Check the specific wholly owned and qualifying-corporation conditions. |
Why the changes matter
The 2018 amendments make the rules more workable for joint-account holders, personal investment companies and corporate holding structures. They also give intermediaries more flexibility when collecting evidence.
They do not remove the need for a careful assessment. The HK$8 million and HK$40 million thresholds remain, the portfolio definition remains limited, and the relevant date and evidence windows still matter. Ownership and governance records are particularly important where a company is relying on a wholly owned subsidiary or qualifying professional-investor owners.
The SFC’s legislative-history page lists the 2018 amendment as the latest amendment shown for the Securities and Futures (Professional Investor) Rules, Cap. 571D, as of 8 August 2026. Anyone applying the rules now should verify the current consolidated text on Hong Kong e-Legislation rather than relying only on summaries of the 2018 consultation.
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FAQ
When did the amended PI Rules take effect?
The Securities and Futures (Professional Investor) (Amendment) Rules 2018 took effect on 13 July 2018.
Can an individual count a joint account with an unrelated person?
Yes, but only the individual’s share may be counted. Use the share stated in a written agreement, or an equal share if no agreement exists after the intermediary makes a reasonable enquiry.
Can someone count investments held through a partly owned company?
Not under the individual investment-company route. The final rule requires the investment-holding corporation to be wholly owned by the individual.
Does HK$8 million in total wealth satisfy the individual PI test?
Not necessarily. The individual test uses an HK$8 million portfolio, not a broad net-worth test. Securities, bank-issued certificates of deposit and money held by custodians are the relevant types described by the SFC.
How recent must the supporting evidence be?
The most recent audited financial statement must generally have been prepared within 16 months before the relevant date. A custodian statement, auditor or CPA certificate, or qualifying public filing generally must fall within the 12 months before the relevant date.
Can a holding company qualify through a subsidiary?
It may qualify if it wholly owns a corporation that meets the applicable HK$8 million portfolio or HK$40 million total-assets threshold. Common ownership alone, such as two fellow subsidiaries sharing a parent, is not enough.
The Bottom Line
The 2018 SFC amendments broadened the practical routes to professional-investor status, but they did not turn the PI Rules into a general wealth test. The safest assessment starts with the correct investor category, applies the relevant-date requirement, checks the prescribed asset and ownership conditions, and keeps evidence showing how the conclusion was reached.
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