10q10k10q10k.net

What changed in Futu Holdings Ltd's 20-F — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Futu Holdings Ltd's 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+725 added−729 removedSource: 20-F (2024-04-24) vs 20-F (2023-04-24)

Top changes in Futu Holdings Ltd's 2023 20-F

725 paragraphs added · 729 removed · 582 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

174 edited+29 added−35 removed675 unchanged
Biggest changeAlthough we have taken and will continue to take rectification measures on our business to be in compliance with laws and regulations and to meet the requirements from the CSRC during the inquiries, we cannot assure or predict whether such measures would meet the requirements and whether the CSRC would impose further regulatory actions and penalties on us, including fines, suspension of parts or all of our operations or activities in Mainland China, or suspension or removal of our websites, desktop devices and mobile applications in China, which, individually or taken as a whole, may affect our client base in China and revenue attributable to such clients, and therefore may have a material and adverse impact on our operations and financial results.
Biggest changeIf the CSRC pursues further regulatory actions or imposes penalties on us, including but not limited to fines, suspension of parts or all of our operations or activities in Mainland China, they may, individually or taken as a whole, have a material and adverse impact on our operations and financial results.
As announced by the CSRC on December 30, 2022, the CSRC has initiated inquiries on us regarding our cross-border operations in Mainland China, including the provision of cross-border securities services for domestic investors. We have taken and may continue to take rectification measures based on our communication with or the requirements from the CSRC.
As announced by the CSRC on December 30, 2022, the CSRC has initiated inquiries on us regarding our cross-border operations in Mainland China, including the provision of cross-border securities services for domestic, China-based investors. We have taken and may continue to take rectification measures based on our communication with or the requirements from the CSRC.
If the CSRC is not satisfied with our rectification measures or the CSRC imposes other further regulatory actions or penalties on us, our business and results of operations may be materially and adversely affected. ● Our operations and services involve collection, processing, and storage of significant amounts of data concerning our clients, business partners and employees and may be subject to complex and evolving laws and regulations regarding privacy and data protection and cybersecurity.
If the CSRC is not satisfied with our rectification measures or imposes other further regulatory actions or penalties on us, our business and results of operations may be materially and adversely affected. ● Our operations and services involve collection, processing, and storage of significant amounts of data concerning our clients, business partners and employees and may be subject to complex and evolving laws and regulations regarding privacy and data protection and cybersecurity.
See “—We are subject to extensive and evolving regulatory requirements in the markets we operate in, non-compliance with which may result in penalties, limitations and prohibitions on our future business activities or suspension or revocation of our licenses and trading rights, and consequently may materially and adversely affect our business, financial condition, operations and prospects.
See “—We are subject to extensive and evolving regulatory requirements in the markets we operate in, non-compliance with which may result in penalties, limitations and prohibitions on our future business activities or suspension or revocation of our licenses and trading rights, and consequently may materially and adversely affect our business, financial condition, operations and prospects.
The market price for the ADSs may continue to be volatile and subject to wide fluctuations in response to factors including, but not limited to, the following: ● regulatory developments affecting us or our industry or China-based companies in general; ● adverse market rumors, speculations, media reports or other negative publicity involving us or our industry or China-based companies in general, some of which may be unsubstantiated or inaccurate; ● announcements of studies and reports relating to the quality of our credit offerings or those of our competitors; ● changes in the economic performance or market valuations of other financial service providers; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the market for financial services; 70 Table of Contents ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● additions to or departures of our senior management; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; ● release or expiry of contractual lock-up or other transfer restrictions on our outstanding shares or the ADSs; and ● sales or perceived potential sales of additional ordinary shares or ADSs.
The market price for the ADSs may continue to be volatile and subject to wide fluctuations in response to factors including, but not limited to, the following: ● regulatory developments affecting us or our industry or China-based companies in general; ● adverse market rumors, speculations, media reports or other negative publicity involving us or our industry or China-based companies in general, some of which may be unsubstantiated or inaccurate; ● announcements of studies and reports relating to the quality of our credit offerings or those of our competitors; ● changes in the economic performance or market valuations of other financial service providers; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the market for financial services; 71 Table of Contents ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● additions to or departures of our senior management; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; ● release or expiry of contractual lock-up or other transfer restrictions on our outstanding shares or the ADSs; and ● sales or perceived potential sales of additional ordinary shares or ADSs.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of board members with voting rights or senior executives habitually reside in the PRC. 59 Table of Contents We believe that our Cayman Islands holding company, Futu Holdings, is not a PRC resident enterprise for PRC tax purposes.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of board members with voting rights or senior executives habitually reside in the PRC. 60 Table of Contents We believe that our Cayman Islands holding company, Futu Holdings, is not a PRC resident enterprise for PRC tax purposes.
Further, if our corporate structure and the Contractual Arrangements are found to be in violation of any existing or future PRC laws or regulations or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, the relevant regulatory authorities would have broad discretion in dealing with such violations, including: ● revoking our business and operating licenses; 66 Table of Contents ● levying fines on us; ● confiscating any of our income that they deem to be obtained through illegal operations; ● shutting down our services; ● discontinuing or restricting our operations in China; ● imposing conditions or requirements with which we may not be able to comply; ● requiring us to change our corporate structure and the Contractual Arrangements, including terminating the Contractual Arrangements and deregistering the equity pledges of the VIEs, which in turn would affect our ability to consolidate the VIEs or direct the activities of the VIEs; ● restricting or prohibiting our use of the proceeds from overseas offering to finance the VIEs’ business and operations; and ● taking other regulatory or enforcement actions that could be harmful to our business.
Further, if our corporate structure and the Contractual Arrangements are found to be in violation of any existing or future PRC laws or regulations or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, the relevant regulatory authorities would have broad discretion in dealing with such violations, including: ​ 67 Table of Contents ● revoking our business and operating licenses; ● levying fines on us; ● confiscating any of our income that they deem to be obtained through illegal operations; ● shutting down our services; ● discontinuing or restricting our operations in China; ● imposing conditions or requirements with which we may not be able to comply; ● requiring us to change our corporate structure and the Contractual Arrangements, including terminating the Contractual Arrangements and deregistering the equity pledges of the VIEs, which in turn would affect our ability to consolidate the VIEs or direct the activities of the VIEs; ● restricting or prohibiting our use of the proceeds from overseas offering to finance the VIEs’ business and operations; and ● taking other regulatory or enforcement actions that could be harmful to our business.
Item 3. Key Information A. Reserved B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors An investment in our ADSs or ordinary shares involves significant risks. Below please find a summary of the principal risks we face, organized under relevant headings.
Item 3. Key Information A. Reserved B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors An investment in the ADSs or ordinary shares involves significant risks. Below please find a summary of the principal risks we face, organized under relevant headings.
We may be subject to examinations and inquiries by the relevant regulators on a regular or ad-hoc basis. Our business operations in Hong Kong are subject to applicable Hong Kong laws, regulations, guidelines, circulars, and other regulatory guidance, or collectively the HK Brokerage Regulations, including, for example, the SFO and its subsidiary legislation.
We may be subject to examinations, investigation and inquiries by the relevant regulators on a regular or ad-hoc basis. Our business operations in Hong Kong are subject to applicable Hong Kong laws, regulations, guidelines, circulars, and other regulatory guidance, or collectively the HK Brokerage Regulations, including, for example, the SFO and its subsidiary legislation.
However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in Mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we and investors in our ADSs would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in the ADSs to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. 63 Table of Contents The ADSs may be delisted and prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China, which will materially and adversely affect the value of your investment.
However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in Mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we and investors in the ADSs would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in the ADSs to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. 64 Table of Contents The ADSs may be delisted and prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China, which will materially and adversely affect the value of your investment.
Under the deposit agreement for the ADSs, if you do not give instructions for voting the Class A ordinary shares underlying your ADSs, the depositary will give us a discretionary proxy to vote those Class A ordinary shares at the shareholders’ meeting if: ● we have timely instructed the depositary to disseminate a notice of meeting and provided the depositary with a notice of meeting and related voting materials; ● we have instructed the depositary that we wish a discretionary proxy to be given; ● we have informed the depositary that as of the instruction date we reasonably don’t know of any substantial opposition as to a matter to be voted on at the meeting; and ● a matter to be voted on at the meeting would not have a material adverse impact on shareholders’ interests. 73 Table of Contents The effect of this discretionary proxy is that you cannot prevent our Class A ordinary shares underlying your ADSs from being voted at the shareholders’ meeting if the circumstances described above are met.
Under the deposit agreement for the ADSs, if you do not give instructions for voting the Class A ordinary shares underlying your ADSs, the depositary will give us a discretionary proxy to vote those Class A ordinary shares at the shareholders’ meeting if: ● we have timely instructed the depositary to disseminate a notice of meeting and provided the depositary with a notice of meeting and related voting materials; ● we have instructed the depositary that we wish a discretionary proxy to be given; ● we have informed the depositary that as of the instruction date we reasonably don’t know of any substantial opposition as to a matter to be voted on at the meeting; and ● a matter to be voted on at the meeting would not have a material adverse impact on shareholders’ interests. 74 Table of Contents The effect of this discretionary proxy is that you cannot prevent our Class A ordinary shares underlying your ADSs from being voted at the shareholders’ meeting if the circumstances described above are met.
However, since the PRC authorities and the commercial banks designated by the SAFE to conduct currency exchange services have significant amount of discretion in interpreting, implementing and enforcing the relevant currency exchange rules and regulations, and for many other factors that are beyond our control, we may be subject to further regulatory requirements, including but not limited to verifying evidence of approval from relevant authorities with respect to the foreign currency exchange. 61 Table of Contents China’s M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of PRC companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
However, since the PRC authorities and the commercial banks designated by the SAFE to conduct currency exchange services have significant amount of discretion in interpreting, implementing and enforcing the relevant currency exchange rules and regulations, and for many other factors that are beyond our control, we may be subject to further regulatory requirements, including but not limited to verifying evidence of approval from relevant authorities with respect to the foreign currency exchange. 62 Table of Contents China’s M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of PRC companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs.
A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase the ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of the ADSs.
As of the date of this annual report, we have limited information to accurately predict if any disciplinary action or punishment will be taken against us and/or our responsible officers after the conclusion of such inquiries, and if so, the nature and extent of any such action.
As of the date of this annual report, we have limited information to accurately predict if any disciplinary action or punishment will be taken against us and/or our officers after the conclusion of such inquiries, and if so, the nature and extent of any such action.
As of the date of this annual report, we have limited information to accurately predict if any disciplinary action or punishment will be taken against us and/or our responsible officers after the conclusion of such inquiries, and if so, the nature and extent of any such action.
As of the date of this annual report, we have limited information to accurately predict if any disciplinary action or punishment will be taken against us and/or our officers after the conclusion of such inquiries, and if so, the nature and extent of any such action.
Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.” We incur and may continue to incur increased costs as a result of being a public company. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.
Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.” We incur and may continue to incur increased costs as a result of being a public company. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of our board of directors or our controlling shareholders than they would as public shareholders of a company incorporated in the United States. 76 Table of Contents Our amended and restated memorandum and articles of association contain anti-takeover provisions that could discourage a third party from acquiring us, which could limit our shareholders’ opportunity to sell their shares, including Class A ordinary shares represented by the ADSs, at a premium.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of our board of directors or our controlling shareholders than they would as public shareholders of a company incorporated in the United States. 77 Table of Contents Our amended and restated memorandum and articles of association contain anti-takeover provisions that could discourage a third party from acquiring us, which could limit our shareholders’ opportunity to sell their shares, including Class A ordinary shares represented by the ADSs, at a premium.
If these third-party distribution platforms change their terms and conditions in a manner that is detrimental to us, or refuse to distribute our application, or if any other major distribution channel with which we would like to seek collaboration refuses to collaborate with us in the future, our business, financial condition and results of operations may be materially and adversely affected. 38 Table of Contents We have not obtained licenses from relevant PRC regulatory authorities in connection with some of the information and services available on our platform.
If these third-party distribution platforms change their terms and conditions in a manner that is detrimental to us, or refuse to distribute our application, or if any other major distribution channel with which we would like to seek collaboration refuses to collaborate with us in the future, our business, financial condition and results of operations may be materially and adversely affected. 39 Table of Contents We have not obtained licenses from relevant PRC regulatory authorities in connection with some of the information and services available on our platform.
If dividends payable to our non-PRC investors, or gains from the transfer of the ADSs or Class A ordinary shares by such investors, are deemed as income derived from sources within the PRC and thus are subject to PRC tax, the value of your investment in the ADSs or Class A ordinary shares may decline significantly. 60 Table of Contents We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-PRC company, or immovable properties located in China owned by non-PRC companies.
If dividends payable to our non-PRC investors, or gains from the transfer of the ADSs or Class A ordinary shares by such investors, are deemed as income derived from sources within the PRC and thus are subject to PRC tax, the value of your investment in the ADSs or Class A ordinary shares may decline significantly. 61 Table of Contents We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-PRC company, or immovable properties located in China owned by non-PRC companies.
Management of operational, legal and regulatory risks requires, among other things, policies and procedures to properly record and verify a large number of transactions and events, and these policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks. 47 Table of Contents From time to time we may evaluate and potentially consummate investments and acquisitions or enter into alliances, which may require significant management attention, disrupt our business and adversely affect our financial results.
Management of operational, legal and regulatory risks requires, among other things, policies and procedures to properly record and verify a large number of transactions and events, and these policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks. 48 Table of Contents From time to time we may evaluate and potentially consummate investments and acquisitions or enter into alliances, which may require significant management attention, disrupt our business and adversely affect our financial results.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. 77 Table of Contents As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq listing standards.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. 78 Table of Contents As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq listing standards.
If either VIE undergoes voluntary or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations. 69 Table of Contents Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and its Implementation Regulations and how they may impact the viability of our current corporate structure, corporate governance and business operations.
If either VIE undergoes voluntary or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations. 70 Table of Contents Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and its Implementation Regulations and how they may impact the viability of our current corporate structure, corporate governance and business operations.
Securities and Exchange Act of 1934, or the Exchange Act, rules and guidance adopted under the Exchange Act by the U.S. Securities and Exchange Commission, or the SEC, and rules and guidance adopted by the Financial Industry Regulatory Authority, or FINRA. See “Item 4. Information on the Company—B.
Securities and Exchange Act of 1934, or the Exchange Act, rules and regulations adopted under the Exchange Act by the U.S. Securities and Exchange Commission, or the SEC, and rules and guidance adopted by the Financial Industry Regulatory Authority, or FINRA. See “Item 4. Information on the Company—B.
If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities. 58 Table of Contents PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our securities offerings to make loans or additional capital contributions to our PRC subsidiaries and the Consolidated Affiliated Entities.
If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities. 59 Table of Contents PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our securities offerings to make loans or additional capital contributions to our PRC subsidiaries and the Consolidated Affiliated Entities.
Ltd., or Moomoo Financial Singapore, as a Capital Markets Services Licensee in Singapore, may be subject to similar examinations and regulatory actions initiated by the MAS or other relevant regulatory authorities in Singapore.
Moomoo Financial Singapore Pte. Ltd., or Moomoo Financial Singapore, as a Capital Markets Services Licensee in Singapore, may be subject to similar examinations and regulatory actions initiated by the MAS or other relevant regulatory authorities in Singapore.
Furthermore, despite our efforts to address negative publicity and correct misinformation about our business model and practices, our reputation and brand may continue to be harmed by such negative publicity and misinformation, and the ADSs may experience substantial price volatility as a result. 41 Table of Contents In addition, any perception that the quality of our online brokerage and other financial services may not be the same as or better than that of other online brokerage and financial service firms can also damage our reputation.
Furthermore, despite our efforts to address negative publicity and correct misinformation about our business model and practices, our reputation and brand may continue to be harmed by such negative publicity and misinformation, and the ADSs may experience substantial price volatility as a result. 42 Table of Contents In addition, any perception that the quality of our online brokerage and other financial services may not be the same as or better than that of other online brokerage and financial service firms can also damage our reputation.
Errors in performing clearing functions, including clerical and other errors related to the handling of funds and securities held by us on behalf of clients, could lead to regulatory fines and civil penalties as well as losses and liability in related legal proceedings brought by clients and others. 44 Table of Contents Our success depends on the continuing service of our key employees, including our senior management members and other talent, who are highly sought after in the market.
Errors in performing clearing functions, including clerical and other errors related to the handling of funds and securities held by us on behalf of clients, could lead to regulatory fines and civil penalties as well as losses and liability in related legal proceedings brought by clients and others. 45 Table of Contents Our success depends on the continuing service of our key employees, including our senior management members and other talent, who are highly sought after in the market.
If our mobile apps are found to violate the provisions, we may be subject to penalties, including warning, service suspension or removal of our mobile apps from the relevant mobile app store, which may materially and adversely affect our business and operating results. 46 Table of Contents We may be subject to litigation and regulatory investigations and proceedings, and may not always be successful in defending ourselves against such claims or proceedings, which may affect our business operations and financial conditions.
If our mobile apps are found to violate the provisions, we may be subject to penalties, including warning, service suspension or removal of our mobile apps from the relevant mobile app store, which may materially and adversely affect our business and operating results. 47 Table of Contents We may be subject to litigation and regulatory investigations and proceedings, and may not always be successful in defending ourselves against such claims or proceedings, which may affect our business operations and financial conditions.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2022. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in Mainland China and Hong Kong, among other jurisdictions.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in Mainland China and Hong Kong, among other jurisdictions.
Failure to provide our users and clients with high quality services and experience for any reason could substantially harm our reputation and adversely impact our efforts to develop a trusted brand, which could have a material adverse effect on our business, results of operations, financial condition and prospects. 42 Table of Contents Fraudulent or illegal activities on our platform could negatively impact our brand and reputation and cause the loss of users and clients.
Failure to provide our users and clients with high quality services and experience for any reason could substantially harm our reputation and adversely impact our efforts to develop a trusted brand, which could have a material adverse effect on our business, results of operations, financial condition and prospects. ​ 43 Table of Contents Fraudulent or illegal activities on our platform could negatively impact our brand and reputation and cause the loss of users and clients.
In addition, the PRC government may impose specific requirement on financial information services, which may also affect our business and operations. 39 Table of Contents In August 2019, we officially launched our online wealth management product distribution service which gives our clients access to money market, fixed income and equity funds products from leading fund houses.
In addition, the PRC government may impose specific requirement on financial information services, which may also affect our business and operations. 40 Table of Contents In August 2019, we officially launched our online wealth management product distribution service which gives our clients access to money market, fixed income and equity funds products from leading fund houses.
Any errors, bugs or defects discovered in the software on which we rely could result in harm to our reputation, loss of users or financial service providers or liability for damages, any of which could adversely affect our business, results of operations and financial conditions. 43 Table of Contents A significant decrease in our liquidity could negatively affect our business and financial management as well as reduce client confidence in our company.
Any errors, bugs or defects discovered in the software on which we rely could result in harm to our reputation, loss of users or financial service providers or liability for damages, any of which could adversely affect our business, results of operations and financial conditions. 44 Table of Contents A significant decrease in our liquidity could negatively affect our business and financial management as well as reduce client confidence in our company.
Furthermore, we may need to take certain additional measures in the future to be in compliance with the Personal Information Protection Law. See “Item 4. Information on the Company—B.
We may need to take certain additional measures in the future to be in compliance with the Personal Information Protection Law. See “Item 4. Information on the Company—B.
On November 22, 2022, SAMR published the Anti-unfair Competition Law of the PRC (Draft for Comments), or the Draft of Anti-unfair Competition Law, which had a comment period expired on December 22, 2022.
On November 22, 2022, SAMR published the Anti-unfair Competition Law of the PRC (Revision Draft for Comments), or the Revision Draft of Anti-unfair Competition Law, which had a comment period expired on December 22, 2022.
See also “—The ADSs may be delisted and prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China, which will materially and adversely affect the value of your investment.” 28 Table of Contents If we fail to protect our platform or the information of our users and clients, whether due to cyber-attacks, computer viruses, physical or electronic break-in, breaches by third parties or other reasons, we may be subject to liabilities imposed by relevant laws and regulations, and our reputation and business may be materially and adversely affected.
See also “—The ADSs may be delisted and prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China, which will materially and adversely affect the value of your investment.” If we fail to protect our platform or the information of our users and clients, whether due to cyber-attacks, computer viruses, physical or electronic break-in, breaches by third parties or other reasons, we may be subject to liabilities imposed by relevant laws and regulations, and our reputation and business may be materially and adversely affected.
Furthermore, we have incurred and anticipate that we will continue to incur considerable costs, management time and other resources in an effort to comply with Section 404 of the Sarbanes-Oxley Act and other requirements. 48 Table of Contents Increasing focus with respect to environmental, social and governance matters may impose additional costs on us or expose us to additional risks.
Furthermore, we have incurred and anticipate that we will continue to incur considerable costs, management time and other resources in an effort to comply with Section 404 of the Sarbanes-Oxley Act and other requirements. 49 Table of Contents Increasing focus with respect to environmental, social and governance matters may impose additional costs on us or expose us to additional risks.
In addition, as we have ceased to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2022.
In addition, as we have ceased to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.
The discontinuation of such financial subsidies or imposition of any additional taxes could adversely affect our financial condition and results of operations. 62 Table of Contents We may not be able to obtain certain benefits under relevant tax treaty on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiary.
The discontinuation of such financial subsidies or imposition of any additional taxes could adversely affect our financial condition and results of operations. 63 Table of Contents We may not be able to obtain certain benefits under relevant tax treaty on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiary.
Business Overview—Regulation—Overview of the Laws and Regulations Relating to Our Business and Operations in Hong Kong—Hong Kong Taxation.” As of December 31, 2022, the total retained earnings of our subsidiaries and the Consolidated Affiliated Entities located in China accounted for a relatively small portion of our total retained earnings and we currently do not have any plan to make offshore distribution.
Business Overview—Regulation—Overview of the Laws and Regulations Relating to Our Business and Operations in Hong Kong—Hong Kong Taxation.” As of December 31, 2023, the total retained earnings of our subsidiaries and the Consolidated Affiliated Entities located in China accounted for a relatively small portion of our total retained earnings and we currently do not have any plan to make offshore distribution.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 64 Table of Contents It may be difficult for overseas authorities to conduct investigations or collect evidence within China.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 65 Table of Contents It may be difficult for overseas authorities to conduct investigations or collect evidence within China.
No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder. 75 Table of Contents You may be subject to limitations on transfer of your ADSs.
No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder. 76 Table of Contents You may be subject to limitations on transfer of your ADSs.
Misconduct by our employees, or even unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business. 40 Table of Contents Any future change in the regulatory and legal regime for the securities brokerage and wealth management industries in regions where we operate may have a significant impact on our business model.
Misconduct by our employees, or even unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business. 41 Table of Contents Any future change in the regulatory and legal regime for the securities brokerage and wealth management industries in regions where we operate may have a significant impact on our business model.
See “—The Contractual Arrangements may result in adverse tax consequences to us in the PRC.” 68 Table of Contents Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
See “—The Contractual Arrangements may result in adverse tax consequences to us in the PRC.” 69 Table of Contents Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
Such a situation could be costly and time-consuming and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our operations and shareholders’ equity, and the value of any investment in the ADSs could be greatly reduced or rendered worthless. ​ ​ 79 Table of Contents
Such a situation could be costly and time-consuming and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our operations and shareholders’ equity, and the value of any investment in the ADSs could be greatly reduced or rendered worthless. ​ ​ 81 Table of Contents
As a consequence, we cannot be certain that the equity interest will be disposed pursuant to the contractual arrangement or ownership by the record holder of the equity interest. 65 Table of Contents All of the Contractual Arrangements are governed by and interpreted in accordance with PRC law, and disputes arising from the Contractual Arrangements will be resolved through arbitration in China.
As a consequence, we cannot be certain that the equity interest will be disposed pursuant to the contractual arrangement or ownership by the record holder of the equity interest. 66 Table of Contents All of the Contractual Arrangements are governed by and interpreted in accordance with PRC law, and disputes arising from the Contractual Arrangements will be resolved through arbitration in China.
In addition, these individuals may breach or cause the VIEs to breach or refuse to renew the existing Contractual Arrangements with us. 67 Table of Contents Currently, we do not have arrangements to address potential conflicts of interest the shareholders of the VIEs may encounter, on the one hand, and as a beneficial owner of our company, on the other hand.
In addition, these individuals may breach or cause the VIEs to breach or refuse to renew the existing Contractual Arrangements with us. 68 Table of Contents Currently, we do not have arrangements to address potential conflicts of interest the shareholders of the VIEs may encounter, on the one hand, and as a beneficial owner of our company, on the other hand.
As a result, fluctuations in exchange rates may have a material adverse effect on your investment. 49 Table of Contents Our anticipated international expansion will subject us to additional risks and increased legal and regulatory requirements, which could have a material effect on our business. Our historical operations have been focused on Hong Kong.
As a result, fluctuations in exchange rates may have a material adverse effect on your investment. 50 Table of Contents Our anticipated international expansion will subject us to additional risks and increased legal and regulatory requirements, which could have a material effect on our business. Our historical operations have been focused on Hong Kong.
During the years ended December 31, 2020, 2021 and 2022, the revenue generated from relevant internet audio-video program services was less than 0.01% of our total revenue per year and the absence of such license did not have any material adverse impact on our business and operations.
During the years ended December 31, 2021, 2022 and 2023, the revenue generated from relevant internet audio-video program services was less than 0.01% of our total revenue per year and the absence of such license did not have any material adverse impact on our business and operations.
As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source for any future dividend income. 72 Table of Contents Our board of directors has complete discretion as to whether to distribute dividends.
As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source for any future dividend income. 73 Table of Contents Our board of directors has complete discretion as to whether to distribute dividends.
As an exempted company incorporated in the Cayman Islands, Futu Holdings and its wholly-owned PRC subsidiaries are classified, respectively, as a foreign enterprise and foreign-invested enterprises under PRC laws and regulations, and none of them is generally allowed to own more than 50% of the equity interests in PRC companies that are value-added telecommunication service providers or to own any equity interests in PRC companies that are engaging in internet culture service or other services prohibited from foreign investment.
As an exempted company incorporated in the Cayman Islands, Futu Holdings and its wholly-owned PRC subsidiaries are classified, respectively, as a foreign enterprise and foreign-invested enterprises under PRC laws and regulations, and, subject to certain exceptions, none of them is generally allowed to own more than 50% of the equity interests in PRC companies that are value-added telecommunication service providers or to own any equity interests in PRC companies that are engaging in internet culture service or other services prohibited from foreign investment.
Upon any sale, transfer, assignment or disposition of any Class B ordinary shares by a holder thereof to any non-affiliate of such holder, each of such Class B ordinary shares will be automatically and immediately converted into one Class A ordinary share. 71 Table of Contents As of the Latest Practicable Date, Mr.
Upon any sale, transfer, assignment or disposition of any Class B ordinary shares by a holder thereof to any non-affiliate of such holder, each of such Class B ordinary shares will be automatically and immediately converted into one Class A ordinary share. 72 Table of Contents As of the Latest Practicable Date, Mr.
This could also have a material adverse effect on our business, financial condition, results of operations and cash flows. 37 Table of Contents We rely on a number of external service providers for certain key market information and data, technology, processing and supporting functions.
This could also have a material adverse effect on our business, financial condition, results of operations and cash flows. ​ 38 Table of Contents We rely on a number of external service providers for certain key market information and data, technology, processing and supporting functions.
Declines in market values of securities or other financial instruments can also result in illiquid markets, which can also result in lower revenues and profitability from transaction execution activities. Lower price levels of securities and other financial instruments, as well as compressed bid/ask spreads, which often follow lower pricing, can further result in reduced revenues and profitability.
Declines in market values of securities or other financial instruments can also result in illiquid markets, which can also result in lower revenues and profitability from trade execution activities. Lower price levels of securities and other financial instruments, as well as compressed bid/ask spreads, which often follow lower pricing, can further result in reduced revenues and profitability.
See also “—Changes in social conditions, political and economic policies of the PRC government may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.” 55 Table of Contents The trade war between United States and China, and on a larger scale internationally, may dampen growth in China and other markets where the majority of our clients reside, and our activities and results of operations may be negatively impacted.
See also “—Changes in social conditions, political and economic policies of the PRC government may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.” The trade war between United States and China, and on a larger scale internationally, may dampen growth in China and other markets where the majority of our clients reside, and our activities and results of operations may be negatively impacted.
Because of the uncertainties involved in establishing our PFIC status, our U.S. tax counsel expresses no opinion regarding our PFIC status. 78 Table of Contents If we are a PFIC in any taxable year, a U.S. Holder (as defined in “Item 10. Additional Information—E.
Because of the uncertainties involved in establishing our PFIC status, our U.S. tax counsel expresses no opinion regarding our PFIC status. 79 Table of Contents If we are a PFIC in any taxable year, a U.S. Holder (as defined in “Item 10. Additional Information—E.
In these cases, the depositary may decide not to distribute such property to you. 74 Table of Contents We and the depository are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, and we may terminate the deposit agreement, without the prior consent of the ADS holders.
In these cases, the depositary may decide not to distribute such property to you. 75 Table of Contents We and the depository are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, and we may terminate the deposit agreement, without the prior consent of the ADS holders.
Based on our analysis of our activities as well as the composition of our income and valuation of our assets, including goodwill, we believe that we were a PFIC for our taxable year ended December 31, 2022. We may also be a PFIC in future taxable years.
Based on our analysis of our activities as well as the composition of our income and valuation of our assets, including goodwill, we believe that we were a PFIC for our taxable year ended December 31, 2023. We may also be a PFIC in future taxable years.
Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions and Strategic Cooperation with Tencent.” We also have business operations and hold relevant licenses in the United States, which had limited revenue contribution as of the date of this annual report.
Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with Tencent.” We also have business operations and hold relevant licenses in the United States, which had limited revenue contribution as of the date of this annual report.
Business Overview—Regulation—Overview of the Laws and Regulations Relating to Our Business and Operations in Hong Kong.” In addition, our operations in the United States are subject to applicable United States laws, rules and regulatory guidance, or collectively the US Brokerage Regulations, including, for example, the U.S.
Business Overview—Regulation—Overview of the Laws and Regulations Relating to Our Business and Operations in Hong Kong.” In addition, our operations in the United States are subject to applicable United States laws, rules and regulations, or collectively the US Brokerage Regulations, including, for example, the U.S.
The experience and capabilities of China courts in handling intellectual property litigation varies and outcomes are unpredictable. 45 Table of Contents We may be subject to intellectual property infringement claims, which may be expensive to defend and disruptive to our business and operations.
The experience and capabilities of China courts in handling intellectual property litigation varies and outcomes are unpredictable. 46 Table of Contents We may be subject to intellectual property infringement claims, which may be expensive to defend and disruptive to our business and operations.
If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected. 52 Table of Contents We may not be able to obtain additional capital when desired, on favorable terms or at all.
If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected. We may not be able to obtain additional capital when desired, on favorable terms or at all.
Leaf Hua Li, our founder, chairman of the board of directors and chief executive officer, and Qiantang River Investment Limited, an existing shareholder of ours, beneficially owned all of our issued Class B ordinary shares.
Leaf Hua Li, our founder, chairman of the board of directors and chief executive officer, and Huang River Investment Limited, an existing shareholder of ours, beneficially owned all of our issued Class B ordinary shares.
The PRC government has recently published new policies that significantly affected certain industries such as the internet industries, and we cannot rule out the possibility that it will in the future release further regulations or policies or take regulatory actions regarding our industry that could adversely affect our business, financial condition and results of operations.
The PRC government has recently published new policies that significantly affected certain industries, and we cannot rule out the possibility that it will in the future release further regulations or policies or take regulatory actions regarding our industry that could adversely affect our business, financial condition and results of operations.
We currently rely on Apple’s app store, Google’s Play Store and major PRC-based Android app stores to distribute our mobile applications to users. As such, the promotion, distribution and operation of our application are subject to such distribution platforms’ standard terms and policies for application developers, which are subject to the interpretation of, and frequent changes by, these distribution channels.
We currently rely on Apple’s app store, Google’s Play Store and Android app stores to distribute our mobile applications to users. As such, the promotion, distribution and operation of our application are subject to such distribution platforms’ standard terms and policies for application developers, which are subject to the interpretation of, and frequent changes by, these distribution channels.
In addition, we are involved in inquiries and investigation by relevant regulators.” Our business may be affected by the Competition Ordinance of Hong Kong. The Competition Ordinance (Chapter 619 of the Laws of Hong Kong) came into full effect in Hong Kong on December 14, 2015.
In addition, we are involved in inquiries and investigation by relevant regulators.” ​ 52 Table of Contents Our business may be affected by the Competition Ordinance of Hong Kong. The Competition Ordinance (Chapter 619 of the Laws of Hong Kong) came into full effect in Hong Kong on December 14, 2015.
For example, once the margin value falls below the outstanding amount of the relevant loan extended as a result of a market downturn or adverse movement in the prices of the pledged securities, we will make a margin call requesting the client to deposit additional funds, sell securities or pledge additional securities to top up their margin value.
For example, with respect to the margin financing business, once the margin value falls below the outstanding amount of the relevant loan extended as a result of a market downturn or adverse movement in the prices of the pledged securities, we will make a margin call requesting the client to deposit additional funds, sell securities or pledge additional securities to top up their margin value.
See “—The trading price of the ADSs has been and may continue to be volatile, which could result in substantial losses to you.” Techniques employed by short sellers may drive down the market price of the ADSs.
See “—The trading price of the ADSs has been and may continue to be volatile, which could result in substantial losses to you.” ​ 80 Table of Contents Techniques employed by short sellers may drive down the market price of the ADSs.
In addition, we are involved in certain inquiries and investigation by relevant regulators. We are subject to extensive regulations and the markets in which we operate, including Hong Kong, Singapore, the United States and Australia, are highly regulated.
In addition, we are involved in certain inquiries and investigation by relevant regulators. We are subject to extensive regulations and the markets in which we operate, including Hong Kong, Singapore, the United States, Australia, Japan, Canada, and Malaysia, are highly regulated.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. Any failure to comply with PRC regulations regarding our employee share incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. ​ 58 Table of Contents Any failure to comply with PRC regulations regarding our employee share incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.
In addition, as we work with third parties to execute trading orders for U.S., Singapore and Australia stocks, our ability to successfully and timely execute these trades for our clients depends on the performance of third parties systems, failure of which may result in potential losses for our clients, which in turn may result in potential claims or litigations brought against us and adversely affect our business and reputation.
In addition, as we work with third parties to execute trading orders, our ability to successfully and timely execute these trades for our clients depends on the performance of third parties systems, failure of which may result in potential losses for our clients, which in turn may result in potential claims or litigations brought against us and adversely affect our business and reputation.
If we fail to retain our existing clients by offering services that cater to their evolving investment and trading needs, we may not be able to maintain and continue to grow the trading volume facilitated by our platform, and our business and results of operations may be adversely affected.
If we fail to retain our existing clients by offering services that cater to their evolving investment and trading needs, we may not be able to maintain and continue to grow platform usage, and our business and results of operations may be adversely affected.
Futu Network Technology (Shenzhen) Co., Ltd. is entitled to enjoy a 15% preferential income tax rate until 2025 as it has been qualified as an “Advanced Technology Service Enterprise” under the PRC Enterprise Income Tax Law and related regulations.
Futu Network Technology (Shenzhen) Co., Ltd. is entitled to enjoy a 15% preferential income tax rate until 2025 as it has been qualified as an “High New Technology Enterprise” under the PRC Enterprise Income Tax Law and related regulations.
Similarly, Hong Kong, Singapore, the United States and Australia also have their respective data privacy legislation that regulates the collection, use, protection and handling of personal data.
Similarly, Hong Kong, Singapore, the United States, Australia, Japan, Canada and Malaysia also have their respective data privacy legislation that regulates the collection, use, protection and handling of personal data.
If we fail to comply with the relevant laws and regulations, our business, results of operations and financial condition may be adversely affected. ● We face significant competition in the online brokerage and wealth management industries, and if we are unable to compete effectively, we may lose our market share and our results of operations and financial condition may be materially and adversely affected. ● If we are unable to retain existing clients or attract new clients to increase their trading volume, or if we fail to offer services to address the needs of our clients as they evolve, our business and results of operations may be materially and adversely affected. ● Because our revenues and profitability depend largely on clients’ trading volume, they are prone to significant fluctuations and are difficult to predict.
If we fail to comply with the relevant laws and regulations, our business, results of operations and financial condition may be adversely affected. ● We face significant competition in the online brokerage and wealth management industries, and if we are unable to compete effectively, we may lose our market share and our results of operations and financial condition may be materially and adversely affected. ● If we are unable to retain existing clients or attract new clients, or if we fail to offer services to address the needs of our clients as they evolve, our business and results of operations may be materially and adversely affected. ● Because our revenues and profitability depend largely on the receipt of transaction-based compensation, they are prone to significant fluctuations and are difficult to predict.
However, such arbitration provisions do not apply to claims made under the United States federal securities laws. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States.
However, such arbitration provisions do not apply to claims made under the United States federal securities laws. The legal environment in the PRC is not as developed as that of the most developed countries in other jurisdictions.
In addition, our institutional partners in Hong Kong, Singapore, the United States and Australia have their own appropriate anti-money laundering policies and procedures with respect to accounts opening services for our clients. Certain of our institutional partners are subject to anti-money laundering obligations under applicable anti-money laundering laws and regulations and are regulated in that respect by the relevant regulators.
In addition, our institutional partners have their own appropriate anti-money laundering policies and procedures with respect to accounts opening services for our clients. Certain of our institutional partners are subject to anti-money laundering obligations under applicable anti-money laundering laws and regulations and are regulated in that respect by the relevant regulators.
We have taken a series of measures in response to the COVID-19 pandemic to protect our employees, including, among others, temporary closure of some offices, remote working arrangements for our employees and travel restrictions or suspension.
For example, during the COVID-19 pandemic, we took a series of measures in response to the COVID-19 pandemic to protect our employees, including, among others, temporary closure of some offices, remote working arrangements for our employees and travel restrictions or suspension.
Historically, we incurred HK$385.3 million, HK$1,392.1 million and HK$895.8 million (US$114.8 million) in selling and marketing expenses, representing 11.6%, 19.6% and 11.8% of our total revenues in 2020, 2021 and 2022, respectively. Although we have spent significant financial resources on marketing expenses and plan to continue to do so, these efforts may not be cost-effective to attract new clients.
Historically, we incurred HK$1,392.1 million, HK$895.8 million and HK$710.3 million (US$90.9 million) in selling and marketing expenses, representing 19.6%, 11.8% and 7.1% of our total revenues in 2021, 2022 and 2023, respectively. Although we have spent significant financial resources on marketing expenses and plan to continue to do so, these efforts may not be cost-effective to attract new clients.
Major risks involving our network infrastructure include: ● breakdowns or system failures resulting in a prolonged shutdown of our servers; 36 Table of Contents ● disruption or failure in the national backbone networks in China, which would make it impossible for users and clients to access our online and mobile platforms; ● physical or cyber based attacks on our servers and other network infrastructure, which may result in disruptions to our network and damages to our technology infrastructure; ● damage from natural disasters or other catastrophic events such as typhoon, volcanic eruption, earthquake, flood, telecommunications failure, or other similar events; and ● any infection by or spread of computer viruses or other system failures.
Major risks involving our network infrastructure include: ● breakdowns or system failures resulting in a prolonged shutdown of our servers; ● disruption or failure in the national backbone networks in China, which would make it impossible for users and clients to access our online and mobile platforms; ● physical or cyber based attacks on our servers and other network infrastructure, which may result in disruptions to our network and damages to our technology infrastructure; ● damage from natural disasters or other catastrophic events such as typhoon, volcanic eruption, earthquake, flood, telecommunications failure, or other similar events; and ● any infection by or spread of computer viruses or other system failures. ​ 37 Table of Contents In addition, any network interruptions or inadequacy on the part of our third-party partners may result in disruptions to the services we provide to our users and clients.
According to the Administrative Provisions on Mobile Internet Applications Information Services which was promulgated by the CAC and became effective in August 2022, providers of mobile apps shall be responsible for the demonstration of the contents of the information and shall not create, publish or distribute information and content through mobile applications that is prohibited by laws and regulations.
According to the Administrative Provisions on Mobile Internet Applications Information Services which was promulgated by the CAC in June 2016, most recently amended in June 2022 and effective from August 2022, providers of mobile apps shall be responsible for the demonstration of the contents of the information and shall not create, publish or distribute information and content through mobile applications that is prohibited by laws and regulations.

… 158 more changes not shown on this page.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

281 edited+81 added−63 removed590 unchanged
Biggest changeAlthough we have been and continue to take rectification measures on our business to be in compliance with laws and regulations and to meet the requirements from the CSRC during the inquiries, we cannot assure or predict whether the CSRC is satisfied with our rectification measures and whether the CSRC would impose further regulatory actions and penalties on us, including fines, suspension of parts or all of our operations or activities in Mainland China, or suspension or removal of our websites, desktop devices and mobile applications in China, which, individually or taken as a whole, may affect our client base in China and revenue attribute to such clients, and therefore may have a material and adverse impact on our operations and financial results.
Biggest changeIf the CSRC pursues further regulatory actions or imposes penalties on us, including but not limited to fines, suspension of parts or all of our operations or activities in Mainland China, they may, individually or taken as a whole, have a material and adverse impact on our operations and financial results. See “Item 3. Key Information—D.
We also perform client suitability assessment for clients on Futubull where each client is required to fill in a suitability questionnaire to determine his or her risk profile. A client can only purchase wealth management products with risk ratings that match his or her risk profile. Only professional investors can access private funds through our platform.
For clients on Futubull , we also perform client suitability assessment where each client is required to fill in a suitability questionnaire to determine his or her risk profile. A client can only purchase wealth management products with risk ratings that match his or her risk profile. Only professional investors can access private funds through our platform.
Risk Factors—Risks Related to Our Business and Industry—We are subject to extensive and evolving regulatory requirements in the markets we operate in, non-compliance with which may result in penalties, limitations and prohibitions on our future business activities or suspension or revocation of our licenses and trading rights, and consequently may materially and adversely affect our business, financial condition, operations and prospects.
Risk Factors—Risks Related to Our Business and Industry—We are subject to extensive and evolving regulatory requirements in the markets we operate in, non-compliance with which may result in penalties, limitations and prohibitions on our future business activities or suspension or revocation of our licenses and trading rights, and consequently may materially and adversely affect our business, financial condition, operations and prospects.
A CMSL holder should, among other things: (a) take appropriate steps to identify, assess and update its money laundering and terrorism financing risks in relation to the launch or use of new products, new business practices, new delivery mechanisms, or new or developing technologies, and to ensure that appropriate measures and controls are implemented to mitigate and manage such risks; (b) conduct anti-money laundering and customer due diligence (“ CDD ”) checks on all new customers (extending to the beneficial owners, connected parties of the customer and persons appointed to act on the customer’s behalf), and update its CDD checks on existing customers from time to time; (c) perform such CDD checks where the licensed corporation first establishes business relations with any customer, where the licensed corporation undertakes any transaction of a value exceeding S$20,000 for any customer who has not otherwise established business relations with it, where there is a suspicion of money laundering or terrorism financing, or where the licensed corporation has doubts about the veracity or adequacy of any information previously obtained; (d) reserve the right to request for such information as deemed necessary to verify the identity, tax status and/or source of payment of a customer in order to comply with any applicable law or regulation of any jurisdiction; (e) implement internal risk management systems, policies, procedures and controls to determine if particular business relations with or transactions for any customer presents a higher risk for money laundering or terrorism financing; (f) conduct on-going monitoring of activities of its customers to ensure that they are consistent with the nature of business, the risk profile and source of funds, as well as identify transactions that are complex, large or unusual, or patterns of transactions that have no apparent economic or lawful purpose; 151 Table of Contents (g) conduct comprehensive on-going screening against the United Nations watch lists, other relevant money laundering and terrorism financing sources and lists and information provided by the MAS or other relevant authorities in Singapore; and (h) report transactions suspected to contain the proceeds of criminal conduct or that is connected in any way with money laundering, tax evasion or terrorist financing to the Suspicious Transactions Reporting Office and the MAS, and document the basis for its assessment and the decision to report the transaction.
A CMSL holder should, among other things: (a) take appropriate steps to identify, assess and update its money laundering and terrorism financing risks in relation to the launch or use of new products, new business practices, new delivery mechanisms, or new or developing technologies, and to ensure that appropriate measures and controls are implemented to mitigate and manage such risks; (b) conduct anti-money laundering and customer due diligence (“ CDD ”) checks on all new customers (extending to the beneficial owners, connected parties of the customer and persons appointed to act on the customer’s behalf), and update its CDD checks on existing customers from time to time; (c) perform such CDD checks where the licensed corporation first establishes business relations with any customer, where the licensed corporation undertakes any transaction of a value exceeding S$20,000 for any customer who has not otherwise established business relations with it, where there is a suspicion of money laundering or terrorism financing, or where the licensed corporation has doubts about the veracity or adequacy of any information previously obtained; (d) reserve the right to request for such information as deemed necessary to verify the identity, tax status and/or source of payment of a customer in order to comply with any applicable law or regulation of any jurisdiction; 157 Table of Contents (e) implement internal risk management systems, policies, procedures and controls to determine if particular business relations with or transactions for any customer presents a higher risk for money laundering or terrorism financing; (f) conduct on-going monitoring of activities of its customers to ensure that they are consistent with the nature of business, the risk profile and source of funds, as well as identify transactions that are complex, large or unusual, or patterns of transactions that have no apparent economic or lawful purpose; (g) conduct comprehensive on-going screening against the United Nations watch lists, other relevant money laundering and terrorism financing sources and lists and information provided by the MAS or other relevant authorities in Singapore; and (h) report transactions suspected to contain the proceeds of criminal conduct or that is connected in any way with money laundering, tax evasion or terrorist financing to the Suspicious Transactions Reporting Office and the MAS, and document the basis for its assessment and the decision to report the transaction.
Consent is not considered given unless the purpose of collection, use or disclosure is notified to the individual and his consent is obtained in relation to such notified purpose; (b) collect, use or disclose personal data about an individual only for purposes that a reasonable person would consider appropriate and, if applicable, have been notified to the individual concerned; (c) notify the individual of the purposes for which an individual’s personal data is intended to be collected, used or disclosed on or before such collection, use or disclosure; (d) give an individual reasonable access to his or her own personal data which the organization has in its possession or control (including informing the individual of the ways in which his personal data has been used or disclosed over the past year); (e) correct errors and omissions in the personal data of an individual if the individual so requests; (f) make reasonable effort to ensure that personal data collected by it is accurate and complete; 155 Table of Contents (g) take reasonable security measures to protect the personal data from unauthorised access, collection, use, disclosure, tampering or disposal, and the loss of any storage medium or device on which the personal data is stored; (h) not retain personal data or to remove the means by which personal data can be associated with particular individuals, as soon as it is reasonable to assume that the original purpose of the collection is no longer served by retention and that retention is also no longer needed for legal or business purposes; (i) ensure that when personal data is transferred out of Singapore to another country, a standard of protection comparable to that under Singapore law is given to the transferred personal data; (j) notify the PDPC of a data breach that results in or is likely to result in significant harm to an affected individual or that is or is likely to be of a significant scale; and (k) implement policies and procedures to comply with the PDPA and to make information about such policies and procedures publicly available.
Consent is not considered given unless the purpose of collection, use or disclosure is notified to the individual and his consent is obtained in relation to such notified purpose; (b) collect, use or disclose personal data about an individual only for purposes that a reasonable person would consider appropriate and, if applicable, have been notified to the individual concerned; (c) notify the individual of the purposes for which an individual’s personal data is intended to be collected, used or disclosed on or before such collection, use or disclosure; (d) give an individual reasonable access to his or her own personal data which the organization has in its possession or control (including informing the individual of the ways in which his personal data has been used or disclosed over the past year); (e) correct errors and omissions in the personal data of an individual if the individual so requests; 161 Table of Contents (f) make reasonable effort to ensure that personal data collected by it is accurate and complete; (g) take reasonable security measures to protect the personal data from unauthorised access, collection, use, disclosure, tampering or disposal, and the loss of any storage medium or device on which the personal data is stored; (h) not retain personal data or to remove the means by which personal data can be associated with particular individuals, as soon as it is reasonable to assume that the original purpose of the collection is no longer served by retention and that retention is also no longer needed for legal or business purposes; (i) ensure that when personal data is transferred out of Singapore to another country, a standard of protection comparable to that under Singapore law is given to the transferred personal data; (j) notify the PDPC of a data breach that results in or is likely to result in significant harm to an affected individual or that is or is likely to be of a significant scale; and (k) implement policies and procedures to comply with the PDPA and to make information about such policies and procedures publicly available.
The minimum liquid capital requirements under the FRR that are applicable to Futu Securities are the higher of the amount of (a) and (b) below: (a) the amount of: ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Amount of ​ ​ Regulated Activities ​ Required Liquid Capital Futu Securities A corporation licensed for Type 1, Type 2, Type 3, Type 4, Type 5, Type 7 and Type 9 regulated activities HK$ ​ 15,000,000 ​ (b) in the case of a corporation licensed for Type 3 regulated activity (whether or not it is also licensed for any other regulated activity), means the sum of its variable required liquid capital which means 5% of the aggregate of (i) its adjusted liabilities, (ii) the aggregate of the initial margin requirements in respect of outstanding futures contracts and outstanding unlisted options contracts held by it on behalf of its clients, and (iii) the aggregate of the amounts of margin required to be deposited in respect of outstanding futures contracts and outstanding unlisted options contracts held by it on behalf of its clients, to the extent that such contracts are not subject to the requirement of payment of initial margin requirements and 1.5% of its aggregate gross foreign currency position which means the aggregate of (i) the value of assets, other than fixed assets, beneficially owned by Futu Securities which are denominated in the foreign currency, (ii) all of Futu Securities’ on-balance sheet liabilities, other than excluded liabilities, which are denominated in the foreign currency and (iii) the aggregate of the total amount of the foreign currency in respect of which Futu Securities is exposed to the risk of a decline or rise in the value of the foreign currency under outstanding contracts (including spot contracts). 113 Table of Contents Securities and Futures (Client Securities) Rules (Chapter 571H of the Laws of Hong Kong) (the “Client Securities Rules”) The repledging limit stipulated under section 8A of the Client Securities Rules applies to an intermediary which is licensed for dealing in securities and/or securities margin financing and where the intermediary or an associated entity of such intermediary repledges securities collateral of the intermediary.
The minimum liquid capital requirements under the FRR that are applicable to Futu Securities are the higher of the amount of (a) and (b) below: (a) the amount of: ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Amount of ​ ​ Regulated Activities ​ Required Liquid Capital Futu Securities A corporation licensed for Type 1, Type 2, Type 3, Type 4, Type 5, Type 7 and Type 9 regulated activities HK$ ​ 15,000,000 ​ (b) in the case of a corporation licensed for Type 3 regulated activity (whether or not it is also licensed for any other regulated activity), means the sum of its variable required liquid capital which means 5% of the aggregate of (i) its adjusted liabilities, (ii) the aggregate of the initial margin requirements in respect of outstanding futures contracts and outstanding unlisted options contracts held by it on behalf of its clients, and (iii) the aggregate of the amounts of margin required to be deposited in respect of outstanding futures contracts and outstanding unlisted options contracts held by it on behalf of its clients, to the extent that such contracts are not subject to the requirement of payment of initial margin requirements and 1.5% of its aggregate gross foreign currency position which means the aggregate of (i) the value of assets, other than fixed assets, beneficially owned by Futu Securities which are denominated in the foreign currency, (ii) all of Futu Securities’ on-balance sheet liabilities, other than excluded liabilities, which are denominated in the foreign currency and (iii) the aggregate of the total amount of the foreign currency in respect of which Futu Securities is exposed to the risk of a decline or rise in the value of the foreign currency under outstanding contracts (including spot contracts). 115 Table of Contents Securities and Futures (Client Securities) Rules (Chapter 571H of the Laws of Hong Kong) (the “Client Securities Rules”) The repledging limit stipulated under section 8A of the Client Securities Rules applies to an intermediary which is licensed for dealing in securities and/or securities margin financing and where the intermediary or an associated entity of such intermediary repledges securities collateral of the intermediary.
Any undistributed profit for the previous accounting years may be distributed together with the distributable profit for the current accounting year. 135 Table of Contents Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents Pursuant to the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which was issued and became effective on July 4, 2014, PRC residents, including PRC institutions and individuals, are required to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interest in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, including but not limited to increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event.
Any undistributed profit for the previous accounting years may be distributed together with the distributable profit for the current accounting year. 140 Table of Contents Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents Pursuant to the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which was issued and became effective on July 4, 2014, PRC residents, including PRC institutions and individuals, are required to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interest in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, including but not limited to increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event.
The M&A Rules, among other things, require offshore special purpose vehicles, formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals, must obtain approval from the CSRC prior to publicly listing such special purpose vehicle’s securities on an overseas stock exchange. 136 Table of Contents In addition, pursuant to the Circular of the General Office of State Council on Establishing the Security Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and took effect on March 3, 2011 and the Provisions of the Ministry of Commerce on the Implementation of the Safety Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the MOFCOM that became effective in September 2011, mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement.
The M&A Rules, among other things, require offshore special purpose vehicles, formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals, must obtain approval from the CSRC prior to publicly listing such special purpose vehicle’s securities on an overseas stock exchange. 141 Table of Contents In addition, pursuant to the Circular of the General Office of State Council on Establishing the Security Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and took effect on March 3, 2011 and the Provisions of the Ministry of Commerce on the Implementation of the Safety Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the MOFCOM that became effective in September 2011, mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement.
However, since many of the PRC laws and regulations on cybersecurity and privacy and data privacy are constantly evolving, there are uncertainties as to the interpretation and application of these regulations and how these will be enforced by relevant regulatory authorities, there also remain uncertainties as to the applicability and requirements of these regulations for our business, operation, or our presence in Mainland China.
Since many of the PRC laws and regulations on cybersecurity and privacy and data privacy are constantly evolving, there are uncertainties as to the interpretation and application of these regulations and how these will be enforced by relevant regulatory authorities, there also remain uncertainties as to the applicability and requirements of these regulations for our business, operation, or our presence in Mainland China.
In addition, data processing activities shall be conducted on the basis of the graded protection system for cybersecurity. 129 Table of Contents On July 30, 2021, the State Council promulgated the Regulations on Protection of Security of Critical Information Infrastructure, effective on September 1, 2021, pursuant to which, a “critical information infrastructure” refers to critical network facilities and information systems involved in important industries and sectors, such as public communication and information services, energy, transportation, water conservancy, finance, public services, governmental digital services, science and technology related to national defense industry, as well as those which may seriously endanger national security, national economy and citizen’s livelihood or public interests if damaged or malfunctioned, or if any leakage of data in relation thereto occurs.
In addition, data processing activities shall be conducted on the basis of the graded protection system for cybersecurity. 133 Table of Contents On July 30, 2021, the State Council promulgated the Regulations on Protection of Security of Critical Information Infrastructure, effective on September 1, 2021, pursuant to which, a “critical information infrastructure” refers to critical network facilities and information systems involved in important industries and sectors, such as public communication and information services, energy, transportation, water conservancy, finance, public services, governmental digital services, science and technology related to national defense industry, as well as those which may seriously endanger national security, national economy and citizen’s livelihood or public interests if damaged or malfunctioned, or if any leakage of data in relation thereto occurs.
As a consequence, we cannot be certain that the equity interest will be disposed pursuant to the contractual arrangement or ownership by the record holder of the equity interest. 163 Table of Contents Based on the above, our PRC legal counsel, Han Kun Law Offices, is of the opinion that the Contractual Arrangements are narrowly tailored to minimize the potential conflict with relevant PRC laws and regulations to the maximum extent and that: (i) each of the WFOE and the VIEs is a duly incorporated and validly existing company and their respective establishment is valid, effective and complies with the relevant PRC laws; (ii) as confirmed by the parties to each of the agreements under the Contractual Arrangements, each of them has obtained all necessary approvals and authorizations to execute the agreements and perform their respective obligations thereunder.
As a consequence, we cannot be certain that the equity interest will be disposed pursuant to the contractual arrangement or ownership by the record holder of the equity interest. 169 Table of Contents Based on the above, our PRC legal counsel, Han Kun Law Offices, is of the opinion that the Contractual Arrangements are narrowly tailored to minimize the potential conflict with relevant PRC laws and regulations to the maximum extent and that: (i) each of the WFOE and the VIEs is a duly incorporated and validly existing company and their respective establishment is valid, effective and complies with the relevant PRC laws; (ii) as confirmed by the parties to each of the agreements under the Contractual Arrangements, each of them has obtained all necessary approvals and authorizations to execute the agreements and perform their respective obligations thereunder.
The Measures for Supervision and Administration of Sales Agencies for Publicly-offered Securities Investment Funds, which was promulgated by the CSRC on August 28, 2020 and became effective on October 1, 2020, further regulates securities companies and other institutions, subject to satisfaction of the relevant requirements, shall apply for business qualification for sales of funds from the local branches of the CSRC. 125 Table of Contents Regulations on Overseas Listing According to Article 6 of the Negative List, with respect to the securities offering and listing in an overseas market by a domestic company engaging in the fields prohibited by the Negative List, the consent of the relevant competent authorities of the PRC shall be obtained, and overseas investors shall not participate in the operation and management of the enterprise, and overseas investors’ shareholding percentage shall be subject to the relevant provisions on administration of domestic securities investment by overseas investors.
The Measures for Supervision and Administration of Sales Agencies for Publicly-offered Securities Investment Funds, which was promulgated by the CSRC on August 28, 2020 and became effective on October 1, 2020, further regulates securities companies and other institutions, subject to satisfaction of the relevant requirements, shall apply for business qualification for sales of funds from the local branches of the CSRC. 129 Table of Contents Regulations on Overseas Listing According to Article 6 of the Negative List, with respect to the securities offering and listing in an overseas market by a domestic company engaging in the fields prohibited by the Negative List, the consent of the relevant competent authorities of the PRC shall be obtained, and overseas investors shall not participate in the operation and management of the enterprise, and overseas investors’ shareholding percentage shall be subject to the relevant provisions on administration of domestic securities investment by overseas investors.
The OSCO extends the money laundering offense to cover the proceeds from all indictable offenses in addition to drug trafficking. 118 Table of Contents United Nations (Anti-Terrorism Measures) Ordinance (Chapter 575 of the Laws of Hong Kong), or the UNATMO Among other things, the UNATMO stipulates that it is a criminal offense to: (1) provide or collect property (by any means, directly or indirectly) with the intention or knowledge that the property will be used to commit, in whole or in part, one or more terrorist acts; or (2) make any property or financial (or related) services available, by any means, directly or indirectly, to or for the benefit of a person knowing that, or being reckless as to whether, such person is a terrorist or terrorist associate, or collect property or solicit financial (or related) services, by any means, directly or indirectly, for the benefit of a person knowing that, or being reckless as to whether, the person is a terrorist or terrorist associate.
The OSCO extends the money laundering offense to cover the proceeds from all indictable offenses in addition to drug trafficking. 120 Table of Contents United Nations (Anti-Terrorism Measures) Ordinance (Chapter 575 of the Laws of Hong Kong), or the UNATMO Among other things, the UNATMO stipulates that it is a criminal offense to: (1) provide or collect property (by any means, directly or indirectly) with the intention or knowledge that the property will be used to commit, in whole or in part, one or more terrorist acts; or (2) make any property or financial (or related) services available, by any means, directly or indirectly, to or for the benefit of a person knowing that, or being reckless as to whether, such person is a terrorist or terrorist associate, or collect property or solicit financial (or related) services, by any means, directly or indirectly, for the benefit of a person knowing that, or being reckless as to whether, the person is a terrorist or terrorist associate.
Wealth Management Product Distribution Services We offer online wealth management product distribution services under Money Plus brand through our Futubull and moomoo platforms, which provide our clients with access to mutual funds, private funds, bonds and other wealth management products, catering to their different investment targets and risk preferences.
Wealth Management Product Distribution Services We offer online wealth management product distribution services under Money Plus brand through our Futubull and moomoo platforms, which provide our clients with access to mutual funds, private funds, bonds, structured products and other wealth management products, catering to their different investment targets and risk preferences.
The SAT Circular 7 may be determined by the tax authorities to be applicable to our offshore transactions or sale of our shares or those of our offshore subsidiaries where non-resident enterprises, being the transferors, were involved. 138 Table of Contents Regulations on Employment and Social Welfare Regulations on Employment in the PRC The principle regulations that govern employment and labor matters in PRC include: (i) Labor Law of the PRC, which was promulgated by the SCNPC on July 5, 1994, and last amended on December 29, 2018; (ii) the Labor Contract Law of the PRC which was promulgated by the SCNPC on June 29, 2007 and last amended on December 28, 2012, and (iii) the Implementing Regulations of the Labor Contract Law of the PRC which was promulgated by the State Council on September 18, 2008.
The SAT Circular 7 may be determined by the tax authorities to be applicable to our offshore transactions or sale of our shares or those of our offshore subsidiaries where non-resident enterprises, being the transferors, were involved. 143 Table of Contents Regulations on Employment and Social Welfare Regulations on Employment in the PRC The principle regulations that govern employment and labor matters in PRC include: (i) Labor Law of the PRC, which was promulgated by the SCNPC on July 5, 1994, and last amended on December 29, 2018; (ii) the Labor Contract Law of the PRC which was promulgated by the SCNPC on June 29, 2007 and last amended on December 28, 2012, and (iii) the Implementing Regulations of the Labor Contract Law of the PRC which was promulgated by the State Council on September 18, 2008.
As of the date of this annual report, we have limited information to accurately predict if any disciplinary action or punishment will be taken against us and/or our responsible officers after the conclusion of such inquiries, and if so, the nature and extent of any such action.
As of the date of this annual report, we have limited information to accurately predict if any disciplinary action or punishment will be taken against us and/or our officers after the conclusion of such inquiries, and if so, the nature and extent of any such action.
For instance, they can filter the broader market across a range of criteria including industry, valuation, trading volume and price volatility over a certain period of time. 91 Table of Contents On an individual company basis, our users and clients can review and track detailed fundamental and technical analyses, including recent transaction details such as trading volumes by major brokers, historical and current valuations, analyst ratings and target prices, operating and financial metrics, compiled news, and other company specific content.
For instance, they can filter the broader market across a range of criteria including industry, valuation, trading volume and price volatility over a certain period of time. 93 Table of Contents On an individual company basis, our users and clients can review and track detailed fundamental and technical analyses, including recent transaction details such as trading volumes by major brokers, historical and current valuations, analyst ratings and target prices, operating and financial metrics, compiled news, and other company specific content.
Licensed Representatives In addition to the licensing requirements for corporations that carry on regulated activities, any individual who: (a) performs any regulated function for his principal which is a licensed corporation in relation to a regulated activity carried on as a business; or (b) holds himself out as performing such regulated function, must separately be licensed under the SFO as a Licensed Representative accredited to his principal. 110 Table of Contents Fit and Proper Requirement Persons who apply for licenses to carry on regulated activities under the SFO must satisfy, and continue to satisfy the HK SFC after the grant of such licenses by the HK SFC, that they are fit and proper persons to be so licensed.
Licensed Representatives In addition to the licensing requirements for corporations that carry on regulated activities, any individual who: (a) performs any regulated function for his principal which is a licensed corporation in relation to a regulated activity carried on as a business; or (b) holds himself out as performing such regulated function, must separately be licensed under the SFO as a Licensed Representative accredited to his principal. 112 Table of Contents Fit and Proper Requirement Persons who apply for licenses to carry on regulated activities under the SFO must satisfy, and continue to satisfy the HK SFC after the grant of such licenses by the HK SFC, that they are fit and proper persons to be so licensed.
We also offer wealth management product distribution services through our Money Plus brand on our Futubull and moomoo platforms, where our clients can get access to a suite of mutual funds, private funds, structured products and bonds.
We offer wealth management product distribution services through our Money Plus brand on our Futubull and moomoo platforms, where our clients can get access to a suite of mutual funds, private funds, structured products and bonds.
Regulated activities include: ● negotiating or arranging a contract of insurance; ● inviting or inducing a person to enter into a contract of insurance (or attempting to do so); ● inviting or inducing a person to make a material decision in relation to a contract of insurance (or attempting to do so); and ● giving regulated advice. 120 Table of Contents Types of Licensed Insurance Brokers The licensing regime under the IO prescribes two types of licensed insurance brokers: ● licensed insurance broker companies, which is a company that is granted a license to carry out regulated activities and to perform the act of negotiating or arranging an insurance contract as an agent of any policy holder or potential policy holder; and ● licensed technical representatives (broker), which is an individual who is granted a license to carry on regulated activities, as an agent of any licensed insurance broker company.
Regulated activities include: ● negotiating or arranging a contract of insurance; ● inviting or inducing a person to enter into a contract of insurance (or attempting to do so); ● inviting or inducing a person to make a material decision in relation to a contract of insurance (or attempting to do so); and ● giving regulated advice. 122 Table of Contents Types of Licensed Insurance Brokers The licensing regime under the IO prescribes two types of licensed insurance brokers: ● licensed insurance broker companies, which is a company that is granted a license to carry out regulated activities and to perform the act of negotiating or arranging an insurance contract as an agent of any policy holder or potential policy holder; and ● licensed technical representatives (broker), which is an individual who is granted a license to carry on regulated activities, as an agent of any licensed insurance broker company.
In addition, foreign-invested enterprises are not allowed to engage in the above-mentioned services. 127 Table of Contents Regulation on Internet Culture Activities The Interim Administrative Provisions on Internet Culture, or the Internet Culture Provisions, promulgated on February 17, 2011, and amended on December 15, 2017, by the Ministry of Culture (the predecessor of the Ministry of Culture and Tourism), stipulates that providers of internet cultural products or services, such as internet shows or programs and internet games must file an application for establishment to the competent culture administration authorities for approval and must obtain the online culture operating permit.
In addition, foreign-invested enterprises are not allowed to engage in the above-mentioned services. 131 Table of Contents Regulation on Internet Culture Activities The Interim Administrative Provisions on Internet Culture, or the Internet Culture Provisions, promulgated on February 17, 2011, and amended on December 15, 2017, by the Ministry of Culture (the predecessor of the Ministry of Culture and Tourism), stipulates that providers of internet cultural products or services, such as internet shows or programs and internet games must file an application for establishment to the competent culture administration authorities for approval and must obtain the online culture operating permit.
Moomoo Financial Singapore shall satisfy itself of compliance with all relevant laws and requirements in the relevant foreign jurisdictions, before it starts offering products and services to investors residing in that foreign jurisdiction. 148 Table of Contents Representatives, Directors, and CEO Requirements Under Section 99B(1) of the SFA, individuals who are employed by or who are acting for a CMSL holder in Singapore to carry out the regulated activities are required to be appointed, provisional or temporary representatives under the SFA, unless exempted.
Moomoo Financial Singapore shall satisfy itself of compliance with all relevant laws and requirements in the relevant foreign jurisdictions, before it starts offering products and services to investors residing in that foreign jurisdiction. ​ 154 Table of Contents Representatives, Directors, and CEO Requirements Under Section 99B(1) of the SFA, individuals who are employed by or who are acting for a CMSL holder in Singapore to carry out the regulated activities are required to be appointed, provisional or temporary representatives under the SFA, unless exempted.
Alternatively, the Stock Exchange of Hong Kong Trading Rights and the Hong Kong Futures Exchange Trading Rights can be acquired from existing Trading Right holders subject to the rules of the respective exchanges. 114 Table of Contents Exchange Participantship The table below sets out a summary of the key requirements for becoming an exchange participant of the relevant exchange: Stock Exchange Participant / Stock Options Exchange Participant Futures Exchange Participant Legal Status Being a company limited by shares incorporated in Hong Kong SFC Registration Being a licensed corporation qualified to carry out Type 1 regulated activity under the SFO Being a licensed corporation qualified to carry out Type 2 regulated activity under the SFO Trading Right Holding a Stock Exchange Trading Right Holding a Futures Exchange Trading Right Financial Standing Having good financial standing and integrity Financial Resources Requirement Complying with the minimum capital requirement, liquid capital requirement and other financial resources requirements as specified by the FRR ​ Clearing Participantship An entity must be an exchange participant of the relevant exchange before it can become a clearing participant of the following clearing houses, namely the HKSCC, HKCC and SEOCH.
Alternatively, the Stock Exchange of Hong Kong Trading Rights and the Hong Kong Futures Exchange Trading Rights can be acquired from existing Trading Right holders subject to the rules of the respective exchanges. 116 Table of Contents Exchange Participantship The table below sets out a summary of the key requirements for becoming an exchange participant of the relevant exchange: Stock Exchange Participant / Stock Options Exchange Participant Futures Exchange Participant Legal Status Being a company limited by shares incorporated in Hong Kong Being a company limited by shares incorporated in Hong Kong SFC Registration Being a licensed corporation qualified to carry out Type 1 regulated activity under the SFO Being a licensed corporation qualified to carry out Type 2 regulated activity under the SFO Trading Right Holding a Stock Exchange Trading Right Holding a Futures Exchange Trading Right Financial Standing Having good financial standing and integrity Having good financial standing and integrity Financial Resources Requirement Complying with the minimum capital requirement, liquid capital requirement and other financial resources requirements as specified by the FRR and other applicable rules Complying with the minimum capital requirement, liquid capital requirement, other financial resources requirements as specified by the FRR and other applicable rules ​ Clearing Participantship An entity must be an exchange participant of the relevant exchange before it can become a clearing participant of the following clearing houses, namely the HKSCC, HKCC and SEOCH.
Recently, the Companies Registry of Hong Kong has introduced more stringent licensing conditions on all money lenders licenses, with an aim to facilitate effective enforcement of the statutory ban on separate fee charging by money lenders and their connected parties, ensure better protection of privacy of intending borrowers, enhance transparency and disclosure, promote the importance of prudent borrowing, address increasing public concern about over-indebtedness and ensure better regulation of money lending-related practices.
Over the years, the Companies Registry of Hong Kong has introduced more stringent licensing conditions on all money lenders licenses, with an aim to facilitate effective enforcement of the statutory ban on separate fee charging by money lenders and their connected parties, ensure better protection of privacy of intending borrowers, enhance transparency and disclosure, promote the importance of prudent borrowing, address increasing public concern about over-indebtedness and ensure better regulation of money lending-related practices.
Cash withdrawal from trading accounts are normally completed within one trading day, whereas withdrawals from fund products normally take approximately two to five trading days, due to longer fund settlement time of the fund houses. 86 Table of Contents As the technologies and practices in connection with online trading accounts opening services are in the early stages of development, we are subject to evolving laws, regulations, guidelines, and other regulatory requirements with respect to our online account opening procedures.
Cash withdrawal from trading accounts are normally completed within one trading day, whereas withdrawals from fund products normally take approximately two to five trading days, due to longer fund settlement time of the fund houses. 88 Table of Contents As the technologies and practices in connection with online trading accounts opening services are in the early stages of development, we are subject to evolving laws, regulations, guidelines, and other regulatory requirements with respect to our online account opening procedures.
It is an offense for a person to conduct any regulated activity without the appropriate license issued by the HK SFC. 109 Table of Contents Further, if a person (whether by itself or another person on his behalf, and whether in Hong Kong or from a place outside of Hong Kong) actively markets to the public in Hong Kong any services that it provides and such services, if provided in Hong Kong, would constitute a regulated activity, then that person is also subject to the licensing requirements under the SFO.
It is an offense for a person to conduct any regulated activity without the appropriate license issued by the HK SFC. ​ 111 Table of Contents Further, if a person (whether by itself or another person on his behalf, and whether in Hong Kong or from a place outside of Hong Kong) actively markets to the public in Hong Kong any services that it provides and such services, if provided in Hong Kong, would constitute a regulated activity, then that person is also subject to the licensing requirements under the SFO.
Offering and trading of securities outside China which disrupt the domestic market order of China and harm the legitimate rights and interests of domestic investors shall be dealt with pursuant to the relevant provisions of the Securities Law of the PRC.
Offering and trading of securities outside China which disrupt the domestic market order of China and harm the legitimate rights and interests of domestic, China-based investors shall be dealt with pursuant to the relevant provisions of the Securities Law of the PRC.
According to the Negative List, the proportion of foreign investment in entities engaged in value-added telecommunication services (excluding e-commerce, domestic multi-party communications services, store-and-forward services, and call center services) shall not exceed 50%. 126 Table of Contents On December 26, 2019, the Stated Council issued the Implementation Regulations for the Foreign Investment Law of the PRC, or the Implementation Regulations, which also became effective on January 1, 2020.
According to the Negative List, the proportion of foreign investment in entities engaged in value-added telecommunication services (excluding e-commerce, domestic multi-party communications services, store-and-forward services, and call center services) shall not exceed 50%. 130 Table of Contents On December 26, 2019, the Stated Council issued the Implementation Regulations for the Foreign Investment Law of the PRC, or the Implementation Regulations, which also became effective on January 1, 2020.
Accordingly, there can be no assurance that the PRC regulatory authorities will not in the future take a view that is contrary to or otherwise different from the above opinion. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.” 164 Table of Contents D. Property, Plant and Equipment Our corporate headquarters are located in Hong Kong.
Accordingly, there can be no assurance that the PRC regulatory authorities will not in the future take a view that is contrary to or otherwise different from the above opinion. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.” 170 Table of Contents D. Property, Plant and Equipment Our corporate headquarters are located in Hong Kong.
As at the date of this annual report, the MAS sanctions regulations which have been issued pursuant to Section 27A of the MAS Act are as follows: (a) MAS (Freezing of Assets of Persons – Democratic Republic of the Congo) Regulations 2006; (b) MAS (Freezing of Assets of Persons – Sudan) Regulations 2006; (c) MAS (Sanctions and Freezing of Assets of Persons – Somalia) Regulations 2010; (d) MAS (Sanctions and Freezing of Assets of Persons – Libya) Regulations 2011; (e) MAS (Freezing of Assets of Persons – South Sudan) Regulations 2015; (f) MAS (Freezing of Assets of Persons – Yemen) Regulations 2015; 153 Table of Contents (g) MAS (Sanctions and Freezing of Assets of Persons – Democratic People’s Republic of Korea) Regulations 2016; and (h) MAS (Sanctions and Freezing of Assets of Persons – Iran) Regulations 2016.
As at the date of this annual report, the MAS sanctions regulations which have been issued pursuant to Section 27A of the MAS Act are as follows: (a) MAS (Freezing of Assets of Persons – Democratic Republic of the Congo) Regulations 2006; (b) MAS (Freezing of Assets of Persons – Sudan) Regulations 2006; (c) MAS (Sanctions and Freezing of Assets of Persons – Somalia) Regulations 2010; (d) MAS (Sanctions and Freezing of Assets of Persons – Libya) Regulations 2011; 159 Table of Contents (e) MAS (Freezing of Assets of Persons – South Sudan) Regulations 2015; (f) MAS (Freezing of Assets of Persons – Yemen) Regulations 2015; (g) MAS (Sanctions and Freezing of Assets of Persons – Democratic People’s Republic of Korea) Regulations 2016; and (h) MAS (Sanctions and Freezing of Assets of Persons – Iran) Regulations 2016.
Therefore, our platform provides a direct channel for our corporate clients to communicate with their existing and prospective investors and increase their brand and product awareness. 93 Table of Contents We enter into marketing agreements with our corporate clients, normally on a fixed term basis, and charge fees for promotional events based on negotiated commercial terms, taking into account market fee rates and the services provided.
Therefore, our platform provides a direct channel for our corporate clients to communicate with their existing and prospective investors and increase their brand and product awareness. ​ 95 Table of Contents We enter into marketing agreements with our corporate clients, normally on a fixed term basis, and charge fees for promotional events based on negotiated commercial terms, taking into account market fee rates and the services provided.
Our internal control, legal and compliance, and internal audit teams coordinate with our risk management team to jointly conduct regular and ad hoc audits on our business to ensure more effective internal control, daily operation, finance and accounting management and business operation. 94 Table of Contents Securities Brokerage Service Risk Management We monitor client transactions on a real-time basis, seeking to identify any unusual or irregular trading activity.
Our internal control, legal and compliance, and internal audit teams coordinate with our risk management team to jointly conduct regular and ad hoc audits on our business to ensure more effective internal control, daily operation, finance and accounting management and business operation. 96 Table of Contents Securities Brokerage Service Risk Management We monitor client transactions on a real-time basis, seeking to identify any unusual or irregular trading activity.
They are required to comply with all applicable provisions of the SFO and its subsidiary rules and regulations, as well as the codes and guidelines issued by the HK SFC. 111 Table of Contents Outlined below are some of the key continuing obligations of our licensed corporations under the SFO: ● maintenance of minimum paid-up share capital and liquid capital, and submission of financial resources returns to the HK SFC in accordance with the requirements under the Securities and Futures (Financial Resources) Rules (Chapter 571N of the Laws of Hong Kong) (“FRR”); ● maintenance of segregated account(s), and custody and handling of client securities in accordance with the requirements under the Securities and Futures (Client Securities) Rules (Chapter 571H of the Laws of Hong Kong); ● maintenance of segregated account(s), and holding and payment of client money in accordance with the requirements under the Securities and Futures (Client Money) Rules (Chapter 571I of the Laws of Hong Kong); ● issuance of contract notes, statements of account and receipts in accordance with the requirements under the Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules (Chapter 571Q of the Laws of Hong Kong); ● maintenance of proper records in accordance with the requirements prescribed under the Securities and Futures (Keeping of Records) Rules (Chapter 571O of the Laws of Hong Kong); ● submission of audited accounts and other required documents in accordance with the requirements under the Securities and Futures (Accounts and Audit) Rules (Chapter 571P of the Laws of Hong Kong); ● maintenance of insurance against specific risks for specified amounts in accordance with the requirements under the Securities and Futures (Insurance) Rules (Chapter 571AI of the Laws of Hong Kong); ● payment of annual fees and submission of annual returns to the HK SFC within one month after each anniversary date of the license; ● notification to the HK SFC of certain changes and events in accordance with the requirements under the Securities and Futures (Licensing and Registration) (Information) Rules (Chapter 571S of the Laws of Hong Kong); ● notification to the HK SFC of any changes in the appointment of MICs or any changes in certain particulars of MICs pursuant to the Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management dated December 16, 2016 issued by the HK SFC; ● compliance with the continuous professional training and related record keeping requirements under the Guidelines on Continuous Professional Training issued by the HK SFC; ● implementation of appropriate policies and procedures relating to client acceptance, client due diligence, record keeping, identification and reporting of suspicious transactions and staff screening, education and training in accordance with the requirements under the Guideline on Anti-Money Laundering and Counter- Financing of Terrorism (For Licensed Corporations) issued by the HK SFC, or the AML/CTF Guideline; ● compliance with the business conduct requirements under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission, the Fund Manager Code of Conduct and the Fit and Proper Guidelines; 112 Table of Contents ● compliance with employee dealings requirements under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, which requires licensed corporations to implement procedures and policies on employee trading, to actively monitor the trading activities in their employees’ accounts and their related accounts; ● compliance with the Advertising Guidelines Applicable to Collective Investment Schemes Authorized under the Product Codes, the Guidelines on Disclosure of Fees and Charges Relating to Securities Services and other applicable codes, circulars and guidelines issued by the Securities and Futures Commission; and ● compliance with the requirements in relation to provision of order execution, distribution or advisory services in respect of investment products via online platforms under the Guidelines on Online Distribution and Advisory Platforms issued by the Securities and Futures Commission.
They are required to comply with all applicable provisions of the SFO and its subsidiary rules and regulations, as well as the codes and guidelines issued by the HK SFC. 113 Table of Contents Outlined below are some of the key continuing obligations of our licensed corporations under the SFO: ● maintenance of minimum paid-up share capital and liquid capital, and submission of financial resources returns to the HK SFC in accordance with the requirements under the Securities and Futures (Financial Resources) Rules (Chapter 571N of the Laws of Hong Kong) (“FRR”); ● maintenance of segregated account(s), and custody and handling of client securities in accordance with the requirements under the Securities and Futures (Client Securities) Rules (Chapter 571H of the Laws of Hong Kong); ● maintenance of segregated account(s), and holding and payment of client money in accordance with the requirements under the Securities and Futures (Client Money) Rules (Chapter 571I of the Laws of Hong Kong); ● issuance of contract notes, statements of account and receipts in accordance with the requirements under the Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules (Chapter 571Q of the Laws of Hong Kong); ● maintenance of proper records in accordance with the requirements prescribed under the Securities and Futures (Keeping of Records) Rules (Chapter 571O of the Laws of Hong Kong); ● submission of audited accounts and other required documents in accordance with the requirements under the Securities and Futures (Accounts and Audit) Rules (Chapter 571P of the Laws of Hong Kong); ● maintenance of insurance against specific risks for specified amounts in accordance with the requirements under the Securities and Futures (Insurance) Rules (Chapter 571AI of the Laws of Hong Kong); ● payment of annual fees and submission of annual returns to the HK SFC within one month after each anniversary date of the license; ● notification to the HK SFC of certain changes and events in accordance with the requirements under the Securities and Futures (Licensing and Registration) (Information) Rules (Chapter 571S of the Laws of Hong Kong); ● notification to the HK SFC of any changes in the appointment of MICs or any changes in certain particulars of MICs pursuant to the Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management dated December 16, 2016 issued by the HK SFC; ● compliance with the continuous professional training and related record keeping requirements under the Guidelines on Continuous Professional Training issued by the HK SFC; ● implementation of appropriate policies and procedures relating to client acceptance, client due diligence, record keeping, identification and reporting of suspicious transactions and staff screening, education and training in accordance with the requirements under the Guideline on Anti-Money Laundering and Counter- Financing of Terrorism (For Licensed Corporations and SFC-licensed Virtual Asset Service Providers) issued by the HK SFC, or the AML/CTF Guideline; ● compliance with the business conduct requirements under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission, the Fund Manager Code of Conduct and the Fit and Proper Guidelines; 114 Table of Contents ● compliance with employee dealings requirements under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, which requires licensed corporations to implement procedures and policies on employee trading, to actively monitor the trading activities in their employees’ accounts and their related accounts; ● compliance with the Advertising Guidelines Applicable to Collective Investment Schemes Authorized under the Product Codes, the Guidelines on Disclosure of Fees and Charges Relating to Securities Services and other applicable codes, circulars and guidelines issued by the Securities and Futures Commission; and ● compliance with the requirements in relation to provision of order execution, distribution or advisory services in respect of investment products via online platforms under the Guidelines on Online Distribution and Advisory Platforms issued by the Securities and Futures Commission.
Furthermore, the disseminated news must come from government-approved sources pursuant to contracts between the internet site and the sources, copies of which must be filed with the relevant government authorities. 128 Table of Contents Regulations on Cybersecurity and Privacy Regulations on Cybersecurity On December 13, 2005, the Ministry of Public Security, or the MPS, promulgated the Provisions on Technological Measures for the Internet Security Protection, or the Internet Protection Measures, which took effect on March 1, 2006.
Furthermore, the disseminated news must come from government-approved sources pursuant to contracts between the internet site and the sources, copies of which must be filed with the relevant government authorities. 132 Table of Contents Regulations on Cybersecurity and Privacy Regulations on Cybersecurity On December 13, 2005, the Ministry of Public Security, or the MPS, promulgated the Provisions on Technological Measures for the Internet Security Protection, or the Internet Protection Measures, which took effect on March 1, 2006.
Users must also read and consent to a standard client agreement and other required documents and review a disclaimer audio which discloses trading risks presented by our licensed personnel. 85 Table of Contents ● Step 2: Verification procedures . Upon receiving a completed online application, our automated risk management system will proceed to verify the applicant’s identity.
Users must also read and consent to a standard client agreement and other required documents and review a disclaimer audio which discloses trading risks presented by our licensed personnel. 87 Table of Contents ● Step 2: Verification procedures . Upon receiving a completed online application, our automated risk management system will proceed to verify the applicant’s identity.
Pursuant to the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, or the SAFE Circular 59 promulgated by SAFE on November 19, 2012, which became effective on December 17, 2012 and last amended on December 30, 2019, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of Renminbi proceeds by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. 134 Table of Contents On March 30, 2015, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, which became effective on June 1, 2015 and was amended on December 30, 2019, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign—Invested Enterprises.
Pursuant to the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, or the SAFE Circular 59 promulgated by SAFE on November 19, 2012, which became effective on December 17, 2012 and last amended on December 30, 2019, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of Renminbi proceeds by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. 139 Table of Contents On March 30, 2015, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, which became effective on June 1, 2015 and was last amended on March 23, 2023, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign—Invested Enterprises.
Moomoo Financial Singapore shall immediately inform the MAS when it becomes aware of the occurrence of any of the following: (i) where any offence is committed by or any disciplinary action is taken against Moomoo Financial Singapore or any of its officers or representatives, whether in Singapore or elsewhere; (ii) where Moomoo Financial Singapore or any of its officers or representatives is the subject of an investigation or when any civil or criminal proceedings are instituted against Moomoo Financial Singapore or any of its officers or representatives, whether in Singapore or elsewhere; (iii) where there is any breach of any laws or regulations, business rules or codes of conduct, whether in Singapore or elsewhere; or (iv) any other matter that would affect Moomoo Financial Singapore or any of its officers’ or representatives’ ability to meet the criteria set out in the Guidelines on Fit and Proper Criteria issued by MAS. 8.
Moomoo Financial Singapore shall immediately inform the MAS when it becomes aware of the occurrence of any of the following: (i) where any offence is committed by or any disciplinary action is taken against Moomoo Financial Singapore or any of its officers or representatives, whether in Singapore or elsewhere; 152 Table of Contents (ii) where Moomoo Financial Singapore or any of its officers or representatives is the subject of an investigation or when any civil or criminal proceedings are instituted against Moomoo Financial Singapore or any of its officers or representatives, whether in Singapore or elsewhere; (iii) where there is any breach of any laws or regulations, business rules or codes of conduct, whether in Singapore or elsewhere; or (iv) any other matter that would affect Moomoo Financial Singapore or any of its officers’ or representatives’ ability to meet the criteria set out in the Guidelines on Fit and Proper Criteria issued by MAS. 8.
Market Data and Information Services We further enhance the investing experience with market data and information services such as news and powerful analytical tools, providing clients with a data-rich foundation to simplify the investment decision-making process. Market Data We provide real-time stock quotes across equity markets in Hong Kong, Mainland China, the United States, Singapore, Australia and Japan.
Market Data and Information Services We further enhance the investing experience with market data and information services such as news and powerful analytical tools, providing clients with a data-rich foundation to simplify the investment decision-making process. Market Data We provide real-time stock quotes across equity markets in Hong Kong, Mainland China, the United States, Singapore, Australia, Japan, Canada and Malaysia.
If the CSRC is not satisfied with our rectification measures or the CSRC imposes other further regulatory actions or penalties on us, our business and results of operations may be materially and adversely affected.” Regulations on the Securities Investment Consulting Service On October 11, 2001, the CSRC promulgated the Notice with Respect to Certain Issues on Regulating the Securities Investment Consulting Services Provided for the Public, which became effective on the same day and was amended on October 30, 2020, stipulates that media which disseminate securities-related information shall not publish or broadcast any analysis, prediction or recommendation in respect of the trends of securities markets and securities products, as well as the feasibility of the securities investment made by any institution which does not obtain the operation permits for securities investment consulting services from CSRC or any individual who is not employed by a qualified securities investment consulting services institution and who does not satisfy the relevant professional requirements.
If the CSRC is not satisfied with our rectification measures or imposes other further regulatory actions or penalties on us, our business and results of operations may be materially and adversely affected. 127 Table of Contents Regulations on the Securities Investment Consulting Service On October 11, 2001, the CSRC promulgated the Notice with Respect to Certain Issues on Regulating the Securities Investment Consulting Services Provided for the Public, which became effective on the same day and was amended on October 30, 2020, stipulates that media which disseminate securities-related information shall not publish or broadcast any analysis, prediction or recommendation in respect of the trends of securities markets and securities products, as well as the feasibility of the securities investment made by any institution which does not obtain the operation permits for securities investment consulting services from CSRC or any individual who is not employed by a qualified securities investment consulting services institution and who does not satisfy the relevant professional requirements.
An individual who suffers damage, including injured feelings, by reason of a contravention of the PDPO in relation to his or her personal data may seek compensation from the data user concerned. 119 Table of Contents Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong) Money lenders and money-lending transactions in Hong Kong are regulated by the Money Lenders Ordinance.
An individual who suffers damage, including injured feelings, by reason of a contravention of the PDPO in relation to his or her personal data may seek compensation from the data user concerned. 121 Table of Contents Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong) Money lenders and money-lending transactions in Hong Kong are regulated by the Money Lenders Ordinance.
The directly accountable person(s) in charge and other directly accountable personnel shall be reprimanded and subject to a fine. As announced by the CSRC on December 30, 2022, the CSRC has initiated inquiries on us regarding our cross-border operations in Mainland China, including the provision of cross-border securities services for domestic investors.
The directly accountable person(s) in charge and other directly accountable personnel shall be reprimanded and subject to a fine. As announced by the CSRC on December 30, 2022, the CSRC has initiated inquiries on us regarding our cross-border operations in Mainland China, including the provision of cross-border securities business services for domestic, China-based investors.
See “Item 3. Key Information—D. Risk Factors—Risks Related to our Corporate Structure” for further details. 162 Table of Contents Loss Sharing . Under the relevant PRC laws and regulations, none of our company and the WFOE is legally required to share the losses of, or provide financial support to, the Consolidated Affiliated Entities.
See “Item 3. Key Information—D. Risk Factors—Risks Related to our Corporate Structure” for further details. 168 Table of Contents Loss Sharing . Under the relevant PRC laws and regulations, none of our company and the WFOE is legally required to share the losses of, or provide financial support to, the Consolidated Affiliated Entities.
Regulation T provides that broker-dealers may only extend credit for the purchase of “margin securities”; generally securities traded on a recognized stock exchange. The initial extension of credit may not exceed 50% of the value of the securities to be purchased. Regulation T requires broker-dealers to impose trading restrictions on accounts that fail to make timely payment for securities.
Regulation T provides that broker-dealers may only extend credit for the purchase of “margin securities”; generally securities traded on a registered stock exchange. The initial extension of credit may not exceed 50% of the value of the securities to be purchased. Regulation T requires broker-dealers to impose trading restrictions on accounts that fail to make timely payment for securities.
Where the base capital falls below the base capital requirement or where the CMSL holder becomes aware that the base capital will fall below the base capital requirement, the MAS must be notified immediately. 149 Table of Contents Risk Capital Requirements Furthermore, a CMSL holder shall at all times meet the risk-based capital requirement in the SF(FMR)R upon obtaining its license.
Where the base capital falls below the base capital requirement or where the CMSL holder becomes aware that the base capital will fall below the base capital requirement, the MAS must be notified immediately. 155 Table of Contents Risk Capital Requirements Furthermore, a CMSL holder shall at all times meet the risk-based capital requirement in the SF(FMR)R upon obtaining its license.
The emerging affluent and tech-savvy population we primarily serve allows us to pursue the massive opportunity in the digitalization of the securities brokerage and wealth management industry. We grow our client base mainly through word-of-mouth referrals as well as online and offline marketing and promotional activities.
The emerging affluent and tech-savvy population we primarily serve allows us to pursue the massive opportunity in the digitalization of the securities brokerage and wealth management industry. We grow our client base mainly through word-of-mouth referrals, organic traffic as well as online and offline marketing and promotional activities.
On September 11, 2020, the Anti-monopoly Commission of the State Council issued the Anti-monopoly Compliance Guideline for Operators, which requires, under the PRC Anti-monopoly Law, operators to establish Anti-monopoly compliance management systems to prevent Anti- monopoly compliance risks. 139 Table of Contents On February 7, 2021, the Anti-monopoly Commission of the State Council published the Guidelines to Anti-Monopoly in the Field of Internet Platforms, or the Anti-Monopoly Guidelines for Internet Platforms.
On September 11, 2020, the Anti-monopoly Commission of the State Council issued the Anti-monopoly Compliance Guideline for Operators, which requires, under the PRC Anti-monopoly Law, operators to establish Anti-monopoly compliance management systems to prevent Anti- monopoly compliance risks. 144 Table of Contents On February 7, 2021, the Anti-monopoly Commission of the State Council published the Guidelines to Anti-Monopoly in the Field of Internet Platforms, or the Anti-Monopoly Guidelines for Internet Platforms.
The aforementioned “types of capital markets products” refer to each of the following classes: 147 Table of Contents (a) securities; (b) units in a collective investment scheme; (c) exchange-traded derivatives contracts; (d) over-the-counter derivatives contracts; or (e) spot foreign exchange contracts for the purposes of leveraged foreign exchange trading. 16.
The aforementioned “types of capital markets products” refer to each of the following classes: (a) securities; (b) units in a collective investment scheme; (c) exchange-traded derivatives contracts; (d) over-the-counter derivatives contracts; or (e) spot foreign exchange contracts for the purposes of leveraged foreign exchange trading. 153 Table of Contents 16.
The requirements of Direct Clearing Participantship are as follows: ● be an Options Trading Exchange Participant of the Stock Exchange of Hong Kong; 115 Table of Contents ● have in place procedures and a back office computer system appropriate to the type of SEOCH Participant applied for; ● have a liquid capital of not less than the higher of : (a) its required liquid capital under the Securities and Futures (Financial Resources) Rules; or (b) HK$5,000,000; and ● contribute HK$1,500,000 to the reserve fund under the rules of SEOCH.
The requirements of Direct Clearing Participantship are as follows: ● be an Options Trading Exchange Participant of the Stock Exchange of Hong Kong; ● have in place procedures and a back office computer system appropriate to the type of SEOCH Participant applied for; ● have a liquid capital of not less than the higher of : (a) its required liquid capital under the Securities and Futures (Financial Resources) Rules; or (b) HK$5,000,000; and ● contribute HK$1,500,000 to the reserve fund under the rules of SEOCH.
If, during the term of the Exclusive Business Cooperation Agreement, the operation period under the business license of either the WFOE or the VIEs expires and the renewal of which is declined or rejected by the relevant government authorities, the Exclusive Business Cooperation Agreements shall be terminated at the expiry of such operation period. 160 Table of Contents Exclusive Option Agreement.
If, during the term of the Exclusive Business Cooperation Agreement, the operation period under the business license of either the WFOE or the VIEs expires and the renewal of which is declined or rejected by the relevant government authorities, the Exclusive Business Cooperation Agreements shall be terminated at the expiry of such operation period. 166 Table of Contents Exclusive Option Agreement.
In some cases, if the value of the collateral falls below the required level and deteriorates sharply, we may liquidate positions without giving prior notification to the client. 95 Table of Contents Our risk management system closely monitors and manages clients’ credit risks.
In some cases, if the value of the collateral falls below the required level and deteriorates sharply, we may liquidate positions without giving prior notification to the client. ​ 97 Table of Contents Our risk management system closely monitors and manages clients’ credit risks.
The IO imposes requirements (set out in rules made under section 129 of the IO) on licensed insurance broker companies in relation to the following aspects: ● capital and net assets; ● professional indemnity insurance; ● client accounts; ● proper books and accounts; and 121 Table of Contents ● accounting disclosure.
The IO imposes requirements (set out in rules made under section 129 of the IO) on licensed insurance broker companies in relation to the following aspects: ● capital and net assets; ● professional indemnity insurance; ● client accounts; ● proper books and accounts; and 123 Table of Contents ● accounting disclosure.
The Value-added Tax rates generally applicable are simplified as 17%, 11%, 6% and 0%, and the Value-added Tax rate applicable to the small-scale taxpayers is 3%. 137 Table of Contents On April 4, 2018, the Ministry of Finance and the SAT issued the Circular on Adjustment of Value-added Tax Rates.
The Value-added Tax rates generally applicable are simplified as 17%, 11%, 6% and 0%, and the Value-added Tax rate applicable to the small-scale taxpayers is 3%. 142 Table of Contents On April 4, 2018, the Ministry of Finance and the SAT issued the Circular on Adjustment of Value-added Tax Rates.
(4) Mr. Leaf Hua Li and Ms. Lei Li hold 85% and 15% equity interests, respectively, in each of Shenzhen Futu Network Technology Co., Ltd. and Hainan Futu Information Services Co., Ltd.. Mr. Li is our founder, chairman of board of directors and chief executive officer. Ms. Lei Li is Mr.
(4) Mr. Leaf Hua Li and Ms. Lei Li hold 85% and 15% equity interests, respectively, in each of Shenzhen Futu Network Technology Co., Ltd. and Hainan Futu Information Services Co., Ltd. Mr. Li is our founder, chairman of board of directors and chief executive officer. Ms. Lei Li is Mr. Li’s spouse.
Failure to comply with the laws and regulations on environmental, social and governance matters may subject us to penalties and adversely affect our business, financial condition and results of operations.” 101 Table of Contents As of the date of this annual report, our business, financial conditions and results of operations had not been materially adversely impacted by ESG risks including those relating to health, work safety, environmental, social or climate-related issues.
Failure to comply with the laws and regulations on environmental, social and governance matters may subject us to penalties and adversely affect our business, financial condition and results of operations.” As of the date of this annual report, our business, financial conditions and results of operations had not been materially adversely impacted by ESG risks including those relating to health, work safety, environmental, social or climate-related issues.
Our users can interact directly with other users, company executives and analysts within the investing community; ● Extensive content. Our content ranges from investing basics to sophisticated analytical guides for professional investors; 92 Table of Contents ● Lively and dynamic delivery.
Our users can interact directly with other users, company executives and analysts within the investing community; ● Extensive content. Our content ranges from investing basics to sophisticated analytical guides for professional investors; 94 Table of Contents ● Lively and dynamic delivery.
(3) As of December 31, 2022, Shenzhen Futu Network Technology Co., Ltd. held a Valued-added Telecommunication Business Operation License, or an ICP License, a Radio and Television Program Production and Operation License and an Internet Culture Operation License; and Hainan Caixuetang Education Network Technology Co., Ltd. held an Internet Culture Operation License, a Radio and Television Program Production and Operation License, an ICP License and a Publication Operation License.
(3) As of December 31, 2023, Shenzhen Futu Network Technology Co., Ltd. held a Valued-added Telecommunication Business Operation License, or an ICP License, a Radio and Television Program Production and Operation License and an Internet Culture Operation License; and Hainan Caixuetang Education Network Technology Co., Ltd. held an Internet Culture Operation License, a Radio and Television Program Production and Operation License, an ICP License and a Publication Operation License.
The requirements for being accepted for registration and remaining registered as a China Connect Clearing Participant are as follows: ● to be a Direct Clearing Participant or a General Clearing Participant; ● to undertake to pay HKSCC such amount of Mainland Settlement Deposit, Mainland Security Deposit, Marks and Collateral as may be specified by HKSCC in accordance with the Operational Procedures of HKSCC in relation to CCASS; and 116 Table of Contents ● to meet all other relevant China Connect Clearing Participant Registration Criteria.
The requirements for being accepted for registration and remaining registered as a China Connect Clearing Participant are as follows: ● to be a Direct Clearing Participant or a General Clearing Participant; ● to undertake to pay HKSCC such amount of Mainland Settlement Deposit, Mainland Security Deposit, Marks and Collateral as may be specified by HKSCC in accordance with the Operational Procedures of HKSCC in relation to CCASS; and ● to meet all other relevant China Connect Clearing Participant Registration Criteria.
There are currently 3 types of financial advisory services under the FAA: a. advising others, either directly or through publications or writings, and whether in electronic, print or other form, concerning any investment product; (6) 150 Table of Contents b. advising others by issuing or promulgating research analyses or research reports, whether in electronic, print or other form, concerning any investment product; and c. arranging of any contract of insurance in respect of life policies (other than a contract of reinsurance).
There are currently 3 types of financial advisory services under the FAA: a. advising others, either directly or through publications or writings, and whether in electronic, print or other form, concerning any investment product; (6) b. advising others by issuing or promulgating research analyses or research reports, whether in electronic, print or other form, concerning any investment product; and c. arranging of any contract of insurance in respect of life policies (other than a contract of reinsurance).
By virtue of our technical edge, the online application process for opening an account can typically be completed in as little as three minutes. Highly Stable, Scalable and Secure System Our distributed, cloud-based infrastructure is the foundation of our trading system, employing a number of interrelated servers to mitigate the risk of a single server disrupting the whole system.
By virtue of our technical edge, the online application process for opening an account can typically be completed in as little as three minutes. 100 Table of Contents Highly Stable, Scalable and Secure System Our distributed, cloud-based infrastructure is the foundation of our trading system, employing a number of interrelated servers to mitigate the risk of a single server disrupting the whole system.
Together with our comprehensive benefits package, we encourage our employees to pursue a healthy work-life balance. We provide fitness facilities and regularly organize social and team-bonding activities to ensure a positive and cohesive work environment for all. ● Anti-discrimination .
Together with our comprehensive benefits package, we encourage our employees to pursue a healthy work-life balance. We provide fitness facilities and regularly organize social and team-bonding activities to ensure a positive and cohesive work environment for all.
Risk Factors—Risks Related to Our Business and Industry—We have limited business insurance coverage, which may be inadequate to protect us from the liabilities or losses we may incur.” Regulation Overview of the Laws and Regulations Relating to Our Business and Operations in Hong Kong As we provide online brokerage services primarily from our subsidiaries in Hong Kong, our business operations are subject to the laws of Hong Kong.
Risk Factors—Risks Related to Our Business and Industry—We have limited business insurance coverage, which may be inadequate to protect us from the liabilities or losses we may incur.” 107 Table of Contents Regulation Overview of the Laws and Regulations Relating to Our Business and Operations in Hong Kong As we provide online brokerage services primarily from our subsidiaries in Hong Kong, our business operations are subject to the laws of Hong Kong.
The categories of activities regulated under the SFA are set out under Part 1 of the Second Schedule to the SFA as follows: (1) dealing in capital markets products; (2) advising on corporate finance; (3) fund management; (4) real estate investment trust management; 144 Table of Contents (5) product financing; (6) providing credit rating services; and (7) providing custodial services.
The categories of activities regulated under the SFA are set out under Part 1 of the Second Schedule to the SFA as follows: (1) dealing in capital markets products; (2) advising on corporate finance; (3) fund management; (4) real estate investment trust management; (5) product financing; (6) providing credit rating services; and (7) providing custodial services.
CMS101000) and is licensed under the SFA to conduct the following regulated activities: (1) dealing in capital markets products; (2) product financing; and (3) providing custodial services. Under the SFA, “capital markets products” include, amongst others, securities, (1) units in a collective investment scheme, derivatives contracts, and spot foreign exchange contracts for the purposes of leveraged foreign exchange trading.
CMS101000) and is licensed under the SFA to conduct the following regulated activities: (1) dealing in capital markets products; (2) product financing; and (3) providing custodial services. ​ 150 Table of Contents Under the SFA, “capital markets products” include, amongst others, securities ,(1) units in a collective investment scheme, derivatives contracts, and spot foreign exchange contracts for the purposes of leveraged foreign exchange trading.
Our platform has attracted and gathered a vast base of high-quality users and clients, with the average client age of 38 and average paying client assets of over HK$280,000 on our platform as of December 31, 2022.
Our platform has attracted and gathered a vast base of high-quality users and clients, with the average client age of 38 and average paying client assets of over HK$280,000 on our platform as of December 31, 2023.
Further, under Section 6(4) of the FAA, a person who contravenes Section 6(1) will be liable on conviction to a maximum fine of S$75,000 or imprisonment for a term of up to 3 years or both. The term “financial adviser” generally refers to a person who carries on a business of providing any financial advisory service under the FAA.
Further, under Section 6(4) of the FAA, a person who contravenes Section 6(1) will be liable on conviction to a maximum fine of S$75,000 or imprisonment for a term of up to 3 years or both. ​ 156 Table of Contents The term “financial adviser” generally refers to a person who carries on a business of providing any financial advisory service under the FAA.
In addition, as part of our carbon neutrality initiatives, we have taken steps to deal with transition risks arisen from accelerated transformation to low-carbon lifestyle globally. We endeavor to limit our carbon emissions and promote green operations during the ordinary course of business and it has become part of our corporate culture.
In addition, as part of our carbon neutrality initiatives, we have taken steps to deal with transition risks arisen from accelerated transformation to low-carbon lifestyle globally. 103 Table of Contents We endeavor to limit our carbon emissions and promote green operations during the ordinary course of business and it has become part of our corporate culture.
We also encourage and sponsor our employees to further their education and obtain additional qualifications, including professional and recognized qualifications within the financial industry. 103 Table of Contents Health, safety and wellbeing It is our priority to protect the physical and mental health, safety and wellbeing of our employees, and we have implemented various internal policies and measures accordingly, including: ● Healthy work-life balance.
We also encourage and sponsor our employees to further their education and obtain additional qualifications, including professional and recognized qualifications within the financial industry. Health, safety and wellbeing It is our priority to protect the physical and mental health, safety and wellbeing of our employees, and we have implemented various internal policies and measures accordingly, including: ● Healthy work-life balance.
Bridge Loan Services One of our subsidiaries in Hong Kong, Futu Lending Limited, also holds a money lenders license issued by the licensing court under the Money Lenders Ordinance, which allows it to provide loans to its clients in its ordinary course of business. We provide limited bridge loan services to our selected clients on a case-by-case basis.
Stock-pledged Loan Services One of our subsidiaries in Hong Kong, Futu Lending Limited, also holds a money lenders license issued by the licensing court under the Money Lenders Ordinance, which allows it to provide loans to its clients in its ordinary course of business. We provide limited stock-pledged loan services to our selected clients on a case-by-case basis.
Moomoo Financial Singapore shall immediately inform MAS of any matter which may adversely affect its financial position to a material extent. 5. Moomoo Financial Singapore shall conduct its business in such a manner as to avoid conflicts of interests, and should such conflicts arise, shall ensure that they are resolved fairly and equitably. 146 Table of Contents 6.
Moomoo Financial Singapore shall immediately inform MAS of any matter which may adversely affect its financial position to a material extent. 5. Moomoo Financial Singapore shall conduct its business in such a manner as to avoid conflicts of interests, and should such conflicts arise, shall ensure that they are resolved fairly and equitably. 6.
Further, the Powers of Attorney are irrevocable and shall remain effective for so long as each registered shareholder holds equity interests in the VIEs. 161 Table of Contents Spousal Undertakings .
Further, the Powers of Attorney are irrevocable and shall remain effective for so long as each registered shareholder holds equity interests in the VIEs. 167 Table of Contents Spousal Undertakings .
If convicted under Section 55 of the CDSA, individuals will be liable to a maximum fine of S$150,000 or imprisonment for a term of up to 3 years, or both, while non-individuals will be liable to a maximum fine of S$300,000. In addition to any criminal liability, the CDSA also allows for the confiscation of proceeds of crime.
If convicted under Section 55 of the CDSA, individuals will be liable to a maximum fine of S$150,000 or imprisonment for a term of up to 3 years, or both, while non-individuals will be liable to a maximum fine of S$300,000. 158 Table of Contents In addition to any criminal liability, the CDSA also allows for the confiscation of proceeds of crime.
We currently hold a collection of intellectual property rights relating to certain aspects of our business operation. As of December 31, 2022, we owned over 100 registered copyrights in China.
We currently hold a collection of intellectual property rights relating to certain aspects of our business operation. As of December 31, 2023, we owned over 100 registered copyrights in China.
In addition, broker-dealers must ensure that all of their email communications relating to the broker-dealer’s business are transmitted using authorized systems and are archived for future access. All required records must be preserved for various periods of time specified in SEC Rule 17a-4.
In addition, broker-dealers must ensure that all of their email communications relating to the broker-dealer’s business are transmitted using authorized systems and are archived for future access. All required records must be preserved for various periods of time specified in Exchange Act Rule 17a-4.
On October 17, 2019, we changed our symbol from “FHL” to “FUTU.” In August 2020, we completed a follow-on public offering of ADSs, and raised US$301.8 million in net proceeds after deducting underwriting discounts and offering expenses.
On October 17, 2019, we changed our symbol from “FHL” to “FUTU.” ​ 83 Table of Contents In August 2020, we completed a follow-on public offering of ADSs, and raised US$301.8 million in net proceeds after deducting underwriting discounts and offering expenses.
Moomoo Financial Inc. is currently authorized to conduct business as an introducing broker, engaging in transactions in domestic equity securities, mutual funds and options as well as foreign securities. It is also authorized to act as an underwriter or selling group participant in offerings of corporate securities other than mutual funds.
Moomoo Financial Inc. is currently authorized to conduct business as an introducing broker, engaging in transactions in equity securities, mutual funds and options. It is also authorized to act as an underwriter or selling group participant in offerings of corporate securities other than mutual funds.
We have developed an easy-to-use and highly integrated cross-market system which allows our clients to view and execute trades in different markets as a unified one from a single platform, with streamlined functionality extending from core trading, real-time risk management to multi-currency, multi-market settlement. 82 Table of Contents ● Security and stability.
We have developed an easy-to-use and highly integrated cross-market system which allows our clients to view and execute trades in different markets as a unified one from a single platform, with streamlined functionality extending from core trading, real-time risk management to multi-currency, multi-market settlement. ● Security and stability.
Under the AML/CTF Guideline, licensed corporations should, among other things: ● assess the risks of any new products and services before they are introduced and ensure that appropriate additional measures and controls are implemented to mitigate and manage the risks associated with money laundering and terrorist financing; ● consider the delivery and distribution channels (which may include sales through online, postal or telephone channels where a non-face-to-face account opening approach is used and business sold through intermediaries) and the extent to which they are vulnerable to abuse for money laundering and terrorist financing; ● identify the client and verify the client’s identity and any beneficial owner’s identity by reference to any documents, information or data from reliable and independent sources, and take steps from time to time to ensure that the client information obtained is up-to-date and relevant; ● conduct on-going monitoring of activities of the clients to ensure that they are consistent with the nature of business, the risk profile and source of funds, as well as identify transactions that are complex, large or unusual, or patterns of transactions that have no apparent economic or lawful purpose and which may indicate money laundering and terrorist financing; ● maintain a database of names and particulars of terrorist suspects and designated parties which consolidates the information from various lists that have been made known to them, as well as conduct comprehensive on-going screening of the client database; and ● conduct on-going monitoring for identification of suspicious transactions and ensure compliance with their legal obligations of reporting funds or property known or suspected to be proceeds of crime or terrorist property to the Joint Financial Intelligence Unit, a unit jointly run by the Hong Kong Police Force and the Hong Kong Customs and Excise Department to monitor and investigate suspicious financial or money laundering activities.
Under the AML/CTF Guideline, licensed corporations should, among other things: ● assess the risks of any new products and services before they are introduced and ensure that appropriate additional measures and controls are implemented to mitigate and manage the risks associated with money laundering and terrorist financing; ● consider the delivery and distribution channels (which may include sales through online, postal or telephone channels where a non-face-to-face account opening approach is used and business sold through intermediaries) and the extent to which they are vulnerable to abuse for money laundering and terrorist financing; ● identify the client and verify the client’s identity and any beneficial owner’s identity by reference to any documents, information or data from reliable and independent sources, and take steps from time to time to ensure that the client information obtained is up-to-date and relevant; ● conduct on-going monitoring of activities of the clients to ensure that they are consistent with the nature of business, the risk profile and source of funds, as well as identify transactions that are complex, large or unusual, or patterns of transactions that have no apparent economic or lawful purpose and which may indicate money laundering and terrorist financing; ● maintain a database of names and particulars of terrorist suspects and designated parties which consolidates the information from various lists that have been made known to them, as well as conduct comprehensive on-going screening of the client database; and ● conduct on-going monitoring for identification of suspicious transactions and ensure compliance with their legal obligations of reporting funds or property known or suspected to be proceeds of crime or terrorist property to the Joint Financial Intelligence Unit, a unit jointly run by the Hong Kong Police Force and the Hong Kong Customs and Excise Department to monitor and investigate suspicious financial or money laundering activities. 119 Table of Contents We set out below a brief summary of the principal legislation in Hong Kong that is concerned with anti-money laundering and counter-terrorist financing.
In particular, Part 4 of the SFA provides for the licensing and regulation of certain regulated activities typically carried out by capital markets intermediaries (such as Moomoo Financial Singapore). Types of Regulated Activities under Part 4 of the SFA Part 4 of the SFA governs the conduct of regulated activities typically carried out by capital market intermediaries.
In particular, Part 4 of the SFA provides for the licensing and regulation of certain regulated activities typically carried out by capital markets intermediaries (such as Moomoo Financial Singapore). 149 Table of Contents Types of Regulated Activities under Part 4 of the SFA Part 4 of the SFA governs the conduct of regulated activities typically carried out by capital market intermediaries.
During 2022, on average, we had an aggregate of approximately 120,000 UGCs (user-generated content) generated on NiuNiu/Moo Community each trading day, which included a multitude of posts, comments and other interactive reactions to social media content. We continuously find ways to enhance the quality of content within our ecosystem.
During 2023, on average, we had an aggregate of approximately 124,000 UGCs (user-generated content) generated on NiuNiu/Moo Community each trading day, which included a multitude of posts, comments and other interactive reactions to social media content. We continuously find ways to enhance the quality of content within our ecosystem.
As announced by the CSRC on December 30, 2022, the CSRC has initiated inquiries on us regarding our cross-border operations in Mainland China, including the provision of cross-border securities services for domestic investors. We have taken and may continue to take rectification measures based on our communication with or the requirements from the CSRC.
As announced by the CSRC on December 30, 2022, the CSRC has initiated inquiries on us regarding our cross-border operations in Mainland China, including the provision of cross-border securities business services for domestic, China-based investors. We have taken and may continue to take rectification measures on our business based on the requirements from the CSRC.

… 345 more changes not shown on this page.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

86 edited+28 added−24 removed81 unchanged
Biggest changeThe results of operations in any year are not necessarily indicative of our future trends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ HK$ % HK$ % HK$ US$ % ​ (in thousands, except for percentages) Revenues Brokerage commission and handling charge income 1,990,138 60.1 3,913,027 55.0 4,007,642 513,701 52.6 Interest income 965,627 29.2 2,518,198 35.4 3,214,327 412,014 42.2 Other income 355,057 10.7 684,095 9.6 392,058 50,254 5.2 Total revenues 3,310,822 100.0 7,115,320 100.0 7,614,027 975,969 100.0 Costs ​ ​ ​ ​ ​ Brokerage commission and handling charge expenses (361,486) (10.9) (572,159) (8.0) (329,789) (42,273) (4.4) Interest expenses (185,090) (5.6) (376,902) (5.3) (292,503) (37,493) (3.8) Processing and servicing costs (149,378) (4.5) (257,003) (3.6) (373,840) (47,919) (4.9) Total costs (695,954) (21.0) (1,206,064) (16.9) (996,132) (127,685) (13.1) Total gross profit 2,614,868 79.0 5,909,256 83.1 6,617,895 848,284 86.9 Operating expenses ​ ​ ​ ​ ​ Research and development expenses (1) (513,283) (15.5) (805,325) (11.3) (1,222,077) (156,646) (16.1) Selling and marketing expenses (1) (385,320) (11.6) (1,392,070) (19.6) (895,772) (114,820) (11.8) General and administrative expenses (1) (248,404) (7.5) (529,048) (7.4) (931,144) (119,354) (12.1) Total operating expenses (1,147,007) (34.6) (2,726,443) (38.3) (3,048,993) (390,820) (40.0) Others, net (2) (17,238) (0.5) 2,478 (0.0) (210,295) (26,956) (2.8) Income before income tax expense and share of loss from equity method investment 1,450,623 43.8 3,185,291 44.8 3,358,607 430,508 44.1 Income tax expense (124,793) (3.8) (375,081) (5.3) (413,962) (53,062) (5.5) Share of loss from equity method investment (307) (0.0) — — (17,752) (2,275) (0.2) Net income 1,325,523 40.0 2,810,210 39.5 2,926,893 375,171 38.4 Notes: (1) Share-based compensation expenses were allocated as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ HK$ HK$ HK$ US$ ​ (in thousands) Selling and marketing expenses 1,640 9,138 15,204 1,949 Research and development expenses 20,579 75,755 145,226 18,615 General and administrative expenses ​ 10,354 ​ 14,020 ​ 44,099 ​ 5,653 Total 32,753 98,913 204,529 26,217 ​ (2) For the year ended December 31, 2020, 2021 and 2022, expected credit loss expenses of HK$9.1 million, HK$3.2 million and HK$15.6 million (US$2.0 million) resulting from the assessment of credit losses for the loans and advances under ASC Topic 326 was recognized in Others, net.
Biggest changeThe results of operations in any year are not necessarily indicative of our future trends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ HK$ % HK$ % HK$ US$ % ​ (in thousands, except for percentages) Revenues Brokerage commission and handling charge income 3,913,027 55.0 4,007,642 52.6 3,944,779 505,035 39.4 Interest income 2,518,198 35.4 3,214,327 42.2 5,536,422 708,807 55.3 Other income 684,095 9.6 392,058 5.2 527,217 67,498 5.3 Total revenues 7,115,320 100.0 7,614,027 100.0 10,008,418 1,281,340 100.0 Costs ​ ​ ​ ​ ​ ​ ​ Brokerage commission and handling charge expenses (572,159) (8.0) (329,789) (4.4) (249,567) (31,951) (2.5) Interest expenses (376,902) (5.3) (292,503) (3.8) (910,759) (116,601) (9.0) Processing and servicing costs (257,003) (3.6) (373,840) (4.9) (375,904) (48,126) (3.8) Total costs (1,206,064) (16.9) (996,132) (13.1) (1,536,230) (196,678) (15.3) Total gross profit 5,909,256 83.1 6,617,895 86.9 8,472,188 1,084,662 84.7 Operating expenses ​ ​ ​ ​ ​ ​ ​ Research and development expenses (1) (805,325) (11.3) (1,222,077) (16.1) (1,440,893) (184,472) (14.4) Selling and marketing expenses (1) (1,392,070) (19.6) (895,772) (11.8) (710,348) (90,943) (7.1) General and administrative expenses (1) (529,048) (7.4) (931,144) (12.1) (1,313,464) (168,158) (13.1) Total operating expenses (2,726,443) (38.3) (3,048,993) (40.0) (3,464,705) (443,573) (34.6) Others, net (2) 2,478 (0.0) (210,295) (2.8) 33,442 4,281 0.3 Income before income tax expense and share of loss from equity method investment 3,185,291 44.8 3,358,607 44.1 5,040,925 645,370 50.4 Income tax expense (375,081) (5.3) (413,962) (5.5) (748,479) (95,825) (7.5) Share of loss from equity method investment — — (17,752) (0.2) (13,497) (1,728) (0.1) Net income 2,810,210 39.5 2,926,893 38.4 4,278,949 547,817 42.8 Note: (1) Share-based compensation expenses were allocated as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ HK$ HK$ HK$ US$ ​ (in thousands) Selling and marketing expenses 9,138 15,204 20,238 2,591 Research and development expenses 75,755 145,226 201,033 25,737 General and administrative expenses ​ 14,020 ​ 44,099 ​ 69,560 ​ 8,906 Total 98,913 204,529 290,831 37,234 ​ 179 Table of Contents Year ended December 31, 2023 compared to year ended December 31, 2022 Revenues Total revenues were HK$10,008.4 million (US$1,281.3 million) in 2023, an increase of 31.4% from HK$7,614.0 million in 2022.
Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes.
E. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes.
Our cash and cash equivalents primarily consist of cash on hand, demand deposits and time deposits with initial terms of less than three months placed with banks or other financial institutions, which are unrestricted for withdrawal or use, and which have original maturities of three months or less. 175 Table of Contents We believe that our current cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and material cash requirements for at least the next 12 months.
Our cash and cash equivalents primarily consist of cash on hand, demand deposits and time deposits with initial terms of less than three months placed with banks or other financial institutions, which are unrestricted for withdrawal or use, and which have original maturities of three months or less. 182 Table of Contents We believe that our current cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and material cash requirements for at least the next 12 months.
Risk Factors—Risks Related to Our Operations in China—We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.” 171 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as a percentage of our revenues for the years presented.
Risk Factors—Risks Related to Our Operations in China—We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.” ​ 178 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as a percentage of our revenues for the years presented.
Futu Network Technology (Shenzhen) Co., Ltd. and Shenzhen Futu are recognized as “High and New Technology Enterprises” and eligible for a preferential income tax rate of 15% with a valid period of three years until 2025 and 2023, respectively. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
Futu Network Technology (Shenzhen) Co., Ltd. and Shenzhen Futu are recognized as “High and New Technology Enterprises” and eligible for a preferential income tax rate of 15% with a valid period of three years until 2025 and 2026, respectively. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
If it is determined that we are able to realize deferred tax assets in excess of the net carrying value or to the extent we are unable to realize a deferred tax asset, we would adjust the valuation allowance in the period in which such a determination is made, with a corresponding increase or decrease to earnings. ​ 182 Table of Contents
If it is determined that we are able to realize deferred tax assets in excess of the net carrying value or to the extent we are unable to realize a deferred tax asset, we would adjust the valuation allowance in the period in which such a determination is made, with a corresponding increase or decrease to earnings. ​ 189 Table of Contents
Our critical accounting estimates are described below. The critical accounting estimates should be read in conjunction with our risk factors as disclosed in “Item 3. Key Information—D. Risk Factors.” See Note 2 to our consolidated financial statements for the year ended December 31, 2022 for more information on our critical accounting policies.
Our critical accounting estimates are described below. The critical accounting estimates should be read in conjunction with our risk factors as disclosed in “Item 3. Key Information—D. Risk Factors.” See Note 2 to our consolidated financial statements for the year ended December 31, 2023 for more information on our critical accounting policies.
Interest income derived from bank deposit increased by 399.7% from HK$197.4 million in 2021 to HK$986.4 million (US$126.4 million) in 2022, which was mainly attributable to the growing market interest rates amid rates hike, partially offset by the decrease in daily average balance of client cash.
Interest income derived from bank deposit increased by 399.7% from HK$197.4 million in 2021 to HK$986.4 million in 2022, which was mainly attributable to the growing market interest rates amid rates hike, partially offset by the decrease in daily average balance of client cash.
These bank borrowings were mainly pledged by margin clients’ shares as the primary source of credit risk mitigation of the lenders, and bear floating interest rates based on various benchmarks including Hong Kong Prime Rate, Hong Kong Interbank Offered Rate, or HIBOR, CNH HIBOR, etc.
These bank borrowings were mainly pledged by margin clients’ shares as the primary source of credit risk mitigation of the lenders, and bore floating interest rates based on various benchmarks including Hong Kong Prime Rate, Hong Kong Interbank Offered Rate, or HIBOR, CNH HIBOR, etc.
In addition, our ability to expand into various markets will enable us to respond to changes in the different markets in terms of client demand and client preferences to remain competitive. 167 Table of Contents Investment in technology and talent Our technology is critical for us to retain and attract clients.
In addition, our ability to expand into various markets will enable us to respond to changes in the different markets in terms of client demand and client preferences to remain competitive. 173 Table of Contents Investment in technology and talent Our technology is critical for us to retain and attract clients.
The decrease of IPO financing interest income was mainly due to the decrease in the number of IPOs during 2022, while the decrease of margin interest income was mainly attributable to the decline in daily average margin financing balance by 9.8% from HK$28.6 billion in 2021 to HK$25.8 billion (US$3.3 billion) in 2022. Other income .
The decrease of IPO financing interest income was mainly due to the decrease in the number of IPOs during 2022, while the decrease of margin interest income was mainly attributable to the decline in daily average margin financing balance by 9.8% from HK$28.6 billion in 2021 to HK$25.8 billion in 2022. Other income .
Brokerage commission and handling charge income was HK$4,007.6 million (US$513.7 million) in 2022, an increase of 2.4% from HK$3,913.0 million in 2021. The increase was mainly due to higher blended commission rate, partially offset by lower trading volume. The blended commission rate increased from 6.4bps in 2021 to 8.3 bps in 2022.
Brokerage commission and handling charge income was HK$4,007.6 million in 2022, an increase of 2.4% from HK$3,913.0 million in 2021. The increase was mainly due to higher blended commission rate, partially offset by lower trading volume. The blended commission rate increased from 6.4bps in 2021 to 8.3 bps in 2022.
The trading volume on our platform declined year-over-year in 2022 compared to 2021, primarily due to weak performance of global capital market and declining investor sentiment.
The trading volume on our platform declined year-over-year in 2023 compared to 2022, primarily due to weak performance of global capital market and declining investor sentiment.
Income tax expense We had income tax expense of HK$414.0 million (US$53.1 million) in 2022, compared to HK$375.1 million in 2021, primarily due to the 6.0% year-over-year increase in our income before income tax expense. Net income As a result of the foregoing, we had net income of HK$2,926.9 million (US$375.2 million) in 2022, compared to HK$2,810.2 million in 2021.
Income tax expense We had income tax expense of HK$414.0 million in 2022, compared to HK$375.1 million in 2021, primarily due to the 6.0% year-over-year increase in our income before income tax expense. Net income As a result of the foregoing, we had net income of HK$2,926.9 million in 2022, compared to HK$2,810.2 million in 2021. B.
For additional information on the share repurchases, see “Part II—Item 16E—Purchases of Equity Securities by the Issuer and Affiliated Purchasers.” In March 2022, our board of directors authorized a new share repurchase program under which our company may repurchase up to US$500 million worth of ADSs, until December 31, 2023.
For additional information on the share repurchases, see “Part II—Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.” In March 2024, our board of directors authorized a new share repurchase program under which our company may repurchase up to US$500 million worth of ADSs, until December 31, 2025.
Further, our platform is fully-licensed to conduct securities brokerage, wealth management product distribution and other financial services across various markets. As of the date of this annual report, we held over 50 licenses, registrations and memberships across Hong Kong, Singapore, the United States, Australia, Japan and Europe.
Further, our platform is fully-licensed to conduct securities brokerage, wealth management product distribution and other financial services across various markets. As of the date of this annual report, we held licenses, registrations and memberships across Hong Kong, Singapore, the United States, Australia, Japan, Canada, Europe and Malaysia.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Our Technology” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Our Technology” and “Item 4. Information on the Company—B.
Other income was HK$392.1 million (US$50.3 million) in 2022, a decrease of 42.7% from HK$684.1 million in 2021. The decrease was primarily attributable to lower IPO financing service charge income and underwriting fee income amid an inactive IPO market. Costs Total costs were HK$996.1 million (US$127.7 million) in 2022, a decrease of 17.4% from HK$1,206.1 million in 2021.
Other income was HK$392.1 million in 2022, a decrease of 42.7% from HK$684.1 million in 2021. The decrease was primarily attributable to lower IPO financing service charge income and underwriting fee income amid an inactive IPO market. Costs Total costs were HK$996.1 million in 2022, a decrease of 17.4% from HK$1,206.1 million in 2021.
For more information regarding the collateralized transactions, see Note 17 to our consolidated financial statements included in this annual report. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements.
For more information regarding the collateralized transactions, see Note 17 to our consolidated financial statements included in this annual report. 187 Table of Contents We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information not necessarily to be indicative of future results of operations or financial conditions. 181 Table of Contents E.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information not necessarily to be indicative of future results of operations or financial conditions.
The change of the trading volume was primarily driven by our total client asset balance, which significantly impacted our brokerage commission and handling charge income and interest income during the past few years.
The change of the trading volume was primarily driven by market sentiment and our total client asset balance, the latter of which significantly impacted our brokerage commission and handling charge income and interest income during the past few years.
Selling and marketing expenses consist primarily of advertising and promotion costs, as well as payroll, rental and related expenses for selling and marketing personnel. Advertising costs primarily consist of costs of online advertising and offline promotional events. General and administrative expenses .
Selling and marketing expenses consist primarily of advertising and promotion costs, as well as payroll, rental and related expenses for selling and marketing personnel. Advertising costs primarily consist of costs of online advertising and offline promotional events. 176 Table of Contents General and administrative expenses .
The margin loans extended to the clients are collateralized by the cash or securities pledged in clients’ accounts at a required margin level determined at our sole discretion. Securities lending transactions require us to deposit cash collateral with the lender and receive the cash collateral from the borrower.
These arrangements include the margin financing and securities lending agreements. The margin loans extended to the clients are collateralized by the cash or securities pledged in clients’ accounts at a required margin level determined at our sole discretion. Securities lending transactions require us to deposit cash collateral with the lender and receive the cash collateral from the borrower.
The decrease was mainly driven by lower margin financing interest expenses, which decreased by 53.1% from HK$176.2 million in 2021 to HK$82.7 million (US$10.6 million) in 2022, partially offset by the increase in interest expenses associated with our securities borrowing and lending business from HK$150.7 million in 2021 to HK$209.8 million (US$26.9 million) in 2022. Processing and servicing costs .
The decrease was mainly driven by lower margin financing interest expenses, which decreased by 53.1% from HK$176.2 million in 2021 to HK$82.7 million in 2022, partially offset by the increase in interest expenses associated with our securities lending business from HK$150.7 million in 2021 to HK$209.8 million in 2022. Processing and servicing costs .
The decrease in our trading volume from HK$6,138.9 billion in 2021 to HK$4,850.2 billion (US$ 621.7 billion) in 2022 was primarily due to weak market sentiments. Interest income . Interest income was HK$3,214.3 million (US$412.0 million) in 2022, an increase of 27.6% from HK$2,518.2 million in 2021.
The decrease in our trading volume from HK$6,138.9 billion in 2021 to HK$4,850.2 billion in 2022 was primarily due to weak market sentiments. Interest income . Interest income was HK$3,214.3 million in 2022, an increase of 27.6% from HK$2,518.2 million in 2021.
The margin financing and securities lending balance is also affected by factors including client asset balance, margin financing and securities lending balance as a percentage of client assets, expansion of international markets and our ability to continue to secure funding and securities from third parties. 166 Table of Contents The net interest income from our margin financing and securities lending businesses is affected by our margin financing and securities lending balance, as well as annualized interest rates and interest spread we earn from margin financing and securities lending.
The margin financing and securities lending balance is affected by factors including client asset balance, expansion of international markets and our ability to continue to secure funding and securities from third parties. 172 Table of Contents The net interest income from our margin financing and securities lending businesses is affected by our margin financing and securities lending balance, as well as annualized interest rates and interest spread we earn from margin financing and securities lending.
As of December 31, 2022, 9.8% of our cash and cash equivalents were held in China, and 0.7% were held by the Consolidated Affiliated Entities. Although we consolidate the results of the Consolidated Affiliated Entities, we only have access to the assets or earnings of the Consolidated Affiliated Entities through the Contractual Arrangements. See “Item 4. Information on the Company—C.
As of December 31, 2023, 6.9% of our cash and cash equivalents were held in China, and 0.3% were held by the Consolidated Affiliated Entities. Although we consolidate the results of the Consolidated Affiliated Entities, we only have access to the assets or earnings of the Consolidated Affiliated Entities through the Contractual Arrangements. See “Item 4. Information on the Company—C.
While our business is influenced by general factors affecting our industry, our results of operations are more directly affected by certain company specific factors, including: Brand awareness and market position We are now a market leader and a go-to brand for retail securities trading.
While our business is influenced by general factors affecting our industry, our results of operations are more directly affected by certain company specific factors, including: Brand awareness and market position We are a market leader and a go-to brand for retail securities trading in several markets where we operate.
Under the new share repurchase program, our company may repurchase ADSs from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations.
We will fund the repurchases from our existing cash balance. Under the new share repurchase program, our company may repurchase ADSs from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations.
The difference was primarily due to net increases of HK$2.3 billion (US$294.5 million) in accounts payable to clients and brokers and net decrease of HK$2.9 billion (US$366.4 million) in loans and advances, partially offset by net decrease of HK$4.5 billion (US$572.7 million) in securities sold under agreements to repurchase.
The difference was primarily due to net increases of HK$2.3 billion in accounts payable to clients and brokers and net decrease of HK$2.9 billion in loans and advances, partially offset by net decrease of HK$4.5 billion in securities sold under agreements to repurchase.
Moomoo Financial Inc. and Futu Clearing Inc., our subsidiaries located in the United States, are subject to the Uniform Net Capital Rule (Rule 15c3-1) under the Exchange Act, which requires the maintenance of minimum net capital. Moomoo Financial Singapore Pte. Ltd., our subsidiary located in Singapore, is subject to the base capital requirement applicable to Moomoo Financial Singapore Pte.
Moomoo Financial Inc. and Futu Clearing Inc., our subsidiaries located in the United States, are subject to the Uniform Net Capital Rule (Rule 15c3-1) under the Exchange Act, which requires the maintenance of minimum net capital. Moomoo Financial Singapore Pte.
Our margin financing business is subject to influences from market factors such as market liquidity, interest rate as well as investor sentiment. 165 Table of Contents In addition, our business and results of operations are also affected by factors driving online brokerage demand from Hong Kong, Mainland China, Singapore, the United States and Australia, such as the increasing number of affluent middle class residents, the growing number of retail investors having interests and needs in investing securities in global capital markets, the usage and penetration rate of the internet and mobile internet, the changing investor preferences with respect to trading and investment platforms and the competitive environment, governmental policies and regulatory environment.
Our margin financing business is subject to influences from market factors such as market liquidity, interest rate as well as investor sentiment. 171 Table of Contents In addition, our business and results of operations are also affected by factors driving online brokerage demand in all markets we operate, such as the increasing number of affluent middle class residents, the growing number of retail investors having interests and needs in investing securities in global capital markets, the usage and penetration rate of the internet and mobile internet, the changing investor preferences with respect to trading and investment platforms and the competitive landscape, governmental policies and regulatory environment.
Our total client asset balance increased from HK$285.2 billion as of December 31, 2020 to HK$407.8 billion as of December 31, 2021, and further to HK$417.5 billion (US$53.5 billion) as of December 31, 2022. We will continue to promote our brand name among our target client groups and enhance our appeal across different demographics.
Our total client asset balance increased from HK$407.8 billion as of December 31, 2021 to HK$417.5 billion as of December 31, 2022, and further to HK$485.6 million (US$62.2 million) as of December 31, 2023. We will continue to promote our brand name among our target client groups and enhance our appeal across different demographics.
Trading activities of our client and commission rate Growth in the trading volume on our platform is the key driver of our revenue growth, which is in turn driven by total client asset balance and turnover of trading volume over client assets. The trading volume on our platform increased significantly from 2020 to 2021.
Trading activities of our client and commission rate Growth in the trading volume on our platform is the key driver of our revenue growth, which is in turn driven by total client asset balance and turnover of trading volume over client assets.
We lease our office facilities under non-cancellable operating leases with various expiration dates through August 2027. Capital Expenditures Our capital expenditures are primarily incurred for purchase of property, equipment and intangible assets. Our capital expenditures were HK$44.6 million in 2020, HK$70.5 million in 2021 and HK$90.5 million (US$11.6 million) in 2022.
We lease our office facilities under non-cancellable operating leases with various expiration dates through August 2027. Capital Expenditures Our capital expenditures are primarily incurred for purchase of property, equipment and intangible assets. Our capital expenditures were HK$70.5 million in 2021, HK$90.5 million in 2022 and HK$77.8 million (US$10.0 million) in 2023.
The number of our paying clients increased from 516,721 as of December 31, 2020 to 1,244,222 as of December 31, 2021, and further to 1,486,980 as of December 31, 2022.
The number of our paying clients increased from 1,244,222 as of December 31, 2021 to 1,486,980 as of December 31, 2022, and further to 1,710,106 as of December 31, 2023.
The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. 176 Table of Contents Regulatory Capital Requirements Our broker-dealer and insurance-broker subsidiaries, Futu Securities International (Hong Kong) Limited, Moomoo Financial Inc., Futu Clearing Inc., Moomoo Financial Singapore Pte.
The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. 183 Table of Contents Regulatory Capital Requirements Our principal broker-dealer subsidiaries, Futu Securities International (Hong Kong) Limited, Moomoo Financial Inc., Futu Clearing Inc. and Moomoo Financial Singapore Pte. Ltd. are subject to capital requirements determined by their respective regulators.
We plan to continue to grow our business organically by attracting new clients, retaining existing clients and increasing our total client asset balance, and to improve the turnover of trading volume over client asset by introducing new products and services on our platform and providing high-quality, reliable and convenient online brokerage and ancillary services to investors at low costs.
We plan to continue to grow our business organically by attracting new clients, retaining existing clients and increasing our total client asset balance, and to introduce new products and services on our platform and provide high-quality, reliable and convenient online brokerage and ancillary services to investors at low costs.
The capital expenditures in 2022 were primarily due to the purchase of computers and equipment. We intend to fund our future capital expenditures with our existing cash balance and proceeds from our securities offerings. We will continue to make capital expenditures to meet the expected growth of our business.
The capital expenditures in 2023 were primarily due to the purchase of computers and equipment. We intend to fund our future capital expenditures with our existing cash balance and proceeds from our securities offerings.
The principal non-cash items affecting the difference between our net income and our net cash generated from operating activities in 2021 were HK$98.9 million in share-based compensation expenses and HK$138.2 million in foreign change gains. Net cash generated from operating activities in 2020 was HK$20.5 billion, as compared to net income of HK$1,325.5 million in the same year.
The principal non-cash items affecting the difference between our net income and our net cash generated from operating activities in 2022 were HK$204.5 million in share-based compensation expenses and HK$133.1 million in foreign change losses. Net cash generated from operating activities in 2021 was HK$6.0 billion, as compared to net income of HK$2.8 billion in the same year.
As of December 31, 2020, 2021 and 2022, respectively, our cash and cash equivalents were HK$1,034.7 million, HK$4,555.1 million and HK$5,028.9 million (US$644.6 million).
As of December 31, 2021, 2022 and 2023, respectively, our cash and cash equivalents were HK$4,555.1 million, HK$5,028.9 million and HK$4,937.5 million (US$632.1 million).
The increase was primarily due to the increase in research and development expenses, selling and marketing expenses and general and administrative expenses as a result of our business growth. Research and development expenses . Research and development expenses were HK$805.3 million in 2021, an increase of 56.9% from HK$513.3 million in 2020.
The increase was primarily due to the increase in research and development expenses and general and administrative expenses as a result of our business growth. Research and development expenses . Research and development expenses were HK$1,222.1 million in 2022, an increase of 51.8% from HK$805.3 million in 2021.
Operating expenses Total operating expenses were HK$3,049.0 million (US$390.8 million) in 2022, an increase of 11.8% from HK$2,726.4 million in 2021. The increase was primarily due to the increase in research and development expenses and general and administrative expenses as a result of our business growth. Research and development expenses .
Operating expenses Total operating expenses were HK$3,464.7 million (US$443.6 million) in 2023, an increase of 13.6% from HK$3,049.0 million in 2022. The increase was primarily due to the increase in research and development expenses and general and administrative expenses as a result of our business growth. Research and development expenses .
Net cash generated from financing activities in 2021 was HK$10.6 billion, primarily attributable to proceeds of HK$53.5 billion from short-term borrowings and proceeds of HK$10.9 billion from our follow-on offering, partially offset by repayment of short-term borrowings of HK$52.6 billion.
Net cash used in financing activities in 2022 was HK$7.0 billion, primarily attributable to repayment of short-term borrowings of HK$74.7 billion and share repurchases of HK$3.1 billion, partially offset by proceeds of HK$70.8 billion from short-term borrowings. 185 Table of Contents Net cash generated from financing activities in 2021 was HK$10.6 billion, primarily attributable to proceeds of HK$53.5 billion from short-term borrowings and proceeds of HK$10.9 billion from our follow-on offering, partially offset by repayment of short-term borrowings of HK$52.6 billion.
Net cash generated from operating activities in 2021 was HK$6.0 billion, as compared to net income of HK$2.8 billion in the same year.
Net cash generated from operating activities in 2022 was HK$3.5 billion, as compared to net income of HK$2.9 billion in the same year.
Under the Hong Kong Inland Revenue Ordinance, profits that we derive from sources outside of Hong Kong are generally not subject to Hong Kong profits tax.
Under the Hong Kong Inland Revenue Ordinance, profits that we derive from sources outside of Hong Kong are generally not subject to Hong Kong profits tax. In addition, payments of dividends from our Hong Kong subsidiaries to us are not subject to any Hong Kong withholding tax.
Brokerage commission and handling charge expenses . Brokerage commission and handling charge expenses were HK$329.8 million (US$42.3 million) in 2022, a decrease of 42.4% from HK$572.2 million in 2021. Despite a slight year-over-year increase in brokerage commission and handling charge income, brokerage commission and handling charge expenses declined due to cost savings from our U.S. self-clearing business. Interest expenses .
Despite a slight year-over-year increase in brokerage commission and handling charge income, brokerage commission and handling charge expenses declined due to cost savings from our U.S. self-clearing business. 181 Table of Contents Interest expenses . Interest expenses were HK$292.5 million in 2022, a decrease of 22.4% from HK$376.9 million in 2021.
As of December 31, 2022, we have repurchased US$300 million worth of ADSs in open market transactions in accordance with the authorization under this share repurchase program.
Share Repurchase Program In November 2021, our board of directors approved a share repurchase program to repurchase up to US$300 million worth of ADSs until December 31, 2022. As of December 31, 2022, we had repurchased US$300 million worth of ADSs in open market transactions in accordance with the authorization under this share repurchase program.
The following table sets forth the components of our revenues by amounts and percentages of our total revenues for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ HK$ % HK$ % HK$ US$ % ​ ​ (in thousands, except for percentages) Revenues: Brokerage commission and handling charge income 1,990,138 60.1 3,913,027 55.0 4,007,642 513,701 52.6 Interest income 965,627 29.2 2,518,198 35.4 3,214,327 412,014 42.2 Other income 355,057 10.7 684,095 9.6 392,058 50,254 5.2 Total revenues 3,310,822 100.0 7,115,320 100.0 7,614,027 975,969 100.0 ​ 168 Table of Contents Brokerage commission and handling charge income Brokerage commission income primarily consists of commissions and execution fees from our clients for whom we act as executing and clearing brokers.
The following table sets forth the components of our revenues by amounts and percentages of our total revenues for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ HK$ % HK$ % HK$ US$ % ​ ​ (in thousands, except for percentages) Revenues: Brokerage commission and handling charge income 3,913,027 55.0 4,007,642 52.6 3,944,779 505,035 39.4 Interest income 2,518,198 35.4 3,214,327 42.2 5,536,422 708,807 55.3 Other income 684,095 9.6 392,058 5.2 527,217 67,498 5.3 Total revenues 7,115,320 100.0 7,614,027 100.0 10,008,418 1,281,340 100.0 ​ Brokerage commission and handling charge income Brokerage commission income primarily consists of commissions and execution fees from our clients for whom we act as executing and clearing brokers.
The principal non-cash items affecting the difference between our net income and our net cash generated from operating activities in 2022 were HK$204.5 million (US$26.2 million) in share-based compensation expenses and HK$133.1 million (US$17.1 million) in foreign change losses.
The principal non-cash items affecting the difference between our net income and our net cash generated from operating activities in 2021 were HK$98.9 million in share-based compensation expenses and HK$138.2 million in foreign change gains.
Provision of income tax and valuation allowance for deferred tax asset Significant judgment is required in determining income tax expense based on tax laws in the various jurisdictions in which we operate.
In developing the macroeconomic scenario, significant judgment is also applied that take into consideration of a number of forecasted economic variables. Provision of income tax and valuation allowance for deferred tax asset Significant judgment is required in determining income tax expense based on tax laws in the various jurisdictions in which we operate.
Processing and servicing costs were HK$373.8 million (US$47.9 million) in 2022, an increase of 45.4% from HK$257.0 million in 2021. The growth was primarily due to an increase in cloud service fee to support overseas expansion.
Processing and servicing costs were HK$373.8 million in 2022, an increase of 45.4% from HK$257.0 million in 2021. The growth was primarily due to an increase in cloud service fee to support overseas expansion. Gross profit As a result of the foregoing, our total gross profit increased by 12.0% from HK$5,909.3 million in 2021 to HK$6,617.9 million in 2022.
Capital Commitment Our capital commitments are primarily related to capital contribution obligation for certain investment funds. As of December 31, 2022, total commitments contracted but not yet reflected in the consolidated financial statements amounted to US$74.0 million. Holding Company Structure Futu Holdings is a holding company with no material operations of its own.
As of December 31, 2023, total commitments contracted but not yet reflected in the consolidated financial statements amounted to US$72.5 million. Holding Company Structure Futu Holdings is a holding company with no material operations of its own.
The increase was primarily due to an increase in headcount for general and administrative personnel and higher professional service fees for our proposed listing in Hong Kong.
General and administrative expenses were HK$931.1 million in 2022, an increase of 76.0% from HK$529.0 million in 2021. The increase was primarily due to an increase in headcount for general and administrative personnel and higher professional service fees for our proposed listing in Hong Kong.
Selling and marketing expenses were HK$895.8 million (US$114.8 million) in 2022, a decrease of 35.7% from HK$1,392.1 million in 2021. The decrease was mainly due to slower paying client growth. General and administrative expenses . General and administrative expenses were HK$931.1 million (US$119.4 million) in 2022, an increase of 76.0% from HK$529.0 million in 2021.
The increase was primarily due to higher average salaries for R&D personnel and an increase in research and development headcount. Selling and marketing expenses . Selling and marketing expenses were HK$895.8 million in 2022, a decrease of 35.7% from HK$1,392.1 million in 2021. The decrease was mainly due to slower paying client growth. General and administrative expenses .
Operating expenses The following table sets forth the components of our operating expenses by amounts and percentages of operating expenses for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ HK$ % HK$ % HK$ US$ % ​ (in thousands, except for percentages) Operating expenses: Research and development expenses 513,283 44.7 805,325 29.5 1,222,077 156,646 40.1 Selling and marketing expenses 385,320 33.6 1,392,070 51.1 895,772 114,820 29.4 General and administrative expenses 248,404 21.7 529,048 19.4 931,144 119,354 30.5 Total operating expenses 1,147,007 100.0 2,726,443 100.0 3,048,993 390,820 100.0 ​ Research and development expenses .
Operating expenses The following table sets forth the components of our operating expenses by amounts and percentages of operating expenses for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ HK$ % HK$ % HK$ US$ % ​ (in thousands, except for percentages) Operating expenses: Research and development expenses 805,325 29.5 1,222,077 40.1 1,440,893 184,472 41.6 Selling and marketing expenses 1,392,070 51.1 895,772 29.4 710,348 90,943 20.5 General and administrative expenses 529,048 19.4 931,144 30.5 1,313,464 168,158 37.9 Total operating expenses 2,726,443 100.0 3,048,993 100.0 3,464,705 443,573 100.0 ​ Research and development expenses .
Costs The following table sets forth the components of our costs by amounts and percentages of costs for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ HK$ % HK$ % HK$ US$ % ​ (in thousands, except for percentages) Costs: Brokerage commission and handling charge expenses 361,486 51.9 572,159 47.4 329,789 42,273 33.1 Interest expenses 185,090 26.6 376,902 31.3 292,503 37,493 29.4 Processing and servicing costs 149,378 21.5 257,003 21.3 373,840 47,919 37.5 Total costs 695,954 100.0 1,206,064 100.0 996,132 127,685 100.0 ​ Brokerage commission and handling charge expenses Brokerage commission and handling charge expenses consist of fees charged by stock exchanges or executing brokers for our use of their clearing and settlement systems and expenses charged by commercial banks or stock exchanges for providing clearing and settlement services in connection with IPO subscriptions.
We generate market information and data income primarily by providing fee-based market data services to users and clients. ​ 175 Table of Contents Costs The following table sets forth the components of our costs by amounts and percentages of costs for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ HK$ % HK$ % HK$ US$ % ​ (in thousands, except for percentages) Costs: ​ ​ ​ Brokerage commission and handling charge expenses 572,159 47.4 329,789 33.1 249,567 31,951 16.2 Interest expenses 376,902 31.3 292,503 29.4 910,759 116,601 59.3 Processing and servicing costs 257,003 21.3 373,840 37.5 375,904 48,126 24.5 Total costs 1,206,064 100.0 996,132 100.0 1,536,230 196,678 100.0 ​ Brokerage commission and handling charge expenses Brokerage commission and handling charge expenses consist of fees charged by stock exchanges or executing brokers for our use of their clearing and settlement systems and expenses charged by commercial banks or stock exchanges for providing clearing and settlement services in connection with IPO subscriptions.
Changes include a reduction in the federal corporate tax, changes to operating loss carry-forwards and carrybacks, and a repeal of the corporate alternative minimum tax. This legislation resulted in a reduction of the U.S. federal corporate income tax rates from a maximum of 35% to 21%, to which our subsidiaries incorporated in the United States are subject.
This legislation resulted in a reduction of the U.S. federal corporate income tax rates from a maximum of 35% to 21%, to which our subsidiaries incorporated in the United States are subject. Singapore Our subsidiaries incorporated in Singapore are subject to an income tax rate of 17% for taxable income earned in Singapore.
Year ended December 31, 2022 compared to year ended December 31, 2021 Revenues Total revenues were HK$7,614.0 million (US$976.0 million) in 2022, an increase of 7.0% from HK$7,115.3 million in 2021. 172 Table of Contents Brokerage commission and handling charge income.
Net income As a result of the foregoing, we had net income of HK$4,278.9 million (US$547.8 million) in 2023, compared to HK$2,926.9 million in 2022. Year ended December 31, 2022 compared to year ended December 31, 2021 Revenues Total revenues were HK$7,614.0 million in 2022, an increase of 7.0% from HK$7,115.3 million in 2021. Brokerage commission and handling charge income.
Ltd. ​ 881,028 ​ 213,683 ​ 667,345 Futu Insurance Brokers (Hong Kong) Limited ​ 1,304 ​ 500 ​ 804 Futu Securities (Australia) Ltd. 48,180 2,299 45,881 ​ Where the relevant operating subsidiaries do not meet regulatory capital requirements, such subsidiaries may be faced with certain operational restrictions, including cessation of carrying on of business in any or all of the regulated activities permitted under their respective licenses.
Ltd. ​ 1,761,901 ​ 258,553 ​ 1,503,348 ​ Where the relevant operating subsidiaries do not meet regulatory capital requirements, such subsidiaries may be faced with certain operational restrictions, including cessation of carrying on of business in any or all of the regulated activities permitted under their respective licenses.
Operating Lease Commitments The following table sets forth our operating lease commitments as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payment due by December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2027 and ​ Total 2023 2024 2025 2026 thereafter ​ ​ (HK$in thousands) Operating lease commitments (1) ​ 223,536 111,603 55,478 42,339 12,073 2,043 Total ​ 223,536 111,603 55,478 42,339 12,073 2,043 Notes: (1) Operating lease commitments consist of the commitments under the lease agreements for our office premises.
Operating Lease Commitments The following table sets forth our operating lease commitments as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payment due by December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total 2024 2025 2026 2027 ​ ​ (HK$ in thousands) Operating lease commitments (1) ​ 248,114 116,684 104,637 24,745 2,048 Note: (1) Operating lease commitments consist of the commitments under the lease agreements for our office premises.
Gross profit As a result of the foregoing, our total gross profit increased by 12.0% from HK$5,909.3 million in 2021 to HK$6,617.9 million (US$848.3 million) in 2022. Gross profit margin increased from 83.0% in 2021 to 86.9% in 2022, primarily attributable to the development of our U.S. self-clearing business this year.
Gross profit margin increased from 83.0% in 2021 to 86.9% in 2022, primarily attributable to the development of our U.S. self-clearing business this year. Operating expenses Total operating expenses were HK$3,049.0 million in 2022, an increase of 11.8% from HK$2,726.4 million in 2021.
As of December 31, 2022, our cash and cash equivalents were HK$5,028.9 million (US$644.6 million), out of which HK$550.1 million (US$70.5 million) was held in Renminbi, HK$3,371.6 million (US$432.2 million) was held in U.S. dollars, HK$411.7 million (US$52.8 million) was held in Hong Kong dollars, HK$308.5 million (US$39.5 million) was held in Singapore dollars, HK$32.3 million (US$4.1 million) was held in Australian dollars, HK$345.3 million (US$44.3 million) was held in Japanese Yen, HK$0.5 million (US$0.1 million) was held in Malaysian Ringgit and HK$8.9 million (US$1.1 million) was held in Canadian dollars.
As of December 31, 2023, our cash and cash equivalents were HK$4,937.5 million (US$632.1 million), out of which HK$391.5 million (US$50.1 million) was held in Renminbi, HK$3,254.3 million (US$416.6 million) was held in U.S. dollars, HK$715.4 million (US$91.6 million) was held in Hong Kong dollars, HK$198.5 million (US$25.4 million) was held in Singapore dollars, HK$13.5 million (US$1.7 million) was held in Australian dollars, HK$270.9 million (US$34.7 million) was held in Japanese Yen, HK$32.4 million (US$4.1 million) was held in Malaysian Ringgit and HK$61.0 million (US$7.9 million) was held in Canadian dollars.
As of December 31, 2022, all of the regulated operating subsidiaries were in compliance with their respective regulatory capital requirements. 177 Table of Contents Cash Flows The following table sets forth a summary of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ HK$ HK$ HK$ US$ ​ (in thousands) Summary Consolidated Cash Flow Data: ​ ​ Net cash generated from operating activities 20,456,717 6,011,971 3,474,931 445,417 Net cash (used in)/ generated from investing activities (244,175) (963,565) 93,859 12,030 Net cash generated from/(used in) financing activities 8,406,896 10,554,218 (7,009,521) (898,481) Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,117) 167,130 (135,196) (17,329) Net increase/(decrease) in cash, cash equivalents and restricted cash 28,618,321 15,769,754 (3,575,927) (458,363) Cash, cash equivalents and restricted cash at beginning of the year 14,903,437 43,521,758 59,291,512 7,600,014 Cash, cash equivalents and restricted cash at end of the year 43,521,758 59,291,512 55,715,585 7,141,651 ​ Operating activities Net cash generated from operating activities in 2022 was HK$3.5 billion (US$445.4 million), as compared to net income of HK$2.9 billion (US$375.2 million) in the same year.
Cash Flows The following table sets forth a summary of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ HK$ HK$ HK$ US$ ​ (in thousands) Summary Consolidated Cash Flow Data: ​ ​ Net cash generated from/ (used in) operating activities 6,011,971 3,474,931 (6,337,396) (811,352) Net cash (used in)/ generated from investing activities (963,565) 93,859 (2,444,418) (312,949) Net cash generated from/(used in) financing activities 10,554,218 (7,009,521) 2,307,957 295,478 Effect of exchange rate changes on cash, cash equivalents and restricted cash 167,130 (135,196) 66,352 8,495 Net increase/(decrease) in cash, cash equivalents and restricted cash 15,769,754 (3,575,927) (6,407,505) (820,328) Cash, cash equivalents and restricted cash at beginning of the year 43,521,758 59,291,512 55,715,585 7,133,055 Cash, cash equivalents and restricted cash at end of the year 59,291,512 55,715,585 49,308,080 6,312,727 ​ 184 Table of Contents Operating activities Net cash used in operating activities in 2023 was HK$6.3 billion (US$811.4 million), as compared to net income of HK$4.3 billion (US$547.8 million) in the same year.
We do not have any variable interest in any unconsolidated entity that provides liquidity, capital resources, market risk support or credit support to us or engages in leasing, hedging or product development services with us. 180 Table of Contents Share Repurchase Program In November 2021, our board of directors approved a share repurchase program to repurchase up to US$300 million worth of ADSs until December 31, 2022.
We do not have any variable interest in any unconsolidated entity that provides liquidity, capital resources, market risk support or credit support to us or engages in leasing, hedging or product development services with us.
Financing activities Net cash used in financing activities in 2022 was HK$7.0 billion (US$898.5 million), primarily attributable to repayment of short-term borrowings of HK$74.7 billion (US$9.6 billion) and share repurchases of HK$3.1 billion (US$403.2 million), partially offset by proceeds of HK$70.8 billion (US$9.1 billion) from short-term borrowings.
Financing activities Net cash generated from financing activities in 2023 was HK$2.3 billion (US$295.5 million), primarily attributable to proceeds of HK$79.6 billion (US$10.2 billion) from other borrowings, partially offset by repayment of other borrowings of HK$76.4 billion (US$9.8 billion).
The principal non-cash items affecting the difference between our net income and our net cash generated from operating activities in 2020 were HK$32.6 million in share-based compensation expenses and HK$27.2 million in depreciation and amortization expenses. 178 Table of Contents Investing activities Net cash generated from investing activities in 2022 was HK$93.9 million (US$12.0 million), primarily due to proceeds from disposal of short-term investments of HK$4.6 billion (US$588.5 million), partially offset by purchase of short-term investments of HK$4.1 billion (US$520.6 million), acquisition of long-term investment of HK$235.4 million (US$30.2 million) and acquisition of subsidiaries of HK$109.5 million (US$14.0 million).
Net cash generated from investing activities in 2022 was HK$93.9 million, primarily due to proceeds from disposal of short-term investments of HK$4.6 billion, partially offset by purchase of short-term investments of HK$4.1 billion, acquisition of long-term investment of HK$235.4 million and acquisition of subsidiaries of HK$109.5 million.
In the years ended December 31, 2020 and 2021 and 2022, we did not incur any Singapore income tax as there was no estimated assessable profit that was subject to Singapore income tax.
In the years ended December 31, 2021, 2022 and 2023, we did not incur any Singapore income tax as there was no estimated assessable profit that was subject to Singapore income tax. ​ 177 Table of Contents PRC Generally, our PRC subsidiaries and the Consolidated Affiliated Entities are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%.
Our board of directors will review the share repurchase program periodically, and may modify, suspend or terminate the share repurchase program at any time. As of December 31, 2022, we have repurchased US$$253.2 million worth of ADSs in open market transactions in accordance with the authorization under this share repurchase program.
In March 2022, our board of directors authorized a new share repurchase program under which our company may repurchase up to US$500 million worth of ADSs, until December 31, 2023. As of December 31, 2023, we have repurchased US$364.8 million worth of ADSs in open market transactions in accordance with the authorization under this share repurchase program.
Interest expenses Interest expenses primarily consist of interest expenses of borrowings from commercial banks, other licensed financial institutions and other parties to fund our margin financing business, securities lending business and IPO financing business. 169 Table of Contents Processing and servicing costs Processing and servicing costs consist of market information and data fees, data transmission fees, cloud service fees, system cost and SMS (short messaging service) fees paid to stock exchanges and data and other service providers.
Interest expenses Interest expenses primarily consist of interest expenses of borrowings from commercial banks, other licensed financial institutions and other parties to fund our margin financing business, securities lending business and IPO financing business.
Our short-term borrowings bear weighted average interest rates of 1.82%, 1.15% and 3.86% as of December 31, 2020, 2021 and 2022, respectively. 179 Table of Contents Other than the above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2022.
Other than the above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2023.
Research and development expenses were HK$1,222.1 million (US$156.6 million) in 2022, an increase of 51.8% from HK$805.3 million in 2021. The increase was primarily due to higher average salaries for R&D personnel and an increase in research and development headcount. 173 Table of Contents Selling and marketing expenses .
Research and development expenses were HK$1,440.9 million (US$184.5 million) in 2023, an increase of 17.9% from HK$1,222.1 million in 2022. The increase was primarily due to an increase in research and development headcount to support new product offering. 180 Table of Contents Selling and marketing expenses .
Short-term Borrowings ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2020 ​ 2021 ​ 2022 ​ HK$ HK$ HK$ US$ Borrowings from: (in thousands) Banks (1) 5,182,620 6,357,405 2,480,532 317,956 Other financial institutions 300,198 — — — Total 5,482,818 6,357,405 2,480,532 317,956 Notes: (1) We have unused borrowing facilities of HK$3,285.9 million, HK$14,695.1 million HK$19,989.1 million (US$2,562.2 million) from banks as of December 31, 2020, 2021 and 2022, respectively, which are uncommitted.
Short-term Borrowings ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2021 ​ 2022 ​ 2023 ​ HK$ HK$ HK$ US$ ​ (in million) Borrowings from banks (1) : 6,357 2,481 5,652 724 Note: (1) We have unused borrowing facilities of HK$14,695.1 million, HK$19,989.1 million and HK$17,400.1 million (US$2,227.7 million) from banks as of December 31, 2021, 2022 and 2023,of which nil, nil and HK$586.2 million are committed, and the remaining are uncommitted, respectively.
The table below summarizes the net capital, the requirement and the excess capital for our broker-dealer and insurance broker subsidiaries as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2022 ​ Net Capital/ ​ ​ ​ Eligible Equity Requirement Excess ​ ​ (HK$ in thousands) Futu Securities International (Hong Kong) Limited 7,021,471 1,427,687 5,593,784 Moomoo Financial Inc. 132,413 20,222 112,191 Futu Clearing Inc. 4,183,966 311,304 3,872,662 Moomoo Financial Singapore Pte.
The table below summarizes the net capital, the requirement and the excess capital for our principal broker-dealer subsidiaries as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ Net Capital/ ​ ​ ​ Eligible Equity Requirement Excess ​ ​ (HK$ in thousands) Futu Securities International (Hong Kong) Limited 9,612,288 1,528,623 8,083,665 Moomoo Financial Inc. 132,522 21,619 110,903 Futu Clearing Inc. 5,198,748 375,692 4,823,056 Moomoo Financial Singapore Pte.
The increase in accounts payable to clients and brokers was due to the increase of cash deposits as a result of the expansion of our brokerage business. The increase of loans and advances was due to the expansion of our margin financing business.
The difference was primarily due to net increase in loans and advances of HK$5.9 billion (US$749.3 million) and net decrease in accounts payable to clients and brokers of HK$4.6 billion (US$590.7 million). The increase in loans and advances was due to the expansion of our margin financing business.
Singapore Our subsidiaries incorporated in Singapore are subject to an income tax rate of 17% for taxable income earned in Singapore. Singapore does not impose a withholding tax on dividends for resident companies.
Singapore does not impose a withholding tax on dividends for resident companies.
We have entered into short-term borrowings primarily to support our margin financing business in Hong Kong.
We have entered into short-term borrowings primarily to support our margin financing business in Hong Kong. Our short-term borrowings bear weighted average interest rates of 1.15%, 3.86% and 5.30% as of December 31, 2021, 2022 and 2023, respectively.
Key Components of Results of Operations Revenues We generate revenues primarily from our online brokerage and margin financing services.
Our ability to effectively manage the quality of collateral and to collect loans and advances when due is critical to our business, prospects and financial conditions. ​ 174 Table of Contents Key Components of Results of Operations Revenues We generate revenues primarily from our online brokerage and margin financing services.
Net cash used in investing activities in 2020 was HK$244.2 million, primarily due to the placement of term deposit of HK$300.0 million with initial terms of over three months and the purchase of available-for-sale financial securities of HK$206.8 million, partially offset by the proceeds from disposal of available-for-sale financial securities of HK$306.6 million.
Investing activities Net cash used in investing activities in 2023 was HK$2.4 billion (US$312.9 million), primarily due to purchase of short-term investments of HK$4.8 billion (US$608.8 million), partially offset by the proceeds from disposal of short-term investments of HK$2.4 billion (US$309.5 million).
The increase was primarily due to higher branding and marketing expenses in 2021, especially in international markets. General and administrative expenses . Our general and administrative expenses were HK$529.0 million in 2021, an increase of 113.0% from HK$248.4 million in 2020. The increase was primarily due to an increase in headcount for general and administrative personnel.
The increase was primarily due to an increase in headcount for general and administrative personnel, especially in new markets. Income tax expense We had income tax expense of HK$748.5 million (US$95.8 million) in 2023, compared to HK$414.0 million in 2022, primarily due to the 50.5% year-over-year increase in our income before income tax expenses.

… 58 more changes not shown on this page.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

37 edited+5 added−4 removed77 unchanged
Biggest changeAs of the Latest Practicable Date, 9,112,530 share options and 26,274,336 restricted share units have been granted and were outstanding under the 2014 Incentive Plan and the 2019 Incentive Plan, excluding awards that were forfeited or cancelled after the relevant grant dates. 187 Table of Contents The following table summarizes, as of the Latest Practicable Date, the number of Class A ordinary shares underlying outstanding options, restricted share units and other equity awards that we granted to our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ ​ ​ ​ Underlying ​ ​ ​ ​ ​ ​ ​ ​ Equity Awards ​ Exercise Price ​ ​ ​ ​ Name ​ Granted ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Leaf Hua Li *(1)(2) ​ — December 24, 2020 December 23, 2030 Arthur Yu Chen ​ *(1) ​ Nominal November 8, 2018, October 5, 2020, December 16, 2021, December 30, 2022 November 7, 2023, October 4, 2030, December 15, 2031, December 29, 2032 Robin Li Xu *(1) ​ Nominal January 2, 2020, December 30, 2022 January 1, 2030, December 29, 2032 Notes: (1) “*” denotes less than 1% of our total outstanding ordinary shares.
Biggest changeThe following table summarizes, as of the Latest Practicable Date, the number of Class A ordinary shares underlying outstanding options, restricted share units and other equity awards that we granted to our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ ​ ​ ​ Underlying ​ ​ ​ ​ ​ ​ ​ ​ Equity Awards ​ Exercise Price ​ ​ ​ ​ Name ​ Granted ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Leaf Hua Li *(1)(2) ​ — December 24, 2020 December 23, 2030 Arthur Yu Chen ​ *(1) ​ Nominal November 8, 2018, October 5, 2020, December 16, 2021, December 30, 2022, December 24, 2023 November 7, 2023, October 4, 2030, December 15, 2031, December 29, 2032, December 23, 2033 Robin Li Xu *(1) ​ Nominal January 2, 2020, December 30, 2022, December 24, 2023 January 1, 2030, December 29, 2032, December 23, 2033 Notes: (1) “*” denotes less than 1% of our total outstanding ordinary shares.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 189 Table of Contents Compensation Committee .
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. ​ 196 Table of Contents Compensation Committee .
Brenda Pui Man Tam and Mr. Vic Haixiang Li. Ms. Brenda Pui Man Tam is the chairperson of our audit committee. We have determined that Ms. Brenda Pui Man Tam and Mr.
Our audit committee consists of Ms. Brenda Pui Man Tam and Mr. Vic Haixiang Li. Ms. Brenda Pui Man Tam is the chairperson of our audit committee. We have determined that Ms. Brenda Pui Man Tam and Mr.
No amendment, suspension or termination of the 2014 Incentive Plan or amendment of any outstanding award granted pursuant to the 2014 Incentive Plan may affect, in any manner materially adverse to the participant, any rights or benefits of the participant or the obligation of our company under the applicable awards previously granted pursuant to the 2014 Incentive Plan unless agreed by the participant in writing. 186 Table of Contents 2019 Share Incentive Plan In December 2018, our board of directors approved the 2019 Share Incentive Plan, or the 2019 Incentive Plan, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
No amendment, suspension or termination of the 2014 Incentive Plan or amendment of any outstanding award granted pursuant to the 2014 Incentive Plan may affect, in any manner materially adverse to the participant, any rights or benefits of the participant or the obligation of our company under the applicable awards previously granted pursuant to the 2014 Incentive Plan unless agreed by the participant in writing. 2019 Share Incentive Plan In December 2018, our board of directors approved the 2019 Share Incentive Plan, or the 2019 Incentive Plan, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
Board Diversity ​ ​ ​ ​ ​ ​ ​ ​ ​ Board Diversity Matrix (As of the Latest Practicable Date) ​ Country of Principal Executive Offices: Hong Kong S.A.R., People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 5 ​ Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 4 — — Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction ​ — LGBTQ+ ​ — Did Not Disclose Demographic Background ​ — ​ 191 Table of Contents D.
Board Diversity ​ ​ ​ ​ ​ ​ ​ ​ ​ Board Diversity Matrix (As of the Latest Practicable Date) ​ Country of Principal Executive Offices: Hong Kong S.A.R., People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 5 ​ Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 4 — — Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction — LGBTQ+ — Did Not Disclose Demographic Background — ​ D.
Zhang received an associate’s degree in marketing from Nanjing University of Science and Technology in June 1994, a master’s degree in business administration from South China University of Technology in June 2009 and an executive master’s degree in business administration from Cheung Kong Graduate School of Business in September 2013. 183 Table of Contents Mr.
Zhang received an associate’s degree in marketing from Nanjing University of Science and Technology in June 1994, a master’s degree in business administration from South China University of Technology in June 2009 and an executive master’s degree in business administration from Cheung Kong Graduate School of Business in September 2013. 190 Table of Contents Mr.
(2) In December 2020, our company granted Mr. Li restricted share units under the 2019 Incentive Plan to acquire 800 Class A ordinary shares for the purpose of testing and experiencing our self-developed ESOP management system. Equity Incentive Trust FUTU First Trust was established under a deed of declaration by Vistra Trust (Singapore) Pte.
(2) In December 2020, our company granted Mr. Li restricted share units under the 2019 Incentive Plan to acquire 800 Class A ordinary shares for the purpose of testing and experiencing our self-developed ESOP management system. ​ 194 Table of Contents Equity Incentive Trust FUTU First Trust was established under a deed of declaration by Vistra Trust (Singapore) Pte.
Our Hong Kong subsidiaries are required by the Hong Kong Mandatory Provident Fund Schemes Ordinance to make monthly contributions to the mandatory provident fund scheme in an amount equal to 5% of an employee’s salary subject to the statutory maximum at HK$1,500. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
Our Hong Kong subsidiaries are required by the Hong Kong Mandatory Provident Fund Schemes Ordinance to make monthly contributions to the mandatory provident fund scheme in an amount equal to 5% of an employee’s salary subject to the statutory maximum at HK$1,500. 191 Table of Contents Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
Xu has over ten years of experience in the internet industry including seven years at Tencent where he was a senior product manager responsible for online payment product development and operations for Tenpay. Mr. Xu received his bachelor’s degree in science from Heilongjiang University in July 2006. 184 Table of Contents B.
Xu has over ten years of experience in the internet industry including seven years at Tencent where he was a senior product manager responsible for online payment product development and operations for Tenpay. Mr. Xu received his bachelor’s degree in science from Heilongjiang University in July 2006. B.
The registered address of each of Qiantang River Investment Limited, Image Frame Investment (HK) Limited and Tencent Holdings Limited is 29/F, Three Pacific Place, No. 1, Queen’s Road East, Wanchai, Hong Kong.
The registered address of each of Huang River Investment Limited, Image Frame Investment (HK) Limited and Tencent Holdings Limited is 29/F, Three Pacific Place, No. 1, Queen’s Road East, Wanchai, Hong Kong.
The deed provides that Vistra Trust shall not exercise the voting rights attached to such Class A ordinary shares unless otherwise directed by the trust administrator, which is an advisory committee consisting of authorized representatives of our company. 188 Table of Contents C. Board Practices Board of Directors Our board of directors consists of five directors.
The deed provides that Vistra Trust shall not exercise the voting rights attached to such Class A ordinary shares unless otherwise directed by the trust administrator, which is an advisory committee consisting of authorized representatives of our company. C. Board Practices Board of Directors Our board of directors consists of five directors.
In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. 190 Table of Contents Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
(4) Eligibility . We may grant awards to our employees, directors and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies and subsidiaries. (5) Vesting Schedule .
(4) Eligibility . We may grant awards to our employees, directors and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies and subsidiaries. 193 Table of Contents (5) Vesting Schedule .
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ Class A Ordinary Class B % of Total % of Aggregate ​ ​ Shares ​ Ordinary Shares ​ Ordinary Shares ​ Voting Power*** Directors and Executive Officers**: ​ ​ ​ ​ ​ ​ ​ ​ ​ Leaf Hua Li (1) 164,086,568 239,750,000 36.2 % 59.4 % Arthur Yu Chen (2) * — * * ​ Nineway Jie Zhang * — * * ​ Shan Lu (3) * — * * ​ Robin Li Xu (4) * — * * ​ Vic Haixiang Li (5) — — — — ​ Brenda Pui Man Tam (6) — — — — ​ All Directors and Executive Officers as a Group 173,870,472 239,750,000 37.1 % 59.4 % Principal Shareholders: ​ ​ ​ ​ ​ Leaf Hua Li (1) 164,086,568 239,750,000 36.2 % 59.4 % Entities affiliated with Tencent (7) 106,616,611 140,802,051 22.1 % 35.0 % * Less than 1% of our total outstanding ordinary shares. ** Except as indicated otherwise below, the business address of our directors and executive officers is 28/F, Unit 1, Building D, Kexing Science Park, 15 Keyuan Road, Technology Park, Nanshan District, Shenzhen, People’s Republic of China. *** For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such person or group with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ Class A Ordinary Class B % of Total % of Aggregate ​ ​ Shares ​ Ordinary Shares ​ Ordinary Shares ​ Voting Power*** Directors and Executive Officers**: ​ ​ ​ ​ ​ ​ ​ ​ ​ Leaf Hua Li (1) 164,086,568 239,750,000 36.6 % 63.1 % Arthur Yu Chen (2) * — * * ​ Nineway Jie Zhang * — * * ​ Shan Lu (3) * — * * ​ Robin Li Xu (4) * — * * ​ Vic Haixiang Li (5) — — — — ​ Brenda Pui Man Tam (6) — — — — ​ All Directors and Executive Officers as a Group 173,331,192 239,750,000 37.4 % 63.2 % Principal Shareholders: ​ ​ ​ ​ ​ Leaf Hua Li (1) 164,086,568 239,750,000 36.6 % 63.1 % Entities affiliated with Tencent (7) 131,616,611 115,802,051 22.4 % 31.1 % * Less than 1% of our total outstanding ordinary shares. ** Except as indicated otherwise below, the business address of our directors and executive officers is 28/F, Unit 1, Building D, Kexing Science Park, 15 Keyuan Road, Technology Park, Nanshan District, Shenzhen, People’s Republic of China. *** For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such person or group with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
Awards granted under the 2014 Incentive Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event that the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.
Awards granted under the 2014 Incentive Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event that the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award. 192 Table of Contents (4) Eligibility .
Directors and Senior Management The following table sets forth information regarding our directors and executive officers as of the date of this annual report. ​ ​ ​ ​ ​ Directors and Executive Officers Age Position/Title Leaf Hua Li 46 Founder, Chairman of the Board of Directors and Chief Executive Officer Arthur Yu Chen 47 Chief Financial Officer Nineway Jie Zhang 48 Director Shan Lu 48 Director Vic Haixiang Li 50 Independent Director Brenda Pui Man Tam 52 Independent Director Robin Li Xu 40 Senior Vice President ​ Mr.
Directors and Senior Management The following table sets forth information regarding our directors and executive officers as of the date of this annual report. ​ ​ ​ ​ ​ Directors and Executive Officers Age Position/Title Leaf Hua Li 47 Founder, Chairman of the Board of Directors and Chief Executive Officer Arthur Yu Chen 48 Chief Financial Officer Nineway Jie Zhang 49 Director Shan Lu 49 Director Vic Haixiang Li 51 Independent Director Brenda Pui Man Tam 53 Independent Director Robin Li Xu 41 Senior Vice President ​ Mr.
(7) Represents (i) 140,802,051 Class B ordinary shares and 28,840,949 Class A ordinary shares held of record by Qiantang River Investment Limited, a wholly-owned subsidiary of Tencent Holdings Limited; (ii) 71,024,142 Class A ordinary shares held of record by Image Frame Investment (HK) Limited, a wholly-owned subsidiary of Tencent Holdings Limited; (iii) 1,161,840 Class A ordinary shares represented by 145,230 ADSs held of record by TPP Opportunity GP I, Ltd., an entity controlled by Tencent Holdings Limited; (iv) 5,412,888 Class A ordinary shares represented by 676,611 ADSs held of record by Tencent Mobility Limited, a wholly-owned subsidiary of Tencent Holdings Limited; and (v) 176,792 Class A ordinary shares represented by 22,099 ADSs held of record by Distribution Pool Limited, a wholly-owned subsidiary of Tencent Holdings Limited, as reported on Schedule 13G/A filed by Qiantang River Investment Limited, among others, on February 3, 2023.
(7) Represents (i) 115,802,051 Class B ordinary shares and 53,840,949 Class A ordinary shares held of record by Huang River Investment Limited, a wholly-owned subsidiary of Tencent Holdings Limited; (ii) 71,024,142 Class A ordinary shares held of record by Image Frame Investment (HK) Limited, a wholly-owned subsidiary of Tencent Holdings Limited; (iii) 1,161,840 Class A ordinary shares represented by 145,230 ADSs held of record by TPP Opportunity GP I, Ltd., an entity controlled by Tencent Holdings Limited; (iv) 5,412,888 Class A ordinary shares represented by 676,611 ADSs held of record by Tencent Mobility Limited, a wholly-owned subsidiary of Tencent Holdings Limited; and (v) 176,792 Class A ordinary shares represented by 22,099 ADSs held of record by Distribution Pool Limited, a wholly-owned subsidiary of Tencent Holdings Limited, as reported on the Schedule 13G/A filed by Huang River Investment Limited, among others, on February 2, 2024.
(4) Eligibility . We may grant awards to, among others, our officers, employees, directors and consultants of our company. (5) Vesting schedule . In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. (6) Exercise of options .
We may grant awards to, among others, our officers, employees, directors and consultants of our company. (5) Vesting schedule . In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. (6) Exercise of options . The plan administrator determines the exercise price for each award, which is stated in the award agreement.
A director will cease to be a director automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be or becomes of unsound mind; (iii) resigns his office by notice in writing to our company; or (iv) without special leave of absence from our board, is absent from meetings of our board for three consecutive meetings and our board resolves that his office be vacated.
A director will cease to be a director automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be or becomes of unsound mind; (iii) resigns his office by notice in writing to our company; or (iv) without special leave of absence from our board, is absent from meetings of our board for three consecutive meetings and our board resolves that his office be vacated. 198 Table of Contents Our officers are elected by and serve at the discretion of our board of directors.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the Latest Practicable Date by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our ordinary shares. 192 Table of Contents The calculations in the table below are based on 736,493,164 Class A ordinary shares and 380,552,051 Class B ordinary shares outstanding as of the Latest Practicable Date.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the Latest Practicable Date by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our ordinary shares. 200 Table of Contents The calculations in the table below are based on 747,830,786 Class A ordinary shares and 355,552,051 Class B ordinary shares outstanding as of the Latest Practicable Date.
Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee . Our audit committee consists of Ms.
Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. ​ 195 Table of Contents Audit Committee .
Li, among others, on February 10, 2023. Lera Ultimate Limited is ultimately owned by Lera Direction Plus Trust and Lera Infinity Limited is ultimately owned by Lera Target Trust. Mr.
Li, among others, on February 6, 2024. Lera Ultimate Limited is ultimately owned by Lera Direction Plus Trust and Lera Infinity Limited is ultimately owned by Lera Target Trust. Mr.
The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term is ten years from the date of a grant. (7) Transfer restrictions .
The vested portion of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term is ten years from the date of a grant. (7) Transfer restrictions .
To our knowledge, as of the Latest Practicable Date, a total of 585,524,848 Class A ordinary shares are held by one record holder in the United States, representing approximately 52.4% of our total outstanding shares. The holder is The Bank of New York Mellon, the depositary of the ADS program.
To our knowledge, as of the Latest Practicable Date, a total of 572,111,688 Class A ordinary shares are held by one record holder in the United States, representing approximately 51.9% of our total outstanding shares. The holder is The Bank of New York Mellon, the depositary of the ADS program.
Our directors also owe to our company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience.
It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience.
The nominating and corporate governance committee is responsible for, among other things: ● selecting and recommending to the board nominees for election by the shareholders or appointment by the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.
The nominating and corporate governance committee is responsible for, among other things: ● selecting and recommending to the board nominees for election by the shareholders or appointment by the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. 197 Table of Contents Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests.
The following table sets forth the number of our employees as of December 31, 2022 by function: ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ December 31, 2022 ​ ​ Number ​ % Functions: ​ ​ Research and development 1,788 64.2 % Customer services and operations 365 13.1 % General and administration 401 14.4 % Marketing 230 8.3 % Total 2,784 100.0 % ​ We participate in various employee social security plans that are organized by municipal and provincial governments, including housing, pension, medical insurance and unemployment insurance, as required by laws and regulations in the PRC.
The following table sets forth the number of our employees as of December 31, 2023 by function: ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ December 31, 2023 ​ ​ Number ​ % Functions: ​ ​ Research and development 2,047 63.7 ​ Customer services and operations 392 12.2 ​ General and administration 434 13.5 ​ Marketing 340 10.6 ​ Total 3,213 100.0 ​ ​ 199 Table of Contents We participate in various employee social security plans that are organized by municipal and provincial governments, including housing, pension, medical insurance and unemployment insurance, as required by laws and regulations in the PRC.
Compensation Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2022, we paid an aggregate of HK$27.8 million (US$3.6 million) in cash to our executive officers and directors, and an aggregate of HK$350,000 (US$45,000) in cash to our non-executive directors.
Compensation Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2023, we paid an aggregate of HK$36.5 million (US$4.7 million) in cash to our executive officers and directors, and an aggregate of HK$350.0 thousands (US$44.8 thousands) in cash to our non-executive directors.
Vic Haixiang Li has served as our independent director since March 2019 and is mainly responsible for providing professional opinion and advice to our board of directors. Mr.
Vic Haixiang Li has served as our independent director since March 2019 and is mainly responsible for providing professional opinion and advice to our board of directors. Mr. Vic Li is the founder and managing partner of VI Ventures, a boutique venture capital fund, and chairman of VI Asset Management. Mr.
The registered address of each of Lera Ultimate Limited and Lera Infinity Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. (2) The business address of Mr. Arthur Yu Chen is 11/F, Bangkok Bank Building, No. 18 Bonham Strand W, Sheung Wan, Hong Kong S.A.R., People’s Republic of China.
The registered address of each of Lera Ultimate Limited and Lera Infinity Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. (2) The business address of Mr.
He now focuses on investments in technology, media and telecommunications as well as medical technology companies in China. Mr. Li received his bachelor’s degree in computer software from South China University of Technology in July 1994 and his master’s degree in business administration from China Europe International Business School in September 2017.
Vic Li is one of the founders and a former senior executive vice president of Tencent. Mr. Li received his bachelor’s degree in computer software from South China University of Technology in July 1994 and his master’s degree in business administration from China Europe International Business School in September 2017.
Vic Haixiang Li is Suite 7013, 70/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong S.A.R., People’s Republic of China. (6) The business address of Ms. Brenda Pui Man Tam is 932 Weldwood Ct, Los Gatos, CA 95032, the United States of America.
Robin Li Xu is 1 Raffles Quay, #39-02, North Tower, Singapore. (5) The business address of Mr. Vic Haixiang Li is Suite 7013, 70/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong S.A.R., People’s Republic of China. (6) The business address of Ms.
(3) The business address of Mr. Shan Lu is Building A, No.12, Shenzhenwan Science and Technology Ecological Garden, Yuehai Subdistrict, Nanshan District, Shenzhen, People’s Republic of China. 193 Table of Contents (4) The business address of Mr. Robin Li Xu is 1 Raffles Quay, #39-02, North Tower, Singapore. (5) The business address of Mr.
Arthur Yu Chen is 34/F, United Centre, 95 Queensway, Admiralty, Hong Kong S.A.R., People’s Republic of China. 201 Table of Contents (3) The business address of Mr. Shan Lu is Building A, No.12, Shenzhenwan Science and Technology Ecological Garden, Yuehai Subdistrict, Nanshan District, Shenzhen, People’s Republic of China. (4) The business address of Mr.
Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. 185 Table of Contents Amended and Restated 2014 Share Incentive Plan In December 2018, our board of directors approved the Amended and Restated 2014 Share Incentive Plan, or the 2014 Incentive Plan, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
Amended and Restated 2014 Share Incentive Plan In December 2018, our board of directors approved the Amended and Restated 2014 Share Incentive Plan, or the 2014 Incentive Plan, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
As of December 31, 2022, 2,426 employees were located in Mainland China, 152 employees were located in Hong Kong, 96 employees were located in the United States, 66 employees were located in Singapore, 22 employees were located in Australia, and 22 employees were located elsewhere.
Employees We had a total of 2,318, 2,784 and 3,213 employees as of December 31, 2021, 2022 and 2023, respectively. As of December 31, 2023, 2,671 employees were located in Mainland China, 210 employees were located in Hong Kong, 113 employees were located in the United States, 85 employees were located in Singapore, and 134 employees were located elsewhere.
Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose.
Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to act with skill and care.
We have also entered into indemnification agreements with each of our directors and executive officers.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.
Removed
Vic Li is the founder and managing partner of Virtus Inspire Ventures, a boutique venture capital fund that offers seed, venture, and growth stage funding, responsible for providing strategic advice on the overall development of Virtus Inspire Ventures. Prior to founding Virtus Inspire Ventures, Mr.
Added
As of the Latest Practicable Date, 6,186,058 share options and 26,915,784 restricted share units have been granted and were outstanding under the 2014 Incentive Plan and the 2019 Incentive Plan, excluding awards that were forfeited or cancelled after the relevant grant dates.
Removed
Vic Li had served as the senior executive vice president of Tencent since 1999 and was responsible for the planning, construction and management and operation of its platforms. From 2010 to 2012, he was in charge of Tencent’s online search business. Mr. Vic Li left Tencent in 2012.
Added
In Japan, we provide statutory employee benefits, including health insurance, pension insurance, and nursing care insurance. Additionally, we offer employee benefits beyond legal requirements, such as marriage celebration bonuses and newborn child celebration bonuses. In Australia, we provide statutory insurance coverage, including retirement pensions and workers’ compensation insurance.
Removed
Our officers are elected by and serve at the discretion of our board of directors.
Added
Furthermore, we offer additional benefits such as marriage bonuses, baby baptism bonuses, and hospitalization benefits. In the province of Ontario, Canada, we actively participate in various employee welfare programs regulated by provincial and federal authorities. These programs include retirement pensions, medical insurance, and unemployment insurance.
Removed
Employees We had a total of 1,315, 2,318 and 2,784 employees as of December 31, 2020, 2021 and 2022, respectively.
Added
In accordance with Canadian employment laws, we are obligated to contribute a specified percentage of wages, bonuses, and certain allowances to employee benefit plans. The contribution percentage is set within the limits defined by provincial and federal regulations.
Added
Brenda Pui Man Tam is 932 Weldwood Ct, Los Gatos, CA 95032, the United States of America.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

4 edited+0 added−21 removed1 unchanged
Biggest changeAs of December 31, 2022, we had amounts due to Tencent of HK$52.7 million (US$6.8 million), primarily consisting of amounts due to Tencent of HK$48.7 million (US$6.2 million) in relation to purchase of cloud equipment and services. 194 Table of Contents Strategic Cooperation Framework Agreement .
Biggest changeAs of December 31, 2023, we had amounts due to Tencent of HK$69.0 million (US$8.8 million), primarily consisting of amounts due to Tencent of HK$55.9 million (US$7.2 million) in relation to purchase of cloud equipment and services. Transactions with Directors and Executive Officers We provide brokerage services to our directors and officers and their spouses.
Directors, Senior Management and Employees—B. Compensation.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation.” C. Interests of Experts and Counsel Not applicable. ​
Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B. Compensation.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation.” C. Interests of Experts and Counsel Not applicable. ​
Organizational Structure—Contractual Arrangements with the VIEs and Their Shareholders.” Transactions and Strategic Cooperation with Tencent Transactions with Tencent . Tencent has been a principal shareholder of us since October 2014. We purchased software, cloud services, SMS channel services and other services from Tencent in the amount of HK$175.0 million (US$22.4 million) in 2022.
Organizational Structure—Contractual Arrangements with the VIEs and Their Shareholders.” 202 Table of Contents Transactions with Tencent Tencent has been a principal shareholder of us since October 2014. We purchased software, cloud services, SMS channel services and other services from Tencent in the amount of HK$158.9 million (US$20.3 million) in 2023.
Cash deposited by our directors, officers, and their spouses for trading purpose were recorded as payables to clients in our consolidated balance sheets and amounted to HK$29.7 million (US$3.8 million) as of December 31, 2022.
Revenue earned from such services amounted to HK$0.1 million (US$0.01 million) for the year ended December 31, 2023. Cash deposited by our directors, officers and their spouses for trading purpose were recorded as payables to clients in our consolidated balance sheets and amounted to HK$31.5 million (US$4.0 million) as of December 31, 2023.
Removed
We work with our strategic investor, Tencent, across a number of cooperation areas in a mutually beneficial relationship. Our collaboration is in part driven by our shared values of technological excellence and innovation. Collaborating with Tencent creates meaningful advantages to us.
Removed
In December 2019, Shenzhen Futu, one of our operating entities in China, entered into a strategic cooperation framework agreement with Shenzhen Tencent Computer System Co., Ltd. ( 深圳市 腾讯计算机系统有限公司 ), a subsidiary of Tencent.
Removed
Pursuant to the strategic cooperation framework agreement, subject to further definitive agreements to be entered into between the parties, and to the extent in compliance with applicable laws and regulations, Tencent agreed to cooperate with us in traffic, content and cloud areas through Tencent’s online platform.
Removed
In addition, to the extent permitted by the applicable laws and regulations, we and Tencent agreed to further explore and pursue additional opportunities for potential cooperation in the area of fintech-related products and services to expand both parties’ international operations. Tencent also agreed to cooperate with us in the areas of ESOP services, administration, talent recruiting and training.
Removed
The strategic cooperation framework agreement has a term of three years unless Tencent ultimately holds less than 15% of our outstanding shares (including through convertible notes and/or other convertible rights that can be converted into ours shares), in which case the agreement will be terminated.
Removed
After the expiration of the agreement, if both parties intend to continue the cooperation under the agreement, a separate written agreement will be executed upon negotiation of the parties. The agreement is governed by PRC law. For any dispute arising out of or relating to the agreement, the parties should first strive to resolve the dispute through amicable consultation.
Removed
In case no settlement can be reached through consultation within thirty (30) days after either party has issued a notice to the other party on such dispute, either we or Tencent can bring the dispute to a Nanshan district court in Shenzhen, China for resolution.
Removed
Transactions with Directors and Executive Officers We provide brokerage services to our directors and officers and their spouses. Revenue earned from such services amounted to HK$0.6 million (US$0.1 million) for the year ended December 31, 2022.
Removed
Shareholders Agreement We entered into a second amended and restated shareholders agreement on May 22, 2018 with our shareholders, which consist of holders of our ordinary shares and preferred shares.
Removed
Other than provisions with respect to registration rights, the description of which is set forth below, all provisions and rights under our second amended and restated shareholders agreement terminated upon consummation of our initial public offering.
Removed
Registration Rights Our registrable securities will include (i) the ordinary shares issued or issuable upon conversion of the preferred shares, (ii) any ordinary shares we issued or issuable as a dividend or other distribution with respect to, in exchange for, or in replacement of, the shares referenced in (i) herein, and (iii) any ordinary shares owned or hereafter acquired by the holders of Series A preferred shares, Series A-1 preferred shares, Series B preferred shares, Series C preferred shares and Series C-1 preferred shares. 195 Table of Contents Demand Registration Rights Registration other than on Form F-3 or Form S-3.
Removed
At any time or from time to time after the earlier of (i) May 27, 2023 or (ii) the date that is six (6) months after the closing of our initial public offering, holder(s) holding ten percent (10%) or more of the voting power of the then outstanding registrable securities held by all holders may request in writing that we effect a registration of the registrable securities.
Removed
Upon receipt of such a request, we shall promptly give written notice of the proposed registration to all other holders and as soon as practicable, use its best efforts to cause the registrable securities specified in the request, together with any registrable securities of any holder who requests in writing to join such registration within fifteen (15) business days after our delivery of written notice, to be registered and/or qualified for sale and distribution in such jurisdiction as the initiating holders may request.
Removed
We shall be obligated to effect no more than three (3) registrations that have been declared and ordered effective; provided that if the sale of all of the registrable securities sought to be included is not consummated, such registration shall not be deemed to constitute one of the registration rights. Registration on Form F-3 or Form S-3.
Removed
If we qualify for registration on Form F-3 or Form S-3 (or any comparable form for registration in a jurisdiction other than the United States), holder(s) holding ten percent (10%) or more of the voting power of the then outstanding registrable securities held by all holders has the right to request us to file, in any jurisdiction in which we have had a registered underwritten public offering, a registration statement on Form F-3 or Form S-3 (or any comparable form for registration in a jurisdiction other than the United States).
Removed
Upon receipt of such a request, we shall (i) promptly give written notice of the proposed registration to all other holders and (ii) as soon as practicable, use its best efforts to cause the registrable securities specified in the request, together with any registrable securities of any holder who requests in writing to join such registration within fifteen (15) business days after our delivery of written notice, to be registered and qualified for sale and distribution in such jurisdiction.
Removed
Piggyback Registration Rights If we propose to register any of our securities for a public offering of such securities, or for the account of any holder (other than a holder) of equity securities any of such holder’s equity securities (except for exempt registration), we shall promptly give each holder written notice of such registration and, upon the written request of any holder given within fifteen (15) business days after delivery of such notice, we shall use our best efforts to include in such registration any registrable securities thereby requested to be registered by such holder.
Removed
If a holder decides not to include all or any of its registrable securities in such registration, such holder will continue to have the right to include any registrable securities in any subsequent registration statement as may be filed by us, subject to certain limitations.
Removed
Expenses of Registration We will pay all expenses, other than the underwriting discounts and selling commissions applicable to the sale of registrable securities pursuant to the registration rights (which will be borne by the holders requesting registration on a pro rata basis in proportion to their respective numbers of registrable securities sold in such registration), incurred in connection with registrations, filings or qualifications pursuant to the registration rights, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees charged by depository banks, transfer agents, and share registrars, fees and disbursements of counsel for us and reasonable fees and disbursement of one counsel for all selling holders.
Removed
However, we are not obligated to pay any expenses of any registration proceeding if the registration request is subsequently withdrawn at the request of the holders holding at least a majority of the voting power of the registrable securities requested to be registered by all the holder in such registration (in which case all participating holders will bear such expenses pro rata based upon the number of registrable securities that were to be thereby registered in the withdrawn registration).
Removed
Termination of Obligations The registration rights set forth above will terminate on the earlier of (i) the date that is five (5) years from the date of closing of a qualified initial public offering and (ii) with respect to any holder, the date on which such holder may sell all of such holder’s registrable securities under Rule 144 of the Securities Act in any ninety (90)-day period. 196 Table of Contents Employment Agreements and Indemnification Agreements See “Item 6.

Other FUTU 10-K year-over-year comparisons