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TCSP Licence or Trust Company? The Difference in Hong Kong

Writer: KTCCPA
KTCCPA
11 minutes ago
4 min read

Businesses planning to offer trustee, custody or corporate services in Hong Kong often ask whether they need a "TCSP licence" or a "trust company". The two terms are frequently used as if they meant the same thing. They do not. They come from different laws, serve different purposes, and in many cases a business will need both.

What is a TCSP licence?

A trust or company service provider ("TCSP") licence is granted by the Registrar of Companies under Part 5A of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) ("AMLO"). Any person who carries on, or wishes to carry on, a trust or company service business in Hong Kong must hold one [1].

A trust or company service business covers providing any of the following services to other persons, by way of business [1]:

  • forming companies or other legal persons;

  • acting, or arranging for another person to act, as a director or company secretary, or as a partner;

  • providing a registered office, business address or correspondence address;

  • acting, or arranging for another person to act, as a trustee of an express trust or a similar legal arrangement, or as a nominee shareholder.

The licence is primarily an anti-money laundering measure. Applicants and their directors and ultimate owners must pass a fit and proper test, and licensees must follow the Registrar's AML guideline [1][2]. Authorized institutions (banks), certain SFC-licensed corporations, certified public accountants and solicitors are exempt from the licensing requirement [2].

What is a trust company?

A trust company is a company registered with the Registrar of Companies under Part 8 of the Trustee Ordinance (Cap. 29) [3]. Registration is a status, not an AML licence. The main requirements are [3]:

  • the applicant must be a company incorporated in Hong Kong (or a re-domiciled company) and not a private company;

  • its objects must be limited to those listed in section 81 of the Trustee Ordinance, such as acting as trustee, executor or administrator;

  • its issued share capital must be at least HK$3,000,000, with at least HK$3,000,000 paid up in cash;

  • it must have at least two directors;

  • it must place a deposit of at least HK$1,500,000 with the Director of Accounting Services, or lodge an acceptable bank guarantee.

No single member may hold more than one-fifth of the issued capital of a trust company, unless it is a subsidiary of a bank [3]. The certificate of registration is normally issued within 10 working days after the application, or after the deposit is confirmed, whichever is later [3].

Key differences at a glance


TCSP licence

Registered trust company

Law

AMLO (Cap. 615), Part 5A

Trustee Ordinance (Cap. 29), Part 8

Purpose

Licensing and AML supervision of trust and company service businesses

Statutory trustee status with capital safeguards

Who needs it

Anyone carrying on trust or company service business in Hong Kong, unless exempt

Companies that want trust company status, or where another regime requires it

Capital

No statutory minimum

HK$3 million paid-up capital and HK$1.5 million deposit

Company type

Individual, partnership or company

Public company only

Scope

Company formation, directors, registered office, trustee and nominee services

Trustee and fiduciary objects only

Do you need both?

Often, yes. The Companies Registry has confirmed that a company already registered as a trust company under the Trustee Ordinance must still apply for a TCSP licence to carry on a trust or company service business in Hong Kong [4]. The two regimes sit side by side.

The reverse is not true. Most TCSP licensees, such as company secretarial firms, are not registered trust companies. Registering as a trust company is generally a choice. It becomes necessary where another regime calls for it. For example, appointing a trustee of an ORSO retirement scheme that is not a registered trust company requires the MPFA's prior approval [5]. Registered trust companies also benefit from certain exemptions, such as an SFC exemption for some fund distribution activities [6].

Using the word "trust" or "trustee" in a company name requires the Registrar's prior approval [7].

Whether a trustee needs a TCSP licence depends on whether it provides trust services "by way of business". The Registry's view is that a company that acts as trustee, charges for the service, publicises it and carries it on continuously is carrying on a business and needs a licence [4].

Practical points

  • Start with the activity. Map what the business will actually do: forming companies, acting as trustee, holding client assets, or providing nominee services. The licences follow from the activities.

  • Plan capital early. Trust company registration requires a public company structure, HK$3 million of paid-up capital and a HK$1.5 million deposit, which affect shareholding and group design.

  • Build AML controls for the TCSP licence. The licence brings ongoing AML/CFT obligations, including customer due diligence and an institutional risk assessment.

  • Check sector rules. Crypto custody, fund and pension businesses may also fall under SFC, HKMA or MPFA rules. See our note on the new licence for virtual asset custodians.

KTC advises applicants on TCSP licence applications, trust company set-up and AML controls. To discuss your plans, request a proposal.

This article is for general information only and does not constitute legal or professional advice.

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