Non Discretionary Investment Advisory Agreement Template for Hong Kong
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What is a Non Discretionary Investment Advisory Agreement?
The Non-Discretionary Investment Advisory Agreement is essential for investment advisory relationships in Hong Kong where the advisor provides professional investment recommendations but the client maintains final decision-making authority over their investments. This document is required for compliance with Hong Kong's Securities and Futures Ordinance and SFC regulations, typically used when establishing formal advisory relationships with individual, corporate, or institutional clients. The agreement covers crucial elements including service scope, fee structures, risk disclosures, compliance obligations, and client protections, while ensuring clear documentation of the non-discretionary nature of the relationship. It's particularly important for licensed investment advisors operating in Hong Kong's financial markets who must demonstrate clear compliance with regulatory requirements while providing investment advisory services.
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About the Non Discretionary Investment Advisory Agreement
When you engage an investment advisor in Hong Kong, you need a Non Discretionary Investment Advisory Agreement to establish a compliant legal framework for your advisory relationship. This agreement ensures that while your advisor provides professional investment recommendations and analysis, you maintain complete control over all investment decisions. Under Hong Kong's regulatory framework, this document is essential for protecting both parties and meeting strict compliance requirements.
When do you need this document?
You need this agreement when hiring a licensed investment advisor who will provide recommendations without making investment decisions on your behalf. This applies whether you're an individual seeking professional guidance for your portfolio, a corporation requiring investment advice for treasury management, or an institutional investor engaging advisory services for pension funds or trust assets. The agreement is also required when transitioning from discretionary to non-discretionary management, establishing advisory relationships with multiple investment professionals, or when regulatory changes necessitate updated documentation of your advisory arrangements.
Key legal considerations
The agreement must clearly define the scope of advisory services while emphasizing that all investment decisions remain with you as the client. Critical clauses include detailed fee structures, performance benchmarks, conflict of interest disclosures, and termination procedures. Risk disclosure sections must comprehensively outline market risks, investment limitations, and the advisor's liability constraints. The document should specify communication protocols, reporting requirements, and procedures for handling client instructions. Personal data handling clauses must comply with privacy regulations, while anti-money laundering provisions ensure proper client due diligence procedures are documented.
Legal requirements in Hong Kong
Under the Securities and Futures Ordinance (Cap. 571), licensed investment advisors must execute written agreements before providing advisory services. The SFC Code of Conduct mandates that agreements include specific client suitability assessments, risk tolerance documentation, and clear service descriptions. Personal Data Privacy Ordinance (Cap. 486) compliance requires explicit consent clauses for data collection and processing. Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) necessitates client identification and verification procedures within the agreement framework. The Trustee Ordinance (Cap. 29) may apply when advisory services involve trust assets, requiring additional fiduciary duty clauses and trustee-specific provisions to ensure full regulatory compliance.
GOVERNING LAW
Applicable law
This Non Discretionary Investment Advisory Agreement is drafted to comply with Hong Kong law. Key legislation includes:
Securities and Futures Commission Code of Conduct: Sets out conduct requirements for licensed intermediaries, including requirements for client agreements, suitability obligations, and professional standards
Personal Data (Privacy) Ordinance (Cap. 486): Governs the collection, use, and handling of personal data, which is relevant for client information management
Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615): Stipulates requirements for client due diligence and record-keeping in financial services
Trustee Ordinance (Cap. 29): Relevant for understanding fiduciary duties and obligations in providing investment advice
Contract Law (Common Law principles): General principles of contract law applying to the formation and enforcement of the agreement
SFC Fund Manager Code of Conduct: Provides additional guidance on investment advisory services and management of investment portfolios
Companies Ordinance (Cap. 622): Relevant for understanding corporate client structures and requirements when dealing with corporate entities
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