Member Article

An exemption from “acting in concert” is available under the Hong Kong Codes on Takeovers and Mergers and Share Repurchases (Takeovers Code) to entities within a large financial group which manage investment accounts on a discretionary basis and which maintain acceptable levels of segregation regarding confidential information through Chinese Walls. The exemption recognises the fiduciary duties owed by discretionary fund managers to their clients and that fund management activities within certain large organisations may be conducted on a day-to-day basis separately from the other activities of that organisation such as its corporate finance activities. Exempted fund managers will not be regarded as acting in concert with the corporate finance operations of their group. Fund managers who wish to apply for the exemption must submit an application containing details of the group structure and operations, their Chinese Wall and compliance procedures to prevent a flow of information between the fund manager and other parts of the Group, and details of the financial interests of the fund manager in the performance of the Group. The Takeover Executive may require further information from the applicant and may ask for a meeting with the applicant to discuss the relevant fund management activities before granting the exemption. A fee of HK$24,000 per ruling is payable.