SFC replaces 2009 Islamic fund arrangement with broader Malaysia mutual recognition of funds regime
Malaysian fund managers gain streamlined SFC authorisation for Hong Kong retail distribution but must appoint a Hong Kong representative and synchronise disclosure across both markets
Change
The Securities and Futures Commission issued a circular on 23 July 2026, alongside a Memorandum of Understanding with the Securities Commission Malaysia of the same date, setting the requirements for SC-authorised Malaysia-domiciled funds seeking SFC authorisation under section 104 of the Securities and Futures Ordinance for offering to the public in Hong Kong; the circular supersedes the SFC's 9 November 2009 circular on Islamic collective investment schemes.
Why it matters
A Malaysian Fund complying with Malaysian law and the circular's conditions is deemed to have complied in substance with Hong Kong requirements and qualifies for streamlined authorisation, rather than full compliance with the SFC Handbook. Each fund must appoint a Hong Kong representative under Chapter 9 and paragraph 11.1(b) of the Code on Unit Trusts and Mutual Funds. The fund must remain SC-authorised and its management company SC-licensed under section 58(1) of the Capital Markets and Services Act 2007, both under ongoing SC supervision. Changes take effect on SC approval and are then filed with the SFC, but changes rendering the fund MRF-ineligible require prior SFC approval. Breaches notifiable to the SC must be reported to the SFC at the same time and rectified promptly, with confirmation once rectified. Sale and distribution must go through SFC-licensed or registered intermediaries. Eligibility requirements sit in Annex B, with further disclosure requirements in Annex A, and the SFC will not take up an application without an SC certificate confirming eligibility.
Implications
- — Malaysian management companies distributing under the 2009 Islamic CIS arrangement must re-examine their position, because that circular is superseded — the fund type definitions and eligibility requirements now sit in Annex B of the new circular, and continued reliance on the 2009 framework is no longer available.
- — Malaysian management companies must appoint a Hong Kong firm as the fund's representative under Chapter 9 and paragraph 11.1(b) of the UT Code before authorisation, since the streamlined route does not remove the local representative requirement that applies to SFC-authorised retail funds.
- — Malaysian management companies must build simultaneous cross-jurisdiction disclosure, dispatching offering document updates, periodic financial reports, notices and announcements to Malaysian and Hong Kong investors at the same time, with equal treatment as to notice period and content, and immediate SFC notification on suspension of dealings.
- — Malaysian management companies must separate two change pathways: ordinary changes take effect on SC approval and are filed with the SFC afterwards, but any change rendering the fund MRF-ineligible — including a strategy change taking it outside the eligible fund type — requires prior SFC approval, and proceeding without it puts the authorisation at risk.
- — Malaysian management companies must treat a breach notifiable to the SC as a simultaneous SFC reporting trigger, and on the fund ceasing to meet the circular's requirements must notify the SFC immediately and stop offering to the public or accepting Hong Kong subscriptions until the SFC approves continuation.
Who is affected
- — Malaysia-domiciled funds authorised or approved by the Securities Commission Malaysia for public offering
- — Malaysian management companies licensed by the Securities Commission Malaysia under section 58(1) CMSA
- — Hong Kong intermediaries licensed by or registered with the SFC distributing Malaysian Funds
- — Hong Kong funds and management companies seeking Securities Commission Malaysia recognition under the reciprocal arrangement