Discretionary Investment Management Agreement Template for Hong Kong

A Discretionary Investment Management Agreement gives you the ability to delegate investment decisions to a professional manager while maintaining clear legal protections and regulatory compliance in Hong Kong. This agreement is essential when you want to benefit from professional investment expertise without making day-to-day portfolio decisions yourself.

When do you need this document?

You need this agreement when engaging a licensed investment manager to handle your portfolio with discretionary authority. This typically occurs when you're a high-net-worth individual or institutional investor seeking professional management of significant assets. The agreement is also required when you want to access sophisticated investment strategies that require quick decision-making, such as hedge fund investments or active trading strategies. Additionally, you'll need this document when your investment manager must comply with specific regulatory requirements for discretionary account management under Hong Kong law.

Key legal considerations

The agreement must clearly define the scope of discretionary authority, including which types of investments the manager can make and any restrictions on their decision-making power. Investment objectives, risk tolerance, and performance benchmarks should be explicitly stated to avoid disputes. Fee structures, including management fees, performance fees, and expense allocations, must be transparent and clearly documented. The agreement should address conflicts of interest, particularly regarding the manager's other clients and personal trading activities. Custody arrangements and the protection of client assets are critical, especially regarding segregation requirements and third-party custodian appointments.

Legal requirements in Hong Kong

Under the Securities and Futures Ordinance, investment managers must hold a Type 9 (Asset Management) license from the SFC to provide discretionary investment management services. The agreement must comply with the SFC's Code of Conduct, which requires proper client classification, suitability assessments, and ongoing monitoring of client portfolios. Risk disclosure statements must be provided, and clients must acknowledge understanding of investment risks and potential losses. The Fund Manager Code of Conduct mandates specific operational requirements, including proper record-keeping, reporting standards, and client asset protection measures. Personal data handling must comply with the Personal Data (Privacy) Ordinance, particularly regarding client information confidentiality and data processing consent.