The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – August 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES IA Caps Referral Fees at 50% for Participating Policies, Effective 1 Oct 2025 Insurers Must Publicly Disclose Audited Financials Under RBC Regime to Boost Market Transparency Under The New Requirement MARKET NEWS Insurance Authority Encourages Relocation of Investment Decision Functions for Life Insurers to Hong Kong ENFORCEMENT NEWS Tahoe Life was fined $10 million for unauthorized transactions IA Secures Conviction Against YAN Zhiyu for Non-Compliance with Investigation Regulatory News 1. IA Caps Referral Fees at 50% for Participating Policies, Effective 1 Oct 2025 The IA issued a circular on 1 September 2025, outlining regulatory expectations for referral fees paid by licensed insurance broker companies in relation to participating policies. This guidance applies to authorized insurers and licensed insurance intermediaries dealing with long-term business. It builds on prior communications, including the 22 May 2024 circular on referral business models and the 30 July 2025 Practice Note on remuneration structures. Key Requirement: Referral Fees Ratio Cap : Insurance broker companies shall not pay referral fees to any referrers above a Benchmark* , which is calibrated as 50% of the total commission receivable by the broker companies from an authorised insurer for introducing, arranging and servicing a participating policy Scope of Circular : The new regulatory expectation will not be applied to the business lines which regulators are SFC and MPFA Effective Date : All licensed insurance broker companies and authorized insurers should comply with this circular by 1 October 2025 . * As stated in the circular on 1 September 2025, the Benchmark is calibrated as 50% of the total commission receivable by a licensed insurance broker company from an authorized insurer for introducing, arranging and servicing a participating policy. SIGNIFICANCE: This circular address concerns over business models that may incentivize misconduct, such as shifting regulated activities to unlicensed referrers or offering indirect rebates. By establishing a clear benchmark and requiring justifications for deviations, the IA aims to promote fair treatment of customers, enhance market integrity, and sustain the long-term health of Hong Kong's insurance sector amid evolving distribution practices. 2. Insurers Must Publicly Disclose Audited Financials Under RBC Regime to Boost Market Transparency Under The New Requirement On 8 August 2025, the IA issued a circular to the Chief Executives of all authorized insurers ( excluding intermediaries ), detailing public disclosure requirements under IO for the first financial year adopting the Risk-based Capital (“ RBC ”) regime (financial years commencing on or after 1 January 2024). This initiative aims to enhance market transparency ahead of the full enactment of the Insurance (Public Disclosure) Rules in 2026. The IA conducted a public consultation on the draft Insurance (Public Disclosure) Rules on 14 March 2025 , with conclusions issued on 8 August 2025 . While the full Disclosure Rules are planned for introduction to the Legislative Council and effective in 2026, insurers are required to disclose quantitative information for the transitional year. Audited Financial Statements All authorized insurers, excluding those with approved transitional arrangements under rule 88 of the Insurance (Valuation and Capital) Rules, marine insurers, captive insurers, or special purpose insurers (collectively "exempted insurers"), must publish their audited financial statements. These are the statements submitted to the IA under rule 3 of the Insurance (Submission of Statements, Reports and Information) Rules, disclosed in their original language without translation. Disclosure Statement All authorized insurers except exempted insurers and Lloyd’s must publish a disclosure statement using the standard templates in Annex 1 (English) and Annex 2 (Chinese). The statement must be provided in English with a Chinese translation or vice versa. Focus on quantitative information; qualitative information is optional if deemed necessary. Disclosures must conform to the valuation and capital requirements under the Insurance (Valuation and Capital) Rules, or any variations/relaxations under sections 10(3) or 130(1) of the IO. Include a statement (referring to section 5 of the disclosure statement) made by a controller (as defined in section 13A(12) of the IO) or a director, on either the English or Chinese version. SIGNIFICANCE: This circular promotes early transparency in the insurance sector under the new RBC regime, enabling stakeholders to assess insurers' financial positions. By mandating public disclosures, the IA fosters greater market integrity, accountability, and confidence in Hong Kong's insurance industry as it transitions to risk-based supervision. Market News 3. Insurance Authority Encourages Relocation of Investment Decision Functions for Life Insurers to Hong Kong According to reports from Bloomberg dated 5 August 2025, the IA has been actively encouraging major life insurance companies, such as AIA Group Limited (1299.HK) (友邦保險控股有限公司), to relocate their investment decision-making functions from Singapore back to Hong Kong. This initiative, which reportedly began in early 2024, aims to address emerging challenges in the competitive landscape between the two financial hubs. Regulatory Oversight Under the IA's Guideline on Outsourcing (GL14) , the IA can monitor outsourcing arrangements, including detailed agreements with delegated investment managers, such as amounts and locations involved. In at least one instance, the IA has scrutinized whether Hong Kong-based teams retain final decision-making authority over delegated mandates. Objectives The push is intended to foster greater employment opportunities in Hong Kong across insurers, fund managers, and legal firms, while ensuring prudent asset management to mitigate excessive concentrations in risk types, counterparties, and investment tools. The launch event featured engaging discussions among executives from regulators, tech giants, and telecom providers on emerging scam trends and joint strategies to protect the public. SIGNIFICANCE: An IA spokesperson commented: “Currently, there is no statutory requirement for life insurers to maintain assets or make investment decisions in Hong Kong. However, all authorized insurers should prudently manage their assets to avoid excessive concentration in risk types, counterparties, and investment instruments. This is crucial to ensure that insurers can promptly meet claims and fulfill contractual obligations, thereby protecting policyholders’ interests. Additionally, in line with international best practices, the IA will appropriately consider potential legal and operational restrictions on capital transfers between jurisdictions when conducting resolution and recovery planning for individual authorized insurers.” This development highlights the IA’s commitment to enhancing Hong Kong’s position as a leading financial center by promoting local decision-making and job creation in the insurance sector. By encouraging the repatriation of key functions, the IA seeks to bolster market resilience, reduce dependency on external jurisdictions, and align with global regulatory standards for risk management and policyholder protection. Enforcement News 4. Tahoe Life was fined $10 million for unauthorized transactions On 2 September 2025, the IA issued a public reprimand to Tahoe Life Insurance Company Limited (泰禾人壽保險有限公司 ) (“ Tahoe Life ”) and imposed a fine of $10 million, to be borne by its shareholders’ fund. Key Details: Background of Tahoe Group The Tahoe Group was a high-profile, Fujian-based real estate conglomerate founded by Mr. Huang Qisen (黄其森先生) (also the former director of Tahoe Life). It specialized in developing luxury residential properties, often with a traditional Chinese architectural theme, known as "Courtyard" series. The company's downfall began around 2017-2018 as the Chinese government implemented stricter policies to curb corporate debt and speculation in the property sector ("Three Red Lines" policy). This made refinancing existing debt extremely difficult. Current Tahoe Life Tahoe Life is currently under the direct control of government-appointed Managers due to a severe failure in corporate governance and regulatory compliance. Disciplinary Actions The IA's actions stem from related party transactions conducted by Tahoe Life between July 2019 and April 2020 without prior IA consent. These transactions involved Tahoe Group Global (Co.) Limited. The IA determined that Mr. Huang Qisen and Mr. Ge Yong (葛勇先生), directors of Tahoe Life at the time, are no longer considered fit and proper persons. Both individuals have since stepped down from their key management roles. Appointment of Managers On 26 July 2024, the IA invoked Section 35(2)(b) of the Insurance Ordinance (Cap. 41) to appoint Mr. Derek Lai, Mr. Forrest Kam of Deloitte Touche Tohmatsu, and Mr. Oliver Cheng of Deloitte Advisory (Hong Kong) Ltd as Joint and Several Managers to take full control of Tahoe Life’s affairs, business, and property. This followed the appointment of Advisors in August 2023 under Section 35(2)(a) to provide recommendations, which Tahoe Life failed to act upon, including not submitting audited financial statements for 2022 and 2023, failing to secure new strategic investors, and not improving corporate governance. For more details, please refer to press release issued by the IA on 16 August 2023 . Supervisory Measures To protect policyholders, the IA has implemented several measures, including: Asset ring-fencing Strengthened internal controls Investment restrictions These measures, combined with the appointment of Managers, aim to ascertain Tahoe Life’s financial and solvency position, preserve capital resources, and identify recovery solutions in the best interest of policyholders. Impact on Policyholders The IA assures that all policies issued by Tahoe Life remain unaffected. The Managers are responsible for maintaining full business operations, including customer service, premium payments, and claims settlement. Policyholders are advised to carefully assess their circumstances and avoid hasty decisions, as life insurance products are designed for long-term maturity. SIGNIFICANCE: The IA’s actions underscore its commitment to ensuring robust governance and compliance within the insurance industry. By addressing unauthorized related party transactions and enforcing stringent supervisory measures, the IA aims to safeguard policyholder interests, uphold market integrity, and reinforce trust in Hong Kong’s insurance sector. 5. IA Secures Conviction Against YAN Zhiyu for Non-Compliance with Investigation On 3 September 2025, the Eastern Magistrates' Courts convicted Mr. YAN Zhiyu (顏志裕先生) and imposed a fine of $10,000 for failing to attend an investigation interview without reasonable excuse. This interview was related to an investigation into the suspected misappropriation of premium payments belonging to two policyholders, constituting a breach of section 64ZZL(1) of the Insurance Ordinance (Cap. 41) (“ IO ”). Conviction and Penalty Mr. YAN Zhiyu was found guilty of non-compliance with the requirement to attend an interview as part of the IA’s investigation. The court imposed a fine of $10,000 for this violation. Legal Obligations Under section 64ZZL(1) of the IO, individuals may be required to attend interviews or provide assistance to support the IA’s regulatory oversight of insurance intermediaries. Failure to comply without reasonable excuse can lead to severe penalties: · On indictment: A fine of up to $200,000 and imprisonment for up to 1 year. · On summary conviction: A fine of up to $50,000 (level 5) and imprisonment for up to 6 months. SIGNIFICANCE: This conviction underscores the IA’s commitment to enforcing compliance with its regulatory processes. By holding individuals accountable for failing to cooperate with investigations, the IA aims to protect policyholders, ensure the integrity of insurance intermediaries, and maintain trust in Hong Kong’s insurance sector. The case highlights the importance of adhering to statutory obligations to facilitate effective regulation and safeguard consumer interests. [End of ComplianceOne Insurance Newsletter – August 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

通過了解海關指引和執法、內部審核，有效維護金錢服務經營者牌照及取得業務持續性的成效。 天匯合規獲邀參與國際會計師公會香港分會主辦之可持續發展講座 我們很榮幸受邀參與由國際會計師公會香港分會主辦的可持續發展講座。王陶浚先生及陸博賢博士藉著剖析海關指引、執法和內部審核，分享有效維護金錢服務經營者（MSO）牌照及取得業務持續性成效的策略。 我們衷心感謝所有參加者的積極參與和寶貴提問，使這次講座取得圓滿成功。 期待在不久的將來舉辦更多講座，和大家分享、交流最新的金融科技及合規見解！ We're honored to have been invited by The Association of International Accountants to co-host this seminar focused on the effective maintenance of Money Service Operator (MSO) licenses through understanding customs guidelines, enforcement and internal audits. We’d like to extend our heartfelt gratitude to all participants for their active engagement and thoughtful questions, altogether making this seminar a pounding success. Stay tuned for future events where we continue to explore and share insights on compliance and business sustainability.

The topics discussed in this analysis update are as follows: The 10 Most Significant Regulatory News for Insurance Sector in 2025 The topics discussed in this analysis update are as follows: Regulatory Updates Tackling Unlicensed Referral Activities Overhauling Commission and Referral Fee Structure Indexed Universal Life Product RO-CPTD requirement and Reference Checking Scheme Market News Macau's Modernized Intermediary Regulations JD.com Enters Hong Kong Insurance Brokerage! Enforcement News IA's Imposes Against the Insurance Company affiliated with the Infamous Prince Group! Tahoe Life Fined $10 Million for Unauthorized Transactions Landmark First Conviction! Broker Fined for Failing to Submit Audited Statements ICAC Crackdowns on Dummy Agent Fraud Schemes Regulatory Updates 1. Tackling Unlicensed Referral Activities In May 2024, The Insurance Authority (IA) issued Circular outlines key principles to regulate referral business models prohibiting unlicensed referral activities conducted by “Mainland China Visitors” (MCV). In Jun 2025, IA’s undercover inspections in Tsim Sha Tsui uncovered unlicensed street sales issues, targeting MCVs, leading to shared findings with the industries. (For more information: IA - Speeches/Articles 2025-06-15 ) 2. Overhauling Commission and Referral Fee Structure To boost transparency and consumer protection, the IA introduced major reforms for participating policies. From 1 Jan 2026, mandates spreading commissions with at least 70% in the first year and 30% over the next five; to prevent front-loading issues. (Source: IA - Circular 2025-07-30 ; Practice Note ) From 1 Oct 2025 , licensed insurance broker(s) should not pay referral fess above 50% of the total commission received from insurer(s), exceed the benchmark required enhanced disclosure and explanation subject to closer monitoring by the IA. (Source: IA - Circular 2025-09-01 ) 3. Indexed Universal Life Product IA and HKMA clarified regulations for Indexed Universal Life (IUL) products in Apr 2025, classifying as Class C (i.e. linked long-term) tailored for professional investors only. (Source: IA&HKMA – Joint Circular 2025-03-13 ) 4. RO-CPTD requirement and Reference Checking Scheme From 1 Aug 2025 , RO must complete at least 2 RO-CPD hours focused specifically on management and control functions during each CPD assessment period. (Source: IA - Circular 2025-07-11 ) From 1 Jan 2026 , the Reference Checking Scheme recommend all licensed insurance companies mandating checks on prospective intermediaries' past seven years , covering agents and technical representatives in long-term business to prevent misconduct migration. Not mandate but breaching the scheme may lead to closer monitoring by the IA. (Source: IA - Circular 2025-11-20 ) Market News 5. Macau's Modernized Intermediary Regulations The Monetary Authority of Macau (AMCM) introduced the Insurance Intermediary Business Law ( Law No. 15/2024 ) effective 1 Aug 2025, replacing a 36-year-old framework ( Decree-Law No. 38/89/M ). 6. JD.com Enters Hong Kong Insurance Brokerage! JD.com (京東集團)'s Hong Kong subsidiary, Jingdong Insurance Consultants (Licensed No.: GB1101), secured the insurance brokerage license in Oct 2025. Enforcement News 7. IA's Imposes Against the Insurance Company affiliated with the Infamous Prince Group! On 28 Oct 2025, IA imposed strict license restrictions on Mighty Divine Insurance Brokers Limited (Licensed No.: FB1329). Due to the company's association with the notorious Prince Group (太子集團); founded by Chen Zhi (陳志) . IA prohibited it from engaging in any regulated activities. 8. Tahoe Life Fined $10 Million for Unauthorized Transactions On 2 Sep 2025, IA reprimanded Tahoe Life and imposed a $10M fine from shareholders' funds. Penalties for unauthorized related-party deals that bypassed board approval, violating policies and regs. (Source: IA - Enforcement 2025-09-02 ) 9. Landmark First Conviction! Broker Fined for Failing to Submit Audited Statements On 19 Mar 2025, IA won its first conviction under Insurance Ordinance s73(1). Aurex Insurance Brokers Ltd fined $26,060 by court for failing to submit audited statements, auditor's report, and compliance report within 6 months (twice). (Source: IA - Enforcement 2025-03-19 ) 10. ICAC Crackdowns on Dummy Agent Fraud Schemes In 2025, ICAC targeted "puppet" and "dummy" agent frauds, securing convictions in related cases. A former branch manager was sentenced to 46 months in Feb, with 10 agents receiving 11-22 months, for a 2016-2020 scheme that defrauded two insurers of over HK$52 million through 478 lapsed policies. (Source: ICAC - Press 2025-02-11 ) In October, police sergeant and five others were charged for HK$3 million in bogus commissions from Sun Life and China Taiping using fake credentials and dummy recruits. (Source: ICAC - Press 2025-10-08 ) The final six defendants in the $52M case were jailed 12-21 months in Nov 2025. (Source: ICAC - Press 2025-11-21 ) [End of ComplianceOne's Summary – The 10 Most Significant Regulatory News fo r Insurance Sector in 2025 ] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – Mar 2025 The topics discussed in this monthly newsletter are as follows: 1. IA and HKMA Clarify Regulatory Framework for Indexed Universal Life (IUL) Products 2. IA publishes its Annual Report 2023-24 3. Insurance Complaints Bureau Releases 2024 Claims Complaint Statistics and Case Review 4. Macau Prepares for a Modernized Insurance Framework 5. PAObank Secures Insurance Agency License and Forms Strategic Partnerships 6. First Case of Insurance Broker Fined for Late Submission of Financial Statements 7. Suspension of Chan Lok Wang’s Insurance License for falsification client signature IA News Updates 1. IA and HKMA Clarify Regulatory Framework for Indexed Universal Life (IUL) Products On 7 April 2025, the IA and Hong Kong Monetary Authority (“ HKMA ”) issued a circular to chief executives of authorized insurers, institutions, and licensed insurance intermediaries, addressing the growing interest in Indexed Universal Life (“ IUL ”) insurance products among high-net-worth clients. The circular clarifies the application of the insurance regulatory framework to IUL products, ensuring policyholder protection and fair treatment. Classify Scope: IUL products combine life insurance with a cash value component tied to financial indices (e.g. stock market indices), offering premium payment flexibility. Unlike traditional universal life insurance, the cash value is linked to index performance, classifying IUL as Class C (linked long term) business under the Insurance Ordinance (Cap. 41). Regulatory Application: As Class C business, IUL products fall under guidelines such as GL15 (Underwriting Class C Business) and GL26 (Sale of ILAS Products), alongside cross-referenced GL28 (Benefit Illustrations) and GL30 (Financial Needs Analysis). However, recognizing IUL’s hybrid nature with traditional universal life features, certain GL16 (Underwriting Long Term Insurance Business) provisions also apply. For IUL products sold exclusively to Professional Investors (“ PIs ”) as defined by the Securities and Futures Ordinance (Cap. 571), adjustments to GL15 and GL26 requirements are permitted to balance practicality and protection. Key Highlights: Some Class C provisions are less relevant to IUL or require tailored application. Traditional universal life elements necessitate select GL16 compliance. For PI-only sales, certain GL15 and GL26 rules can be offset without compromising safeguards. SIGNIFICANCE: This clarification responds to industry enquiries amid rising demand for IUL products, offering a practical framework that aligns innovation with regulatory oversight. It ensures robust protection for sophisticated investors while fostering market growth. The Annex to the circular details specific guideline provisions and their adjusted application for IUL products targeting PIs, which insurers and intermediaries must follow. 2. IA publishes its Annual Report 2023-24 The IA released its Annual Report 2023-24 on 19 March 2025, titled "Striding towards a Sustainable Future." This report showcases the IA’s pivotal role in guiding Hong Kong’s insurance industry through a challenging year, spotlighting key achievements such as: Risk-based Capital (RBC) Regime The IA successfully implemented the RBC regime, a framework that requires insurers to maintain capital aligned with the risks they underwrite. This ensures financial stability, protects policyholders, and positions Hong Kong as a leader in global insurance standards. Insurance-linked Securities (ILS) Market Progress in developing the ILS market has allowed insurers to transfer risks to capital markets, enhancing risk management and attracting international investors. This strengthens Hong Kong’s reputation as a premier financial hub. Conduct Supervision and Disciplinary Enforcement The IA intensified its efforts to oversee conduct and enforce disciplinary measures, ensuring that insurers and intermediaries uphold high ethical standards. These actions safeguard policyholder interests and bolster trust in the industry. SIGNIFICANCE: Through these initiatives, the IA is not only addressing today’s challenges but also laying a foundation for the long-term sustainability of Hong Kong’s insurance sector. The report reflects a commitment to resilience, innovation, and policyholder protection in an ever-evolving global landscape. The complete Annual Report 2023-24 , along with an engaging abridged animated version, is now available on the IA website. 3. Insurance Complaints Bureau Releases 2024 Claims Complaint Statistics and Case Review The Insurance Complaints Bureau (“ ICB ”) in Hong Kong released its 2024 claims complaint statistics on 27 March 2025, showing a rise in disputes, particularly in medical and travel insurance. Of the 646 cases received, 356 were resolved, with 111 complainants receiving over HK$10 million in total compensation, the highest being HK$120,000. The 356 resolved cases showed the following distribution: Policy term interpretations: 54% of cases, the most common issue. Exclusions: 16.5% of cases. Non-disclosure of facts: 15.5% of cases. Leading policy types causing disputes were: Hospitalization/medical insurance: 46% of cases. Travel insurance: 27% of cases. Key Case Examples: Medical Insurance Dispute: A policyholder insured in 2018 declared good health but later clarified on the policy issuance date that a 2017 hospital record (using her social security card) belonged to her father due to liver issues. In 2023, diagnosed with breast cancer, she claimed compensation, but the insurer initially denied it, citing non-disclosure of liver conditions diagnosed as primary biliary cirrhosis. The ICCP investigated, noting she provided a 2022 normal liver ultrasound report, indicating she was unlikely to have had liver disease in 2017. The ICB ruled in her favor, ordering the insurer to pay HK$120,000. Travel Insurance Dispute: A policyholder planned a trip but a blizzard halted train services for three days, delaying his scheduled trip. The insurer offered 50% of the trip delay limit, arguing no specific train ticket was booked. The ICCP found the delay due to "adverse weather" was covered, supported by evidence like hotel bookings, and recommended full compensation, which the insurer accepted. SIGNIFICANCE: The 2024 data reflect the ICB’s role in balancing consumer protection with industry practices, particularly as medical and travel insurance disputes rise. Those cases illustrate the ICCP’s emphasis on objective evidence and fair interpretation, suggesting policyholders need accurate disclosures and insurers clear term explanations. It serves as a reference for insurers and policyholders, highlighting communication and evidence’s role in reducing disputes, especially in an increasingly complex insurance environment for medical and travel policies. 4. Macau Prepares for a Modernized Insurance Framework The Monetary Authority of Macau (“ AMCM ”) is laying the groundwork for the new Insurance Intermediaries Law (Law No. 15/2024) , set to take effect on 1 August 2025. Key changes in the law include: Extending license validity to two years Introducing pre-approval and notification requirements for specific actions Expanding suitability assessments for intermediaries Enhancing the AMCM’s supervisory powers The AMCM has taken proactive steps to ensure a smooth transition. Recently, it joined an exchange session hosted by the Macau Financial Society, briefing representatives from banks, insurers, brokerages, and corporate agents on the law’s details. SIGNIFICANCE: These updates go beyond mere administration—they align Macau’s standards with global best practices, boosting the sector’s competitiveness and resilience. This landmark legislation replaces the outdated Decree-Law No. 38/89/M , in place for 36 years, and aims to bring the regulatory framework for insurance intermediaries into the modern era. With 7,798 licensed intermediaries as of 30 April 2024, this sector is a vital pillar of Macau’s financial ecosystem. Market News 5. PAObank Secures Insurance Agency License and Forms Strategic Partnerships On 5 March 2025, PAObank – a leading digital bank in Hong Kong, has been granted an insurance agency license by the IA. This milestone allows PAObank to act as an intermediary. PAObank will provide customers with a range of general and life insurance products, all accessible through a seamless, fully online purchasing experience. The IA-issued license empowers PAObank to broaden its financial services by offering insurance solutions. As an insurance agency, PAObank will distribute products from its appointing principals China Ping An and FWD to its growing customer base. Strategic Partnerships PAObank has partnered with two powerhouse insurance providers: China Ping An Insurance (Hong Kong) Company Limited and FWD Life Insurance Company (Bermuda) Limited. These collaborations unlock a broad spectrum of insurance offerings, ranging from general policies such as motor, travel, and home insurance, courtesy of Ping An, to life insurance solutions provided by FWD. Digital Innovation PAObank is redefining convenience by harnessing advanced fintech and API technology. By syncing its digital platform with those of Ping An and FWD, the bank offers a streamlined, entirely online process for purchasing insurance. Customers can now browse options, choose coverage, and finalize policies in just a few clicks without any paperwork or branch visits required. SIGNIFICANCE: PAObank 's entry into the insurance business is not only a major step forward for its business, but also demonstrates its determination to build a comprehensive financial services platform. Through its collaboration with Ping An Hong Kong and FWD, relies on the professional advantages of the United Insurance Group to provide customers with high-quality insurance products, while combining its banking digital technology advantages to meet the market's urgent demand for convenient financial services. This "bank + insurance" (bancassurance) model is not unfamiliar in Hong Kong, but PAObank has taken this traditional cooperation to a whole new level with its fully online service model. Customers can purchase reliable protection for themselves and their families in just a few simple steps. Enforcement News 6. First Case of Insurance Broker Fined for Late Submission of Financial Statements On 19 March 2025, a licensed broker company was convicted by the Eastern Magistrates’ Courts and fined $26,060 for failing to submit audited financial statements within the required six-month deadline, on two occasions. This is the first such conviction by the IA. Case Overview The licensed broker company, was found guilty of contravening section 73(1) of the Insurance Ordinance (Cap. 41). The company failed to submit its audited financial statements, auditor’s report, and auditor’s compliance report within the mandatory six-month period following the end of its financial year—on not one, but two separate occasions. As a result, the court imposed a fine of $26,060. SIGNIFICANCE: These documents are more than just paperwork—they are vital tools for assessing whether a broker meets the regulatory standards necessary to responsibly handle public insurance business. Regulators (including IA) relies on them to ensure transparency, accountability, and trust within the industry. Failing to submit them on time can signal potential issues with a broker’s operations and erode public confidence. This case highlights the need for strict adherence to regulatory requirements to uphold industry standards and public trust. 7. Suspension of Chan Lok Wang’s Insurance License for falsification client signature On 12 March 2025, the IA suspended Mr. Chan Lok Wang’s insurance license for four months. The suspension follows his falsification of a client’s signature on a policy surrender form. Case Overview In December 2022, Mr. Chan, having inherited a client from colleagues at his company, received a partially completed surrender form signed by the client to terminate one of their two long-term insurance policies. Mistakenly assuming the client intended to surrender both policies, Mr. Chan photocopied the original form, completed it with details for the second policy, and submitted it without verifying the client’s intentions. Consequently, both policies were cancelled. In determining the four-month suspension, the IA considered several factors: Mr. Chan’s admission of his misconduct, the internal disciplinary measures already imposed by his insurer, and his full cooperation throughout the IA’s disciplinary process. SIGNIFICANCE: The IA has made it clear that forging a client’s signature—irrespective of intent or method—is unacceptable for a licensed insurance intermediary. Such actions can expose policyholders to significant risks or financial harm. This case also highlights the critical need for due diligence when managing orphan policies to uphold public trust in the insurance industry. [End of ComplianceOne Insurance Newsletter – March 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

A Tour of Recent Developments of the VA Regulatory Regime in Hong Kong Recent Developments (1) Hong Kong Expands Crypto Market with Derivative Trading for Professional Investors The SFC is ready to introduce virtual asset derivatives trading for professional investors as part of its efforts to increase product diversity and reinforce robust risk controls. The move is part of Hong Kong's drive to enhance its competitiveness in the global digital asset market. With this in mind, the SFC will focus on robust risk management measures to ensure orderly, transparent, and secure trading. The proposed product is designed to facilitate efficient risk transfers, increase liquidity in spot markets where cryptocurrencies area traded instantly, and assist experienced investors in implementing their hedging and leveraging strategies. The Financial Services and the Treasury Bureau is preparing a second policy statement on virtual assets, exploring how to harness traditional financial services and emerging technologies to drive growth in the VA market. More encouraging, virtual assets will be classified as qualifying transactions under Hong Kong's preferential tax regimes to attract international fintech players. (2) Second policy statement on development of digital assets issued to scale Hong Kong to new heights of global digital asset leadership On 26 June 2025, the HKSAR Government issued its long-awaited Policy Statement 2.0 on the Development of Digital Assets in Hong Kong, reinforcing its commitment to establishing Hong Kong as a global hub for innovation in the digital asset (DA) field; built upon the foundational measures outlined in its initial policy statement in October 2022. The Policy Statement 2.0 sets out a vision for a trusted and innovative DA ecosystem that prioritizes risk management and investor protection; the latest statement introduces the main theme of “ LEAP ” framework with focuses on: Legal and regulatory streamlining : The government is establishing a comprehensive regulatory framework for DA service providers, including DA exchanges, stablecoins issuers, DA dealing service providers, and DA custodian service providers. Expanding the suite of tokenised products : The government will regularize the issuance of tokenised Government bonds and incentivize the tokenisation of RWAs to enhance liquidity and accessibility. Advancing use cases and cross-sectoral collaboration : The government is fostering collaboration among regulators, law enforcement agencies, and technology providers for the development of DA infrastructures. People and partnership development : The government is strengthening talent development through partnerships with industry and academia, positioning Hong Kong as a centre of excellence for DA knowledge-sharing and international cooperation. (3) Next move is to seek opinion from market practitioners. Starting with the first “ Public Consultation on Legislative Proposal to Regulate Dealing in Virtual Assets ” (a non-exhaustive extract) (1) Scope and coverage : any person who conducted a business in providing services of spot trade of any VAs in Hong Kong will need to be licensed (2) Business types and Business models: a) simple dealing; b) more complex dealing services; c) all other VA dealing services. (3) Exemptions: a) stablecoin issuers who (i) are licensed by the HKMA and (ii) conduct offering or redemption of the stablecoins they issue in the primary market; b) peer-to-peer trading of VAs between individuals where no intermediary is involved. (4) Regulatory Requirements: a) VA dealing service providers that fall within the scope will need to be licensed or registered; b) The SFC will set out standards of the requirements. (5) Regulatory Principle: a) taking the “same activity, same risks, same regulation” principle, taking reference from the VATP licensing regime. (6) Eligibility: a) A HK company with two ROs with sufficient financial resources such as HKD5M as minimum paid-up capital or HKD3M as minimum required liquid capital; b) A licensee or registrant will have to set up a token admission and review committee establishing, implementing and enforcing the criteria for any VA to be made available for/withdrawn from trading; c) deposits/withdrawals of clients’ VAs to/from the licensees’ wallet addresses; d) Investor Protection: assessing clients’ VA knowledge, risk profiling, position limits etc. (7) Licensing Matters: no deeming arrangement to the pre-existing VA dealing service providers. (8) Powers of the Regulatory Authorities: the SFC still being the licensing and registration authority, and be empowered to impose licensing and registration conditions. (9) Sanctions: to achieve the necessary deterrent effect and to ensure regulatory parity among different regimes relating to VA activities (10) Public Consultation. (4) Then come with the next round for “ Public Consultation on Legislative Proposal to Regulate Virtual Asset Custodian Services ” (a non-exhaustive extract) (1) Definition: the provision of VA custodian service as a business is proposed to be defined as: by way of business, the safekeeping of (i) VAs on behalf of clients; or (ii) instruments enabling transfer of VAs of clients (including but not limited to private keys) on behalf of clients. (2) Incidental Exemption for SFC or HKMA regulated entities where the safekeeping of client VAs is wholly incidental to the principal business of providing the VA service. (3) Examples of VA Custodian like associated entities of SFC-licensed VATPs or banks, licensed or registered fund managers etc. (4) Eligibility: a regime similar to Type 13 regulated activity. (5) Licensing Issues: no deeming arrangement to the pre-existing VA Custodian. (6) Powers of the Regulatory Authorities: the SFC still being the licensing and registration authority, and be empowered to impose licensing and registration conditions. (7) Sanctions: to achieve the necessary deterrent effect and to ensure regulatory parity among different regimes relating to VA activities. (8) Public Consultation. Active participations from market participants (5) GF Securities (Hong Kong) issued its first tokenised securities HashKey Chain announced that GF Securities (Hong Kong) Brokerage Limited (“ GFS ”) as the first brokerage firm to issue tokenized securities in Hong Kong, has now fully integrated with HashKey Chain as the core on-chain issuance network, and has launched the first daily redeemable tokenized security ,"GF Token". High-net-worth individual professional investors and institutional professional investors can participate in subscription and trading. "GF Token" is a tokenized security issued by GFS based on its credit rating support where the issuance to investors includes three currencies: USD, HKD, and CNH. Among them, the yield of the US dollar tokenized securities is anchored to the Secured Overnight Financing Rate (“SOFR”), providing users with a fair, transparent, and low-volatility cash management tool denominated in USD. HashKey Group Chairman Xiao Feng stated that the on-chain integration of Real-World Assets (RWA) requires genuine two-way integration between financial institutions and blockchain technology platforms, and the release of the "GF Token" materialized this concept. ComplianceOne Consulting Limited 15 July 2025

Navigating Regulatory Requirements for EAM and Virtual Asset Management Navigating Regulatory Requirements for External Asset Managers (EAM) and Virtual Asset Management Join us for our first co-hosting webinar of the year with abc Multiactive! We'll be discussing the topic of Navigating Regulatory Requirements for External Asset Managers (EAM) and Virtual Asset Management . During the webinar, our expert speakers will share their knowledge and experience on the regulatory landscape and provide practical tips and strategies to help you ensure compliance and streamline your wealth management workflow. Topics: 1. Regulatory Requirements for EAM Client Onboarding: KYC, PI Assessment, Suitability, Risk Assessment, and More 2. Understanding the Fund Manager Code of Conduct (FMCC) and Its Impact on EAMs 3. Key Considerations & Requirements for Managing Virtual Assets 4. Tips and Strategies for EAMs and Virtual Asset Managers: Best Practices with Wealth Management Solutions Event Details: Date: 20 Apr 2023 (Thur) Time: 16:30 - 17:30 Language: Cantonese 廣東話 *Attendance Cert will be provided upon completion of the webinar by request. Speakers: Tao Wong , Co-founder & Partner, ComplianceOne Consulting Limited Nelson Wong , Business Development Director, abc Multiactive (HK) Limited Don't miss out on this informative and valuable event! Register now to secure your spot. https://us06web.zoom.us/webinar/register/9816812016364/WN_pOKc4BQZTcGJ_UcRgHKHuw

Use of generative AI language models Compliance Impact Alert: Use of generative AI language models Dec 2024 Disclaimer: Contents contained in this document including should not be regarded as a substitute legal and / or compliance advice in any circumstances and shall not be reproduced (in whole or in part), distributed or otherwise passed on to any other person without our prior written consent. Language: English version only Executive Summary On 12 November 2024, the Securities and Futures Commission (“SFC”) issued a circular addressing the risks associated with generative AI language models (“AI LMs”) for licensed corporations (“LCs”). The SFC mandates enhanced cybersecurity protocols and responsible use of AI LMs to mitigate risks such as output quality issues, data management vulnerabilities, and reliance on external providers. LCs must implement robust policies, conduct thorough testing, and ensure compliance with regulatory standards. Actions and Recommendations Review Existing AI Implementations Assess current AI systems for compliance gaps and plan corrective actions. Develop AI Risk Assessment Frameworks Create frameworks to identify high-risk applications and mitigation strategies. Implement Enhanced Monitoring and Validation Regularly evaluate AI model performance and check for biases or inaccuracies. Staff Training Educate employees on new AI governance requirements and ethical AI use. Update Third-Party AI Provider Agreements Ensure agreements meet regulatory expectations, focusing on data handling and compliance. How We Can Help Our team comprises experienced professionals with deep expertise in compliance, risk management, and policy review and development in identifying gaps between the regulatory expectations in the circular and your current policies and procedures. 1. Continuous Support: Stay ahead of regulatory changes with our continuous monitoring and updates, ensuring that you are always in compliance. 2. Gap Analysis: Identify gaps between regulatory expectations and your current policies. 3. Develop Tailored Solutions: Create solutions to meet specific needs and close material gaps. 4. Ensure Adherence: Maintain compliance with regulatory standards and enhance overall compliance practices. For any inquiries, please refer to our Ongoing Compliance Support Service or feel free to Contact us .

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Newsletter – July 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES Implementation of regulatory regime for stablecoin issuers Itinerant Professional are allowed to stay longer each calendar year SFC will amend the FRR to foster market developments for OTC derivatives and other products Anti-Scam Consumer Protection Charter 3.0 MARKET NEWS Latest SFC Report shows growing AUM and net fund inflow to Hong Kong SFC hosts meeting to promote industry collaboration in Hong Kong’s digital asset sector HKEX launched Order Routing Service on its Integrated Fund Platform ENFORCEMENT NEWS SFC and ICAC Launch Joint Operation "Leverage" Against Suspected Market Manipulation Syndicate The court-appointed administrator distributed $19 million in assets to clients of Hong Kong Wan Kiu Investment MMT Rules Former Dan Form Company Secretary and Associate Guilty of Insider Dealing Regulatory Updates 1. Implementation of regulatory regime for stablecoin issuers The Hong Kong Monetary Authority (“ HKMA ”) announced the implementation of the regulatory regime for stablecoin issuers which has come into effect on 1 August 2025 (the commencement date). A bundle of documentations has been published as below: Consultation conclusions on the Guideline on Supervision of Licensed Stablecoin Issuers and the finalized Guideline on Supervision of Licensed Stablecoin Issuers ; Consultation conclusions on the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Stablecoin Issuers) and the finalized Guideline on AML & CFT (For Licensed Stablecoin Issuers) ; Explanatory Note on Licensing of Stablecoin Issuers on various aspects of the licensing regime and application process; Explanatory Note on Transitional Provisions for Pre-existing Stablecoin Issuers As we are just on the inception stage of the stablecoin licensing regime, and no license has been granted yet, we will focus more on the initial transitional period where interested parties : are encouraged to contact the HKMA before 31 August 2025 , showing their intention to apply for a license; and the HKMA will communicate with the applicants, conveying to them the regulatory expectations and provide feedbacks as appropriate; which consider themselves sufficiently ready and wish to be considered early should submit an application to HKMA by 30 September 2025 . Key takeaways of the “ Explanatory Note on transitional provisions for pre-existing Stablecoin Issuers ” (“Note”): The Stablecoin Ordinance (SO) effective 1 August 2025 defines Regulated Stablecoin Activities (RSA), including issuing specified stablecoins in Hong Kong or those pegged to the Hong Kong Dollar from outside. Transitional provisions under Schedule 7 of the SO, detailed in this Explanatory Note, apply specifically to Pre-existing Issuers (PEIs). PEIs are entities that substantively carried on RSA in Hong Kong before 1 August 2025; mere "shell" operations do not qualify. These provisions give PEIs time to either apply for a license or wind down their operations. PEIs wishing to continue must submit a formal license application, a written declaration of prior RSA activity, and a written undertaking to comply with regulations to the HKMA by 31 October 2025. Meeting this deadline grants "Application Submitted and Acknowledged" (APSA) status, allowing continued RSA operation until 31 January 2026. During this period, the HKMA assesses APSA entities and may grant a Provisional License, a Full License, issue a Rejection Notice, or refuse the application. PEIs that miss the 31 October deadline, or whose application is rejected, refused, or withdrawn, must enter a closing down period. These entities have one month from the trigger event (e.g., rejection date or 1 November 2025 for non-applicants) to cease RSA activities, operating only to effect an orderly shutdown. SIGNIFICANCE: The RSA licensing process of the HKMA looks alike to that of the VA licensing regime adopted by the SFC, starting with transitional period, provisional license, mutual and interactive communication with the applicants by the regulatory body, with assessment and final determination of license approval. It demonstrates the effectiveness of such pragmatic approach with interactive adjustment through bilateral communication and feedback, and the applicants are given the entire roadmap whether to go or to quit! 2. Itinerant Professional are allowed to stay longer each calendar year The SFC is joining regulators across the globe to curb activities of unlawful financial influencers (“ finfluencers ”) who are putting millions of social media users at risk by touting financial products or services illegally. To achieve this aim, the SFC and the other members of the International Organization of Securities Commissions (“ IOSCO ”) are participating in the “Global Week of Action Against Unlawful Finfluencers” during the week of 2 June 20The SFC post a circular in July 2025 which enhanced measure to facilitate visiting professionals to conduct regulated activities or provide virtual asset service (VA service) in Hong Kong. Current arrangement visiting professionals from an overseas group company of a licensed corporation or licensed provider can choose to apply for a representative licence to be an itinerant professional (“ ITP ”) for providing services in Hong Kong for a short period of time each year to (a) conduct regulated activities on behalf of the licensed corporation; or (b) provide VA service on behalf of a licensed provider, under company of a licensed person at all times; the ITPs are only allowed to stay not more than 30 days each calendar year, and the license is imposed with a condition to this effect ( existing ITP condition ). Revised measure to facilitate and provide more flexibility to visiting professionals to conduct these activities in Hong Kong, the SFC is now extending the period to 45 days each calendar year; it should be noted that the application process, and any exemptions for ITPs remain unchanged; the new condition of extended period is applicable to all existing licensed ITPs, and the SFC will replace their existing ITP condition with a 45-day period accordingly. 3. SFC will amend the FRR to foster market developments for OTC derivatives and other products The SFC launched a public consultation on draft amendments to the Securities and Futures (Financial Resources) Rules (FRR) and related guidelines for implementing a set of internationally comparable capital requirements for licensed corporations (LCs) engaging in over-the-counter derivative activities (“ OTCD capital requirements ”) Under the current proposal, and after a couple of consultations papers & conclusions in 2015 and 2017 respectively before, the OTCD capital requirements previously proposed have been fine-tuned with reference to recent changes to Hong Kong’s Banking (Capital) Rules and the Basel Framework. Some key takeaways from the public consultation (please refer to original for details) the capital requirements for inter-dealer brokers will also be significantly lowered, and the introduction of OTCD in various licenses as below with substantial reduction in capital requirements (reference to APPENDIX 2 regarding details of the proposed minimum capital requirements): (i) LCs conducting OTCD dealing under Type 1, 2, 3 or 11 regulated activity; (ii) LCs conducting OTCD clearing under Type 12 regulated activity; (iii) LCs operating OTCD platform under Type 7 regulated activity; (iv) LCs conducting OTCD advising under Type 4, 5 or 11 regulated activity; (v) LCs conducting OTCD asset management under Type 9 regulated activity Some major incidental and technical changes with respect to: (i) minimum capital requirements (ii) market risk (iii) counterparty credit risk (iv) sundry requirements some substantial amendments to the Securities and Futures (Financial Resources) Rules as compared with the previous 2017 version proposed exemption of capital requirements for centrally-cleared repurchase transactions (repos) to promote central clearing in Hong Kong and the development of the city’s inter-dealer repo market SIGNIFICANCE: As Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, has said, “ To reinforce Hong Kong’s status as an international financial centre, it is crucial to align our OTCD capital requirements with global standard .” Licensed corporations which are keen to engage in OTCD business are strongly advised to take a look and assess if they can fulfil the capital and regulatory requirements with the facilitations proposed. 4. Anti-Scam Consumer Protection Charter 3.0 The Hong Kong Monetary Authority (“HKMA”), the Securities and Futures Commission (“SFC”), the Insurance Authority (“IA”) and the Mandatory Provident Fund Schemes Authority (“MPFA”) together announced the launch of the Anti-Scam Consumer Protection Charter 3.0 (the Charter 3.0) which is fully supported by the Consumer Council, the Hong Kong Association of Banks, the Hong Kong Police Force, and the Office of the Communications Authority. Leveraged with success of previous versions, the Charter 3.0 is enhanced in anti-scam actions by collaboration with the financial regulators, technology firms and telecommunications firms in combatting financial scams. Six principles focused of the Anti-Scam Consumer Protection Charter 3.0 are: (1) Reporting Functions for Users. (2) Reporting Channels for Financial Regulators. (3) Checking of Advertisers. (4) Internal Monitoring Processes. (5) Enforcement of Terms of Service, (6) Collaboration on Public Awareness. During the launch event, executives from various sectors engaged in productive discussion on the latest trends of financial frauds/scams and their collaborative efforts for the common purpose of combatting such frauds and scams. SIGNIFICANCE: Mr Eddie Yue, Chief Executive of the HKMA, said, “ The fight against financial frauds and scams and to protect the public requires a united front, …. The Charter 3.0 represents a significant milestone in this endeavour, harnessing the collective strength of the financial, technology, and telecommunications industries to better safeguard the public .” Ms Julia Leung, Chief Executive Officer of the SFC, added, “ This initiative not only echoes global governments and regulators’ call to action but also positions Hong Kong as a leader in safeguarding the financial world’s digital future. Together, we are building a safer, more responsible online landscape that prioritises vigilance, collaboration, and public trust .” And Mr Clement Cheung, Chief Executive Officer of the IA, said, “ The IA will leverage on this platform to strengthen public education and empower policy holders so that they can safeguard effectively against the increasingly sophisticated plots concocted by swindlers. ” Finally, Mr Cheng Yan-chee, Managing Director of the MPFA, said, “ We urge the working population to stay vigilant and join hands with us by proactively reporting suspected scams to safeguard their MPF interests. ” Though the executives represent interests in their own fields, the Charter 3.0 really achieves concerted efforts by spearheading towards a common goal of combating frauds and scams. Market News 5. Latest SFC Report shows growing AUM and net fund inflow to Hong Kong A growth in Hong Kong's asset and wealth management sector, as revealed in the SFC 2024 Asset and Wealth Management Activities Survey . Released on 16 July 2025, the report underscores Hong Kong's rising prominence on the global stage amid evolving market dynamics. Hong Kong continues to solidify its position as a leading international asset and wealth management center, with assets under management (“ AUM ”) climbing 13% year-on-year to HK$35.1 trillion (US$4.53 trillion) by the end of 2024. This surge was fuelled by net fund inflows of HK$705 billion (US$91 billion), marking an 81% increase from the previous year. Noteworthy Developments Private Banking and Wealth Management Growth The AUM in this segment rose 15% to HK$10.4 trillion (US$1.3 trillion), highlighting strong investor confidence. SFC-Authorized Funds Shine Hong Kong-domiciled funds saw their net asset value (“ NAV ”) jump 22% to HK$1.64 trillion (US$211 billion) by year-end 2024, with further growth of 21% to HK$1.99 trillion (US$256 billion) by May 2025. Net inflows reached HK$163 billion (US$20.9 billion) in 2024, followed by an impressive HK$237 billion (US$30.5 billion) in the first five months of 2025. The number of such funds also expanded to 954 in 2024 and 987 by May 2025. Fund Inflows Surge The asset management and fund advisory business recorded a staggering 571% increase in net inflows to HK$321 billion (US$41.3 billion). Open-Ended Fund Companies (OFCs) Registrations soared 93% in 2024, as managers leveraged Hong Kong's corporate fund structures and government grants. Mainland-Related Firms Thrive Their AUM grew 15% to HK$3.1 trillion (US$397 billion), with net inflows up 68%, marking five consecutive years of outperformance. Licensed Firms Expansion The number of firms licensed for asset management (Type 9 regulated activity) increased 4% to 2,212. Asset managers in Hong Kong are increasingly diversifying their portfolios, allocating 59% of assets outside Mainland China and Hong Kong. Non-equity investments have grown by 13 percentage points over the past five years, now comprising 59% of holdings, as firms adapt to global shifts. These findings align with the Boston Consulting Group's (BCG) Global Wealth Report 2025 , which ranks Hong Kong alongside Switzerland as one of the world's top two cross-border wealth centers. In 2024, Hong Kong achieved the highest absolute growth in cross-border wealth at US$231 billion, with a 9.6% year-on-year increase outpacing the global average. It is on track to surpass Switzerland as the leading global hub for offshore asset management by 2028. SIGNIFICANCE: Ms. Christina Choi, SFC's Executive Director of Investment Products, commented: " Hong Kong is gaining more clout than ever as a leading international hub for asset and wealth management, propelled by strong fund inflows, financial innovation, and a growing talent pool. The SFC is committed to supporting Hong Kong’s continued advancement as a full-service international financial centre and a leading offshore renminbi hub through fixed income and currency market developments. " The survey, which included 1,237 participating firms, covers asset management, fund advisory, private banking, private wealth management, SFC-authorized real estate investment trusts, and assets under trusts. Note that it excludes entities like single family offices, sovereign wealth funds, and government direct investments. 6. SFC hosts meeting to promote industry collaboration in Hong Kong’s digital asset sector On 7 July 2025, the SFC held the second meeting of the Digital Asset Consultative Panel (“ DACP ”), highlighting progress in regulatory innovation and industry collaboration. The SFC convened the meeting with licensed virtual asset trading platforms (“ VATPs ”), fostering dialogue on key market and regulatory advancements in Hong Kong's digital asset sector. Discussions centered on initiatives under Pillars A (Access) and P (Products) of the SFC’s ASPIRe roadmap , including proposals for new regulatory frameworks for virtual asset dealing and custodian providers, as well as enhancements in market accessibility and product offerings. This engagement underscores the SFC's commitment to building a sustainable, competitive digital asset environment while prioritizing investor protection. “A-S-P-I-Re” Roadmap: Pillar A (Access) Streamline market entry through regulatory clarity Pillar S (Safeguards) Optimising compliance burdens without compromising security Pillar P (Products) Expand product offerings and services based on investor categorisation Pillar I (Infrastructure) Modernise reporting, surveillance and cross-agency collaboration Pillar Re (Relationships) Empower investors and industry through education, engagement and transparency SIGNIFICANCE: Dr Eric Yip, the SFC’s Executive Director of Intermediaries and chair of the DACP, stated: “ Today’s DACP meeting is constructive and insightful, underscoring the importance of engagement with licensed VATPs in nurturing a sustainable and competitive digital asset ecosystem. The SFC remains committed to maintaining global competitiveness while ensuring robust investor protection and local safeguards within the digital asset sector .” 7. HKEX launched Order Routing Service on its Integrated Fund Platform On 3 July 2025, the SFC welcomed the rollout of HKEX's Order Routing Service on the Integrated Fund Platform (“ IFP ”) , marking a pivotal step in enhancing Hong Kong's retail funds ecosystem. This service streamlines communication among market participants, fostering greater collaboration within the fund distribution network. What is the Integrated Fund Platform (IFP)? IFP is a business-to-business fund services platform developed with the support of the Hong Kong Special Administrative Region (HKSAR) Government and the SFC. Key features and services include: Fund Repository : An online database featuring all SFC-authorized fund products, providing transparency and helping investors make informed decisions. Launched in 13 December 2024 . Order Routing Service : Connects distributors, fund houses, and transfer agents to facilitate subscriptions and redemptions, improving operational efficiency. Upcoming Services : Platform and Nominee Services are expected to be rolled out subject to regulatory approvals. SIGNIFICANCE: Ms Christina Choi, the SFC’s Executive Director of Investment Products, remarked: “ By enhancing the connectivity between various market participants, the Order Routing Service can help significantly improve the efficiencies of the fund distribution ecosystem. This is expected to contribute to cost optimisation in the fund sales chain, which will also strengthen the overall competitiveness of the Hong Kong retail funds marke t.” The SFC expressed gratitude for industry support and pledged ongoing collaboration with HKEX and stakeholders to ensure the IFP's full implementation. Enforcement News 8. SFC and ICAC Launch Joint Operation "Leverage" Against Suspected Market Manipulation Syndicate On 25 July 2025, the SFC and Independent Commission Against Corruption (“ ICAC ”) announced the results of a joint operation conducted on July 23, codenamed " Leverage " targeting a sophisticated syndicate accused of manipulating shares of a listed company and engaging in corrupt practices. The operation involved searches at 14 locations, including the listed company's offices and SFC-licensed brokers. Key details from the investigation include: Arrests : The ICAC arrested a former chairman and a former executive director of the listed company under the Prevention of Bribery Ordinance. Alleged Scheme : The syndicate is suspected of using false documents, such as internal records and public announcements, to fabricate a share subscription agreement and joint venture with a Mainland company worth over HK$20 million. They allegedly created a false market appearance through nominee accounts. Additional Misconduct : The former executive director, who was also a responsible officer and director of a broker, is accused of accepting advantages from the former chairman and misappropriating client shares valued at approximately HK$9 million. Detection and Collaboration : The SFC initially identified suspicious trading, referring corruption aspects to the ICAC while handling market misconduct under the Securities and Futures Ordinance (“ SFO ”). The operation follows the Memorandum of Understanding between the SFC and ICAC. SIGNIFICANCE: The listed company's shares have been suspended since March 2025 due to a court-ordered liquidation. Suspected offenses include bribery, using false documents, handling proceeds of crime under the Organized and Serious Crimes Ordinance, and market manipulation under the SFO. 9. The court-appointed administrator distributed $19 million in assets to clients of Hong Kong Wan Kiu Investment On 23 July 2025, the SFC reported that court-appointed administrators have distributed around $19 million worth of assets as compensation to impacted clients of Hong Kong Wan Kiu Investment Company Limited (“ HKWK ”), a corporation licensed by the SFC for Type 1 regulated activity. This distribution, completed this month, follows the Court of First Instance's approval in January 2025 and stems from final court orders granted in November 2022 under section 213 of the Securities and Futures Ordinance (SFO). HKWK investigation Case Recap The SFC's actions originated from an investigation uncovering financial irregularities at HKWK. Findings revealed that HKWK and its sole director and shareholder, Connie Sham Khi Rose, had unauthorizedly sold client securities, misappropriated proceeds totalling about $58 million between 2011 and 2019, and falsified statements to hide the activities. The case was referred to the Police, leading to criminal prosecution by the Department of Justice. In the High Court, Sham, aged 88, pleaded guilty and was sentenced on 3 July 2025, to 160 hours of community service, considering her remorse and personal compensation efforts via family and friends. The court orders included a restoration directive for clients and the appointment of administrators—Mr Fok Hei Yu and Mr Chow Wai Shing Daniel of FTI Consulting (Hong Kong) Limited—to recover and manage HKWK's assets. HKWK's license for Type 1 regulated activity (dealing in securities) was revoked in March 2024. SIGNIFICANCE: Prior steps included a restriction notice in November 2019 prohibiting HKWK's operations and asset dealings, followed by an interim injunction in February 2020 to freeze assets. Mr Christopher Wilson, SFC’s Executive Director of Enforcement, stated: “ The SFC is firmly committed to safeguarding market integrity and protecting investors. The actions taken by the SFC in this case highlights the SFC’s strong stance against dishonest practices by intermediaries and its dedication to maintaining public trust in the financial markets .” 10. MMT Rules Former Dan Form Company Secretary and Associate Guilty of Insider Dealing On 17 July 2025, the Market Misconduct Tribunal (“ MMT ”) determined that Ms Cynthia Chen Si Ying, ex-company secretary of Dan Form (now Asiasec Properties Limited) (HKEX: 00271), and her Mainland associate, Mr Wen Lide, engaged in insider dealing related to the company's shares. The tribunal ordered them to disgorge over $1 million in illicit profits and imposed additional sanctions. Case Recap: The case revolves around inside information about the sale of Dan Form's controlling stake. On 22 September 2016, Dan Form, Tian An China Investments Company Limited, and its subsidiary Autobest Holdings Limited announced a conditional agreement for Autobest to acquire 36.45% of Dan Form’s shares from then-chairman Mr Dai Xiaoming at $2.75 per share. Key findings: Chen possessed the inside information by 2 September 2016, and disclosed it to Wen, knowing he might use it for trading. Wen, aware of the information, purchased 1,250,000 Dan Form shares between September 5 and 19, 2016, via his Shenwan Hongyuan Securities account, plus 250,000 shares on September 6 and 50,000 on September 12 through his and his wife's accounts at Grand Investment (Securities) Limited. Chen had an interest in Wen’s dealings through the Shenwan Hongyuan account. The MMT deemed Chen’s actions particularly grave due to her role as company secretary, her managerial responsibilities entrusted by Dai, her encouragement of Wen’s trades, and efforts to obscure profits via layered accounts. Sanctions imposed: Chen and Wen to jointly disgorge $794,347; Wen to disgorge an additional $206,067, plus compound interest from October 26, 2016. Four-year disqualification for Chen from managing Asiasec or any listed Hong Kong corporation without court approval; recommendation for disciplinary action by the Hong Kong Chartered Governance Institute. Four-year cold shoulder orders banning both from dealing in Hong Kong securities, futures, leveraged forex, or collective schemes. Cease and desist orders against future market misconduct. Payment of government and SFC costs. For prior context, see SFC press releases from 23 April 2024 , and 21 January 2025 . [End of ComplianceOne Newsletter – July 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

在2024年9月26日，天匯合規成功舉辦疫情後的首次同業交流酒會，為業界帶來了一次難得的交流契機。 天匯合規首次同業交流酒會圓滿舉行 在 2024年9月26日，天匯合規成功舉辦疫情後的首次同業交流酒會，為業界帶來了一次難得的交流契機。活動吸引了近五十名來自金融、銀行等行業的專業人士參加。現場氣氛熱烈，參加者們熱情互動，分享了最新的行業動態與創新觀點。 整個活動過程中，與會者們積極交流，深入探討當前市場的挑戰和機遇，並就如何共同推動行業發展提出了寶貴意見。酒會不僅促進了彼此間的了解，還加強了各機構之間的合作聯繫。參加者們對於活動的組織與內容給予高度評價，認為這樣的交流機會對於行業發展具有重要意義。 大家一致表示，期待天匯合規能夠在未來繼續舉辦更多類似的活動，提供更多的交流平台，促進不同領域的專業交流與資源共享。此次酒會不僅加強了業界聯繫，也為未來的合作奠定了堅實的基礎，成為行業內交流的典範。 On September 26, 2024, ComplianceOne successfully hosted its first industry networking event since the pandemic, providing a valuable opportunity for professional exchange. Nearly fifty experts from the financial and banking sectors attended the gathering. The atmosphere was vibrant, with participants eagerly interacting and sharing the latest industry trends and innovative ideas. Throughout the event, professionals engaged in meaningful discussions, exploring current market challenges and opportunities. They also shared insights on how to drive industry growth collaboratively. The event not only fostered mutual understanding but also strengthened inter-organizational connections. Attendees highly praised the event's organization and content, emphasizing its significance for industry development. Participants expressed a strong desire for ComplianceOne to continue organizing similar events in the future, offering more platforms for professional dialogue and resource sharing. This networking event not only enhanced industry connections but also laid a solid foundation for future collaborations, setting a benchmark for industry engagement.

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – October 2022 ComplianceOne Newsletter – October 2022 The topics discussed in this monthly newsletter are as follows: 1. The SFC Considers Authorization of Virtual Asset Futures Exchange Traded Funds ( VA Futures ETFs ) 2. HKEX Announces the Launch of Core Climate - A New International Carbon Marketplace 3. Court orders Sound Global ( 0967.HK ) Chairman to Purchase Shares from Investors 4. SFC Reprimands and Fines Asia Research & Capital Management Limited HK$1.75 million and Bans its MIC of Compliance 5. Former Account Executive of Fullbright Securities Limited Convicted of Securities Fraud 6. Court Convicted Wong King Hoi for Obstruction of SFC's Search Operation 7. SFC Bans a Former Licensed Staff of China Galaxy for Violation of Company's Staff Dealing Policy MARKET NEWS 1. The SFC Considers Authorization of Virtual Asset Futures Exchange Traded Funds (VA Futures ETFs) The SFC would consider authorizing exchange traded funds (ETFs) that obtain exposure to virtual assets (VAs) primarily through futures contracts for public offering in Hong Kong. Unlike before in 2018 NOV where only professional investors are allowed to have exposure to VAs, and having witnessed the rapid evolution of the VA landscape; a Joint Circular in January 2022 between the SFC and the HKMA has announced that licensed and registered intermediaries are allowed to offer VA Futures ETF to retail investors in HK. For reasons that it has been observed that there are meaningful developments in the VA ecosystem recently and some of the initial concerns over VA Futures ETFs have become increasingly manageable and could be adequately addressed with proper safeguards, disclosure and investor education. SIGNIFICANCE: Despite the recent developments and innovations, the exposure to spot VAs are still restricted to professional investors only. Whereas VA Futures ETFs seeking for SFC authorization have to meet applicable requirements including the followings: (i) Management companies should demonstrate at least three years’ proven track record with relevant experience. (ii) Only VA futures traded on conventional regulated futures exchanges are allowed currently, only Bitcoin futures and Ether futures on CME are allowed. (iii) The management company is expected to adopt a flexibility investment strategy in the portfolio composition (iv) Disclosure of the product key facts statement is required. (v) Intermediaries are obliged to comply with the applicable requirements under the Code of Conduct when distributing the derivative products. (vi) Investor education should be provided. 2. HKEX Announces the Launch of Core Climate - A New International Carbon Marketplace HKEX announced on 20 OCT 2022, the launch of the Core Climate , a new international carbon marketplace that helps connect capital and resources with climate-related opportunities in Hong Kong, Mainland China, Asia and beyond. The HKEX is committed to provide an easy-access, one-stop, integrated carbon marketplace that includes trading, custody and settlement functions for investors and project owners across the climate value chain, contributing to the realization of global carbon neutrality goals. What is Core Climate: (i) Trading platform : investors can source, purchase, settle and retire voluntary carbon credits in phases. (ii) Trusted marketplace : provides best-in-class market infrastructure and effective, transparent and certified carbon credits and instruments that corporates and investors can use to deliver on their commitment to net zero. (iii) Global community : Core Climate builds Hong Kong’s position as a leading global finance center connecting capital with climate-related products and opportunities in vicinity and around the world. SIGNIFICANCE: HKEX is demonstrating to the world that Hong Kong , as an international financial center, also entrusts with itself the obligation to committing to building a more low-carbon and healthy community to our next generations. As CO-Head of Markets Glenda So said: " We see Core Climate developing to become essential infrastructure, part of our highly connected international ecosystem, matching investment capital with new climate projects, technologies and business models. This will accelerate the shared Net Zero transition and secure a sustainable future for coming generations .” ENFORCEMENT NEWS 3. Court orders Sound Global ( 0967.HK ) Chairman to Purchase Shares from Investors The Securities and Futures Commission (SFC) has obtained an order in the Court of First Instance against the chairman and executive director of Sound Global Ltd. (Sound Global), Mr. Wen Yibo, to purchase shares held by the other shareholders of the company at a price to be determined by the Court – after he was found to have orchestrated a scheme to falsify the company’s bank balances and fabricated relevant bank statements and balance confirmations. And the Court also issued a disqualification order for 12 years against Wen. As Mr Ashley Alder, the SFC’s Chief Executive Officer said: “ The share purchase order represents an important milestone in the SFC’s efforts to protect the investing public from wrongful conduct by management of listed companies and our determination to deploy our full range of regulatory tools to tackle market misconduct and uphold market integrity .” 4. SFC Reprimands and Fines Asia Research & Capital Management Limited HK$1.75 million and Bans its MIC of Compliance The SFC has reprimanded and fined Asia Research & Capital Management Limited (ARCM) HK$1.75 million for failures relating to its non-compliance with the European Union’s short selling reporting requirements (EU Regulation) and to promptly notify the SFC of its material regulatory breaches. The SFC has also banned Mr. Billy Wong Yim Chi, ARCM’s former Head of Compliance and Operations and Manager-In-Charge (MIC) for Compliance for two months from 10 October 2022 to 9 December 2022 for reason that ARCM’s failures to comply with the EU Regulation were directly attributable to Wong’s failure to discharge his duties as ARCM’s MIC for Compliance and a member of its senior management during the material time. The SFC also considers Wong’s conduct fell short of the standard required of him as MIC for Compliance. SIGNIFICANCE: This case seems to be the first instance since the introduction of the MIC regime that a person entrusted with MIC function is sanctioned by the SFC for his incompetence in discharging the duties for the licensed corporation. It conveys a signal to the licensed corporations and the MIC candidates that non-licensed personnel taking the roles of MIC are supposed to assume the same degree of accountability in the eyes of the SFC. 5. Former Account Executive of Fullbright Securities Limited Convicted of Securities Fraud The Eastern Magistrates’ Court has convicted Mr. Danny Fung Kwong Shing, a former account executive of Fulbright Securities Limited, of the offences of engaging in fraud or deception in transactions involving securities under the Securities and Futures Ordinance (SFO) in a criminal prosecution brought by the SFC. Fung admitted that he had employed a fraudulent scheme of effecting transactions between two accounts, one of his friend and one of his client (without proper authorization from the client), rendering the client a loss and his friend a profit instead. Fung was remanded in custody pending sentence on 27 October 2022 after pleading guilty to all 25 charges; and was later sentenced to two-and-a-half months’ imprisonment following his conviction. 6. Court Convicted Wong King Hoi for Obstruction of SFC's Search Operation The Eastern Magistrates’ Court has convicted Mr. Wong King Hoi (aka「 摸魚 」) after he pleaded guilty to a charge of obstructing employees of the SFC in the execution of a search warrant . When the SFC executed the search warrant at Wong’s residence, Wong allegedly delayed in giving the SFC search team access to his residence and attempted to dispose of four objects including two mobile phones and two notebooks. Wong was remanded in custody pending sentence on 10 November 2022. 7. SFC Bans a Former Licensed Staff of China Galaxy for Violation of Company's Staff Dealing Policy The SFC has banned Ms. Tang Shiyi, a former licensed staff of China Galaxy International Securities (Hong Kong) Co., Limited and China Galaxy International Futures (Hong Kong) Co., Limited (collectively, CGI), from re-entering the industry for 10 months from 29 October 2022 to 28 August 2023. The disciplinary action follows an SFC investigation which found that between July 2019 and February 2021, Tang: (i) failed to obtain CGI’s approval to open and maintain two securities trading accounts with an external brokerage firm and conducted 148 personal trades through the said accounts; (ii) dealt in a stock on CGI’s restricted list; (iii) engaged in day-trading on two occasions, in violation of CGI’s staff dealing policy; (iv) concealed the above securities trading accounts by providing a false and misleading declaration to CGI. The SFC considers that Tang’s conduct, which was willful and dishonest, calls into question her fitness and properness to be a licensed person . SIGNIFICANCE: Tang circumvented CGI’s internal control policies and her conduct prevented CGI from monitoring and reviewing its employees’ trading activities to ensure compliance with laws and regulations. It reminds the licensed persons that taking a frivolous attitude in complying with internal policies will not be construed by the SFC as a lesser breach as compared to violation of prevailing governing rules. For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

ComplianceOne Newsletter – March 2022The topics discussed in this monthly newsletter are as follows:1 SFC emph ComplianceOne Newsletter – March 2022 ComplianceOne Newsletter – March 2022 The topics discussed in this monthly newsletter are as follows: 1. SFC emphasizes the importance of Business Continuity Planning ( BCP ) amidst latest COVID-19 situation 2. The requirement of End-To-End (E2E) Test for systems relating to Hong Kong Investor Identification Regime ( HKIDR ) 3. SFC Waives the annual licensing fee 4. Reminder to complete BRMQ by 30 April 2022 5. SFC reprimands and fines HSBC Securities Brokers (Asia) Limited $6.3 million for regulatory breaches 6. SFC reprimands and fines Emperor Securities Limited and Emperor Futures Limited $5.4 million for breaches of anti-money laundering regulatory requirements MARKET NEWS 1. SFC emphasizes the importance of BCP amidst latest COVID-19 situation Amidst the acute situation of the fifth wave of COVID-19 infections in Hong Kong, the SFC again reminds licensed corporations to review and update their business continuity plan ( BCP ). As the HKSAR Government has announced its intention to implement a Compulsory Universal Testing ( CUT ) scheme, albeit its timing and details have not been announced yet, licensed corporations should start preparing now considering the number of actions that may need to be taken in advance. Specifically, licensed corporations should critically assess the impact of sudden disruptive events such as the scenarios of temporary staff shortages or reduced service offerings by essential vendors and service providers, as a result of positive cases identified before or during the CUT scheme, and take steps to manage associated risks to ensure that their business operations and client interests are not unduly affected. Significance: Even the number of infected victims decreased recently, and the CUT scheme is temporary postponed, a BCP which should still be in place for every licensed corporation as something as "need-to-do". Preparing a BCP commensurate with its operational scale poses an insurmountable burden for those small-size brokers within which there is only one staff for each functional role, or even one staff to take several roles. Having considered that there is still a regulatory requirement of "segregation of duties" which governs that a single staff cannot assume roles of front end and back office at the same time which further complicates any job rotations to fill the gap of infected staff of any designated role. 2. The requirement of End-To-End (E2E) Test for systems relating to HKIDR Reference is made to the Circular on 13 September 2021 regarding the roadmap to implement the HKIDR and Over-the-counter Securities Transactions Reporting Regime (OTCR). To enable Relevant Regulated Intermediaries (RRIs) to get ready for the implementation of the HKIDR, an E2E Test will start between mid-May and June 2022 . It is mandatory for all RRIs to participate in the E2E Test. The E2E Test will cover: (i) the submission of the BCAN-CID Mapping File and Reporting Forms to the Stock Exchange of Hong Kong’s (SEHK) data repository (applicable to all RRIs), as well as (ii) the test on BCAN tagging for order submission to the SEHK trading system (applicable to RRIs who are Exchange Participants only). The following two set of documents will be published by SEHK by the end of March 2022: 1. E2E Test package; and 2. HKIDR File Transfer Connectivity Guide The exact start date of the E2E Test will be further announced in mid-April 2022 . Significance: Currently when the SFC begins an investigation, it is only possible to identify exchange participants (i.e. the brokers) which place securities orders directly through the HKEX trading system. In case the SFC intends to detect any suspicious trading activities, it is necessary to obtain information from brokers in order to identify the actual individual or any entity behind the scene where trades orders are placed. With the introduction of the HKIDR, any relevant information concerning the individual/ entity who places orders can be spot out directly with reference to the submitted BCAN-CID information provided by the brokers. From the brokers’ point of view, there will be a great burden to kick off given the complicated operational and technical procedures to be fulfilled before they can participate successfully in the E2E Test, examples are the generation of BCANs, preparation of the BCAN-CID Mapping File as well as submission of the Reporting Forms. Brokers, especially the EPs, have to make good preparation in understanding the entire BCAN regime and requirements beforehand, or otherwise it will be very time-consuming to implement remedial measures to revert and start all over again! Most of all, failure to comply with the BCAN-CID requirements is construed as a breach of the HKEX trading rules and induces reprimand from the SFC! 3. SFC Waived the annual licensing fee The Securities and Futures Commission (SFC) will waive the annual licensing fees of all intermediaries and licensed individuals incurred during the period from 1 April 2022 to 31 March 2023. The SFC will not issue the usual demands for payment for annual licensing fees which would ordinarily become payable during this one-year period. Payments of all other fees, including for licence applications and transfers, will not be affected. 4. Reminder to complete BRMQ by 30 April 2022 Licensed corporations are reminded that the deadline to submit the Business and Risk Management Questionnaire (BRMQ) via WINGS, the latest common flatform for electronic forms and submission, is 30 April 2022. ENFORCEMENT NEWS 5. SFC reprimands and fines HSBC Securities Brokers (Asia) Limited $6.3 million for regulatory breaches The Securities and Futures Commission (SFC) has reprimanded and fined HSBC Securities Brokers (Asia) Limited ( HCCB ) $6.3 million for internal control failures and breaches of the Code of Conduct. The SFC found that between September 2018 and September 2021, HCCB failed to ensure compliance with the Rules of the SEHK (Rules of the Exchange) by making multiple errors: (a) in the assignment of the BCAN to its clients who traded A-shares through the China Connect Securities (CCS), (b) in the mapping of CID to BCAN, and (c) in the tagging of BCAN to the clients’ orders. As a result, incorrect BCAN and CID information in relation to 92 clients were submitted to SEHK, involving 3,379,065 orders and 4,202,534 trades . Significance: It was found that the errors were due to deficiencies in HCCB’s client onboarding and BCAN assignment, more seriously the manual nature of account creation procedures and the use of manual process in updating data between their systems with multi-layered data structure. It has been reminded and reiterated in the SFC circulars that the use of manual process should be kept to minimal as practicable as possible in order to avoid any human input errors and manipulations of data integrity. Moreover, it was also found that HCCB erroneously self-matched 370 warrant orders with their market making engine for reason of their insufficient knowledge of the system in handling live orders across trading sessions. It demonstrates expressly the failure of HCCB to act with due skill and diligence in conducting their business, either internally in market making activities, or externally in executing orders on behalf of their clients. 6. SFC reprimands and fines Emperor Securities Limited and Emperor Futures Limited $5.4 million for breaches of AML regulatory requirements The Securities and Futures Commission (SFC) has reprimanded and fined Emperor Securities Limited ( ESL ) and Emperor Futures Limited ( EFL ) (collectively, “ Emperor ”) $5.4 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) regulatory requirements. The SFC found that Emperor failed to implement adequate and effective policies and procedures to mitigate the risks of money laundering with third party deposits and payments. In particular, (a) with third party fund transfers with no accompanying explanations yet approved, (b) no further inquiries for supporting documents for verification when these are required. Significance: It was obvious that Emperor adopted a lax attitude towards the clients in handling the third-party fund transfer. As a LC, the message from the SFC is so explicit that it would endeavor to combat any breach of AML regulatory requirements; and the continual connivance with facilitating clients in third party transfers is nothing other than a “one way ticket” to disciplinary action by the SFC! For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================== The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to cs@complianceone.hk or call us at (852) 39550277. Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – May 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES Updates to intermediaries of new acceptable account opening approaches MARKET NEWS SFC-HKEX launch Technology Enterprises Channel for Technology and Biotech Companies HK Government welcomes passage of the Stablecoins Bill The Mainland-Hong Kong Swap Connect to include enriched Product Types to foster internationalization of RMB Renewed Mutual Recognition of Funds between Ireland and Hong Kong ENFORCEMENT NEWS SFC Fines Sino-Rich $2 Million and Suspends its Responsible Officer for Margin Lending Failures SFC Issues Restriction Notice to Bloomyears Limited SFC Revokes Mui Chok Wah’s Licence following Theft Conviction and Regulatory Breach of Non-disclosure The Responsible Officer of Lion Futures Limited is Banned for breach of AML/CFT Regulations SFC Prosecutes a Finfluencer for Providing Securities Advice Publicly without a License Court Convicts Brothers-in-Law of False Trading Conspiracy in Pa Shun Shares SFC Disqualifies National Agricultural Executives for Multiple Financial Misconduct Regulatory Updates 1. Updates to intermediaries of new acceptable account opening approaches On 30th May 2025, the SFC issued an update on acceptable account opening approaches allowing intermediaries to streamline the client onboarding process for overseas investors while ensuring compliance and enhancing security. These updates permit intermediaries flexibility in acceptable remote client account opening procedures. The table below lists out the updates on acceptable non-face-to-face (NFTF) account opening approaches. For more details, please refer to the SFC circular. The updates on acceptable non-face-to-face (“NFTF”) account opening approaches are summarized as below: (1) Certification services (i) Certification services recognised by the Electronic Transactions Ordinance (Cap. 553) can be employed for client identity verification in NFTF account opening where the list of recognized certificates are made available on the website of the Digital Policy Office (“ DPO ”)[1] of the Hong Kong SAR Government. (ii) Smartphones equipped with Near Field Communication (“ NFC ”) technology can be used for accessing the certification services provided by recognised Certification Authorities (“ CA ”) remote account opening. (iii) Personal (Remote) ID-Cert Class 12 (a kind of Recognised Certificate), issued by Digi-Sign Certification Services Limited , can be subscribed by overseas investors holding ePassports for remote clients onboarding. The certificates must be in compliance with the standards of Internationals Civil Aviation Organization (“ ICAO ”). (iv) Currently, more than 100 overseas jurisdictions have issued ICAO-compliant ePassports which are eligible for remote client onboarding. ————————————————— [1] The DPO was set up in July 2024 by merging the Office of the Government Chief Information Officer and the Efficiency Office. Representing a consortium of know-how of the two offices specialized in information technology (IT) and business processes re-engineering, the DPO is responsible for formulating policies on digital government, data governance and information technology. The establishment of the DPO is an important step in enhancing governance and driving the development of digital government by bolstering the Government’s capabilities in addressing long-term and strategic issues. (2) iAM Smart (i) iAM Smart is a newly included acceptable NFTF account opening approach by the SFC; (ii) It is a one-stop personalised digital services platform, which provides a reliable and independent source of Hong Kong residents’ identities, which can be used for client identity verification; (iii) iAM Smart has also been specified as a recognised digital identification system for client identity verification under paragraph 4.2.1 of the AML/CFT Guideline (June 2023); (iv) To facilitate the adoption of iAM Smart by financial institutions, an iAM Smart Sandbox Program (“ Programme ”) has been launched by the DPO in collaboration with the Cyberport, licensed intermediaries are encouraged to join the Program for access to various documentation and resources via the SFC by visiting the “ invitation letter ” for details. (v) Illustrative processes of the connection to and the adoption of iAM Smart for account opening are set out in Appendix B of the SFC circular for further reference. The SFC has published a list of eligible jurisdictions that clients may maintain bank accounts with for first payments and ongoing fund movements for the purpose of remote onboarding of overseas individual clients, currently, 15 additional eligible jurisdictions are added. SIGNIFICANCE: As NFTF account opening approaches become more prevalent, financial intermediaries should keep themselves abreast of the latest technologies available in order to widen their access to onboarding overseas clients amid the intense competition in the local market. Whereas intermediaries should be reminded that some jurisdictions may have restrictions on citizens’ investments or capital transfers beyond their territorial boundaries, thus intermediaries are advised to seek reference to the requirements of that domestic regulatory authorities when onboarding overseas clients. Market News 2. SFC-HKEX launch Technology Enterprises Channel for Technology and Biotech Companies The SFC and the Hong Kong Exchanges and Clearing Limited (the “ HKEX ”) jointly announced the launch of a dedicated technology enterprises channel (“ TECH ”) to further facilitate New IPO Listing applications from prospective Specialist Technology Companies (“ STC ”) and Biotech Companies (“ BTC ”), and introduced new confidential filing option. There are views that the establishment of TECH is a key measure for Hong Kong to consolidate its position as a global hub for capital of technology and innovation, effectively highlighting the advantages of listing in Hong Kong. TECH supports prospective STCs and BTCs in understanding applicable Listing Rules and preparing for their listing in Hong Kong before submitting formal New Listing applications, the following facilitating measures are: (i) a specialized team with relevant experience has been designated in reviewing and providing guidance on the Main Board Chapter 18A, 18C applications; (ii) engagement with the prospective STC or BTC in order to gain a deeper knowledge of their specific business; (iii) provision of guidance on the eligibility and suitability for listing on the products and services to be offered; (iv) opportunities for the STC or BTC to discuss and seek guidance from the SEHK on Listing Rules; (v a confidential filing option is made available for listing applications filed under the Main Board Chapter 18A, 18C in the wake of this announcement. SIGNIFICANCE: The TECH channel is strategically vital for Hong Kong's financial hub status. By providing pre-application guidance and confidential submissions tailored specifically for high-potential, high-risk specialist tech and biotech firms, TECH directly addresses a critical market gap. This significantly enhances Hong Kong's attractiveness and competitiveness against global rivals in capturing innovative, fast-growth companies seeking capital. 3. HK Government welcomes passage of the Stablecoins Bill The Hong Kong Government announced the passage of the Stablecoin Bill (the “Bill” ) by the Legislative Council on 21 May 2025 to establish a licensing regime for the fiat-referenced stablecoin (“ FRS ”) issuers in Hong Kong. Important takeaways with the Stablecoins Ordinance It is required to obtain a license from the Hong Kong Monetary Authority if any person who, in the course of business, issues an FRS in Hong Kong, or issues an FRS that purports to maintain a stable value with reference to Hong Kong dollars in or outside Hong Kong. Some key points to note (a) The relevant person must satisfy reserves asset management and redemption requirements which include: (i) a proper segregation of client assets; (ii) maintenance of a robust stabilisation mechanism, and; (iii) the processing of stablecoin holders’ requests for redemption at par value with reasonable conditions. (b) The relevant person must comply with other requirements which include: (i) anti-money laundering and counter-terrorist financing; (ii) risk management; (iii) disclosure and auditing; and (iv) fitness and propriety. (c) The regulatory regime will also provide better protection for the general public and investors, including: (i) only specified licensed institutions may offer an FRS in Hong Kong; (ii) only an FRS issued by a licensed issuer may be offered to a retail investor; (iii) only advertisements of licensed FRS issuance are allowed in order to avoid any fraud and scams. SIGNIFICANCE: As the Secretary for Financial Services and the Treasury, Mr Christopher Hui, had said, “ The Ordinance adheres to the ‘ same activity, same risks, same regulation ’ principle, with a focus on a risk-based approach to promote a robust regulatory environment. This is not only in line with international regulatory requirements, but also lays a solid foundation for Hong Kong’s virtual asset market …” It is also of crucial importance to know how the Bill defines the meaning of stablecoin : A " stablecoin " is a cryptographically secured digital representation of value that – (a) is expressed as a unit of account or store of economic value; (b) is used, or intended to be used, as a medium of exchange accepted by the public for any one or more of the following purposes:- (i) payment for goods or services; (ii) discharge of a debt; (iii) investment; (c) can be transferred, stored or traded electronically; (d) is operated on a distributed ledger or similar information repository; and purports to maintain a stable value with reference to:- (i) a single asset; or (ii) a pool or basket of assets". According to the above meaning, it is worth to note that stablecoins can be used as a medium of exchange for payment of goods or services owing to its stable value with reference to certain assets like fiat money and be exchanged for in equivalent value ; whereas other cryptocurrencies are only convertible to fiat money subject to prevailing market values. Most important is that the issuers of stablecoins are required to obtain a license from HKMA. 4. The Mainland-Hong Kong Swap Connect to include enriched Product Types to foster internationalization of RMB To further promote the collaborative development of financial derivatives markets on Mainland and Hong Kong, and to support a high-quality opening-up of Mainland’s financial markets, the People’s Bank of China (“ PBoC ”), the SFC and the HKMA work together to enrich the product types under the Swap Connect by the following ways: (i) tenor of the interest rate swap contracts to be extended to 30 years; (ii) the scope be expanded to cover interest rate swap contracts using the Loan Prime Rate (“ LPR ”) as the reference rate. The Timeline for Mutual Access: Back in May 2023, following the launch of the Mainland-Hong Kong interest rate swap markets mutual access scheme (“ Swap Connect ”) for opening-up of Mainland’s financial markets, transaction volume under the scheme has been growing steadily. In 2024, the Swap Connect had been enhanced to provide more flexibility for offshore institutional investors to manage their interest rate risk, increasing the attractiveness of RMB assets. As of April 2025, 20 Mainland dealers and 79 offshore investors had participated in Swap Connect, completing more than 12,000 interest rate swap transactions with an aggregate notional amount of approximately RMB 6.5 trillion. SIGNIFICANCE: It is the second round of enrichment for Swap Connect since May 2024, the operational performance is amazing as stated above. Looking ahead, the regulatory authorities in Mainland and HK will continue to leverage on this promising scenario to enhance relevant arrangements for further opening-up of the financial markets in Mainland with an aim toward internationalization of RMB in a steady manner. 5. Renewed Mutual Recognition of Funds between Ireland and Hong Kong Further to the memorandum dated back on 5th November 1997, Central Bank of Ireland (“ CBI ”) and the Hong Kong SFC enter another memorandum of understanding for Mutual Recognition of Funds (“ MRF ”) on 14 May 2025. The purpose of the Memorandum is to enhance cooperation in relation to (i) collective investment schemes; and (ii) management companies of the CIS, either in Hong Kong or Ireland. The main points of the Memorandum are as below: (1) General Principles a) under the MRF, a CBI-authorized Irish Covered Fund (CBI-authorized “ ICFD ”) seeking or has received authorization in HK, shall : (i) meet the eligibility requirements; (ii) remain authorized by the CBI, and available to retail investors; (iii) be operated/ managed by relevant laws and regulations in Ireland; (iv) be sold and distributed in compliance with applicable laws in Hong Kong; (v) ensure investors in both Ireland and Hong Kong receive fair treatment; (vi) ensure ongoing disclosure of information be made available at the same time. b) if an ICFD complies with the relevant Irish laws and regulations, it is generally deemed to have complied in the same manner with those of Hong Kong, and will enjoy a streamlined process of authorisation for offering to the public; c) the existing Acceptable Inspection Regimes on managers and Recognised Jurisdiction Schemes on funds, and the streamlined measures are still applicable to ICFD. (2) Eligibility Requirements and types of eligible funds a) the requirements are set in details in the Annex B; b) for ICFD to be authorized by SFC, it must fall within at least one of the following eligible fund types: (i) general equity funds, bond funds, mixed funds and funds that invest in other schemes; (ii) feeder funds; (iii) unlisted index funds; (iv) passively managed index tracking exchange traded funds (ETFs); (v) listed open-ended funds. c) ALL ICFD must comply with the requirements under the “Requirements applicable to all Irish Covered Funds” below. (3) Requirements applicable to all Irish Covered Funds a) Representatives in Hong Kong (i) Appoint a firm as representative in HK. b) Operational and ongoing requirements (i) Home jurisdiction supervision: remain authorized by CBI. (ii) Changes to Irish Covered Funds: either notification or approval from SFC is required from the ICFD. (iii) Breach: report to SFC if the ICFD is found in breach of domestic laws. (iv) Withdrawal of authorization. c) Sales/ distribution, offering documents, ongoing disclosure and advertisements (i) Sales/ distribution: by intermediaries licensed with SFC. (ii) Offering documents: must be complete, accurate, fair, clear and effective, and up-to-date. (iii) Ongoing disclosure: be made available at the same time in both locations. (iv) Language: in English and Chinese. (v) Advertising. (vi) Fees. (4) Requirements applicable to each specific type of Irish Covered Funds a) Please refer to Annex A for details (5) Application Process a) FASTrack (i) ICFD seeking authorization will be processed under the FASTrack. b) Two-stream approach (i) If the ICFD does not meet the FASTrack requirements, the process of “Standard Applications” stream and “Non-standard Applications” stream will apply. SIGNIFICANCE: Ireland is a dominant global hub for fund management, particularly renowned as the leading domicile for UCITS funds. Its strengths include EU market access via passporting, a favourable tax treaty network, and deep expertise. Partnering with Ireland is vital for Hong Kong as it provides crucial entry to the vast EU investor base and distribution networks, while Hong Kong offers Ireland a strategic gateway into Asian markets. Enforcement News 6. SFC Fines Sino-Rich $2 Million and Suspends its Responsible Officer for Margin Lending Failures SFC has reprimanded and fined Sino-Rich Securities & Futures Limited (“ Sino-Rich ”) $2 million for significant lapses in its margin lending policy and practices between 1 December 2017 and 30 September 2019. The firm failed to properly document its margin lending policy, neglected to enforce a requirement that clients’ credit limits be based on objective proof of their net income or net worth, and did not mandate written justifications for policy deviations. In addition, the SFC has suspended the license of Mr. Budihardjo Wilhelm Soeharsono, a responsible officer at Sino-Rich, for five months and two weeks, from 8 May 2025, to 22 October 2025. The SFC holds Mr. Budihardjo accountable for failing to fulfil his oversight duties as a senior manager during this period. Key Factors in the SFC’s Decision The SFC considered several factors when determining the penalties: Prior Disciplinary History: Both Sino-Rich and Mr. Budihardjo faced SFC sanctions previously—Sino-Rich in 2021 for anti-money laundering lapses Mr. Budihardjo in 2009 for inadequate client monitoring at another firm. Remedial Efforts: Sino-Rich has since taken steps to enhance its margin lending practices. Cooperation: The firm and Mr. Budihardjo cooperated fully with the SFC’s investigation. Financial Position: Accounting for Sino-Rich’s financial situation and cooperation, the fine was reduced from a potential $3.5 million to $2 million. SIGNIFICANCE: This disciplinary action highlights the critical need for robust compliance in margin lending, an area where lax policies can expose firms and clients to significant risks. Licensed corporations are urged to ensure their lending practices are well-documented and strictly enforced to align with regulatory standards. 7. SFC Issues Restriction Notice to Bloomyears Limited On 21 May 2025, SFC has imposed a restriction notice on Bloomyears Limited (“ Bloomyears ”), prohibiting the firm from conducting its licensed activities or managing any property, including client assets, without prior SFC approval. This decision, driven by concerns over Bloomyears’ reliability, integrity, and competence, signals potential risks to investors as the SFC’s investigation continues. SIGNIFICANCE: SFC issued the notice due to doubts about Bloomyears’ fitness and properness to remain licensed, citing deficiencies in its reliability, integrity, and ability to operate competently, honestly, and fairly. The regulator views this action as necessary to protect the investing public and uphold public interest. SFC’s investigation into Bloomyears is ongoing, suggesting that additional findings or enforcement measures may follow. The restriction notice serves as an interim step to limit potential harm while the inquiry progresses. 8. SFC Revokes Mui Chok Wah’s Licence following Theft Conviction and Regulatory Breach for Non-disclosure SFC has taken significant disciplinary action against Mr. Mui Chok Wah, revoking his licence and banning him from the financial industry for two years, effective from 16 May 2025 to 15 May 2027. This decision follows Mui’s criminal conviction for theft and his failure to promptly notify the SFC of the criminal charge against him, which constitutes a breach of regulatory requirements. On 13 June 2024, Mui was arrested and charged by the Hong Kong Police Force for stealing a wallet left on an ATM machine. He was convicted of theft by the Eastern Magistrates’ Courts on 11 September 2024. Mui pleaded guilty and was sentenced to two months’ imprisonment, suspended for three years, and ordered to pay HKD 3,400 in restitution for the stolen items. SIGNIFICANCE: The SFC’s decision to revoke Mui Chok Wah’s licence and impose a two-year ban reflects its rigorous approach to enforcing regulatory standards. This case highlights the critical importance of transparency, timely reporting, and maintaining professional conduct in the financial industry. Licensed individuals and firms are encouraged to ensure compliance with all regulatory requirements to avoid similar disciplinary actions. 9. The Responsible Officer of Lion Futures Limited is Banned for breach of AML/CFT Regulations SFC has imposed a five-month ban on Mr. Ho Hin Hang, a former responsible officer (“ RO ”), manager-in-charge (“ MIC ”), and director of Lion Futures Limited (“ LFL ”). The ban, effective from 21 May 2025 to 20 October 2025, stems from compliance failures during his tenure at LFL between May 2017 and September 2018. This disciplinary action follows previous sanctions against LFL for breaches of anti-money laundering and counter-terrorist financing (“ AML/CFT ”) regulations and other regulatory requirements from May 2017 to July 2019. Key Findings SFC investigation found that LFL, under Mr. Ho’s oversight, failed to perform adequate due diligence on clients using client-supplied systems (“ CSSs ”) to place orders. These systems, linked to LFL’s broker-supplied system (“ BSS ”) via application programming interfaces, presented significant risks of money laundering and terrorist financing, which LFL did not properly address. Furthermore, the firm lacked an effective system for ongoing monitoring to identify and evaluate suspicious trading patterns in client accounts. The SFC holds Mr. Ho accountable for these lapses, citing his failure to fulfil his duties as an RO and senior manager. SIGNIFICANCE: In deciding the sanction, the SFC highlighted: The severity of the compliance failures, which jeopardized market integrity and public trust. The need to send a clear deterrent message to the financial industry. Mr. Ho’s clean disciplinary history, which was considered but did not outweigh the need for action. This case reinforces the SFC’s commitment to enforcing robust AML/CFT controls and diligent oversight within Hong Kong’s financial markets. 10. SFC Prosecutes a Finfluencer for Providing Securities Advice Publicly without a Licence SFC has launched legal action against Mr. CHAU Pak Yin, previously known as CHAU Kin Hei, a financial influencer (the “ Finfluencer ”) on social media. On 8 May 2025, the Eastern Magistrates’ Court scheduled a pre-trial review for 24 July 2025 after CHAU pleaded not guilty to charges of advising on securities without a license. Background Finfluencers are individuals who share investment-related content on social media platforms. The SFC alleges that between 16 April 2021 and 14 May 2021, CHAU hosted a Telegram chat group where he provided securities advice. This activity, conducted without an SFC license and without reasonable excuse, is claimed to violate sections 114(1)(a) and 114(8) of the SFO. SIGNIFICANCE: Under the SFO, "advising on securities" is the Type 4 Regulated Activity requiring a license from the SFC. The SFC’s enforcement efforts aim to protect investors and maintain market integrity by ensuring that only licensed individuals engage in regulated activities like securities advising. This case serves as a warning to finfluencers and others providing financial advice online. The SFC also urges investors to verify the licensing status of individuals and firms offering securities dealing services. This can be done easily through the SFC’s Public Register of Licensed Persons and Registered Institutions, accessible at www.sfc.hk . Engaging with unlicensed parties poses significant risks, including financial loss and fraud. 11. Court Convicts Brothers-in-Law of False Trading Conspiracy in Pa Shun Shares The Eastern Magistrates’ Courts today convicted Mr. LIN Tai Fung and his brother-in-law, Mr. OR Chun Nin, after they pleaded guilty to conspiracy to commit false trading in the shares of Pa Shun International Holdings Limited ( 00574.HK ) (“ Pa Shun ”) between 9 April 2017 and 7 March 2018. The prosecution was initiated by the SFC. Details of the Conviction False Trading Conspiracy : LIN and OR conspired to purchase Pa Shun shares to artificially maintain the closing share price at or above a certain level, misleading investors about the stock’s attractiveness. Failure to Disclose Interests : LIN also pleaded guilty to failing to notify the Stock Exchange of Hong Kong of changes in his shareholding in Pa Shun on eight occasions between 2 June 2017 and 14 March 2018, despite a legal obligation to do so. The case has been adjourned to 10 June 2025 for sentencing. Both individuals were granted bail with conditions of $20,000 cash bail and $50,000 surety. SIGNIFICANCE: SFC issued the notice due to doubts about Bloomyears’ fitness and properness to remain licensed, citing deficiencies in its reliability, integrity, and ability to operate competently, honestly, and fairly. The regulator views this action as necessary to protect the investing public and uphold public interest. SFC’s investigation into Bloomyears is ongoing, suggesting that additional findings or enforcement measures may follow. The restriction notice serves as an interim step to limit potential harm while the inquiry progresses. 12. SFC Disqualifies National Agricultural Executives for Multiple Financial Misconduct SFC has secured disqualification orders from the Court of First Instance against former directors and a senior executive of National Agricultural Holdings Limited ( 01236.HK ) (“ NAH ”), barring them from corporate management roles in Hong Kong for periods ranging from two to nine years. This follows an investigation revealing significant financial misconduct and breaches of duty. Key Findings The SFC uncovered multiple instances of misconduct: Unpaid Shares : NAH’s controlling shareholder, Parko (Hong Kong) Limited, failed to pay approximately HK$676 million for 212,194,500 shares allotted on 9 June 2015. Fund Misappropriation : Between January and June 2015, HK$384 million was transferred to another company under the pretext of establishing an investment fund for NAH, orchestrated by former chairman Mr. CHEN Li-Jun. The funds were diverted for unrelated purposes, including transfers to Parko. Suspicious Transfers : In August 2017, a refund of RMB1.85 billion from lapsed transactions was quickly moved out of NAH through dubious transactions for unknown purposes. Unauthorized Transfer : In 2015, CHEN transferred HK$50 million from NAH to a connected company without justification, disguising it as a loan to another entity. Roles, Breaches and Disqualification Details Name Roles and Breaches Disqualification Ms. LU Ying As financial manager, she coordinated the questionable payments and knew or should have known of the misconduct. Disqualified for nine years. Mr. REN Hai; and Mr. PENG Guojiang As executive directors and Parko directors, they allowed Chen to dominate NAH’s affairs for personal benefit, failing to investigate or address the misconduct. Each disqualified for seven years. Mr. TING Tit Cheung As an independent non-executive director and audit committee member, he neglected oversight duties, ignoring auditor concerns and failing to question suspicious transactions. Disqualified for two years. The above-mentioned individuals are prohibited from serving as directors, liquidators, receivers, or managers of any corporation in Hong Kong, including NAH and its affiliates, and from participating in corporate management. They were also ordered to cover the SFC’s legal costs. They all admitted to breaching their duties to NAH, leading to the court’s orders. SIGNIFICANCE: This action follows disqualification orders against three other NAH directors on 23 June 2023, signalling ongoing efforts to address governance failures at the company, whose shares were delisted from the Hong Kong Stock Exchange in November 2019. Orders reinforce the SFC’s commitment to upholding corporate governance standards, protecting investors, and maintaining Hong Kong’s financial market integrity. Stakeholders are encouraged to prioritize robust oversight in their organizations. Case Reference: HCMP 36/2021 [End of ComplianceOne Newsletter –May 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk