SecProbe.io

CORRESP
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filename1.htm

October
31, 2024

Via
Edgar Transmission

Ms. Jennifer O’Brien

Securities and Exchange Commission

Division
of Corporation Finance

Office of Energy & Transportation

Washington,
D.C. 20549

    Re:
    Magic
    Empire Global Limited (the “Company”)

    Form
    20-F for Fiscal Year Ended December 31, 2023

    Response
    dated October 9, 2024

    File
    No. 001-41467

Dear
Ms. O’Brien:

As
counsel for the Company and on its behalf, this letter is being submitted in response to the letter dated October 17, 2024 from the Securities
and Exchange Commission (the “Commission”) in which the staff of the Commission (the “Staff”) commented
on the above-referenced Form 20-F for Fiscal Year Ended December 31, 2023 (the “Form 20-F”).

For
the Staff’s convenience, the Staff’s comment has been stated below in its entirety, with the Company’s response set
out immediately underneath such comment.

Form
20-F for the Fiscal Year Ended December 31, 2023

General

  1.
  Regarding the Company’s response to staff’s previous
comment 1, we have the following comments:

●
Please update the calculations and discussion under “Sources of Present Income” to cover the preceding 12 months rather than
the preceding nine months.

●
Under “Nature of Present Assets,” please provide additional detailed information about the line-item “Other receivables”
in your chart for the Company and its subsidiaries. Specifically, please describe whether and how such receivables are documented, the
financial terms of such arrangements and the purposes for entering into such arrangements. Please also ensure that your response is specific
as to the nature and terms of the receivables for both the Company and each applicable subsidiary.

●
The “Nature of Present Assets” table provides that MEIL does not hold any investment securities as of September 30,
2024. However, the “Sources of Income” table provides that MEIL earned 1,105,998 HK$ in income from investment
securities for the nine-month period ending September 30, 2024. Please clarify the source of the income from investment securities
(for example, any investment securities that were sold).

●
The Company failed to discuss its treatment of time deposits in the context of the analysis under Section 3(a)(1)(A) of the Investment
Company Act (“1940 Act”) as previously requested. Please do so in your response. To the extent the Company believes that
such time deposits should be treated as cash items for purposes of Section 3(a) of the 1940 Act, please ensure that your response includes
a detailed legal analysis supporting your position.

●
Please recalculate all calculations under “Nature of Present Assets” and “Sources of Income” and under Section
3(a)(1)(C) in response to our prior comment under the assumption that time deposits are investment securities and to account for data
as of the most recent fiscal quarter end.

Response:

MEGL
is an offshore holding company incorporated in the British Virgin Islands (“BVI”). All of MEGL’s subsidiaries are incorporated
in  Hong Kong. Through the subsidiaries, the Company is a financial services provider in Hong Kong and the Company’s principal
revenue stream since its establishment has been derived and is deriving from the provision of corporate finance advisory services, including
IPO sponsorship services, financial advisory services, independent financial advisory services, compliance advisory services and underwriting
services in Hong Kong. All of the Company’s revenue were derived in Hong Kong and the Company has not provided any services outside
Hong Kong.

The
Company is a “foreign private issuer,” as defined by the SEC. As a result, in accordance with the rules and regulations of
The Nasdaq Stock Market LLC, or NASDAQ, the Company may comply with home country governance requirements and certain exemptions thereunder
rather than complying with Nasdaq corporate governance standards. The Company takes advantage of the exemptions afforded to foreign private
issuers that it is exempted from filing quarterly reports on Form 10-Q or provide current reports on Form 8-K disclosing significant
events within four (4) days of their occurrence. The Company is only obliged to issue half-yearly results for the six months ending
June 30 on Form 6-K and annual results for the year ending December 31 on Form 20-F. The Company is exempted from filing quarterly
reports.

The
table below set for the breakdown of sources of revenue of the Company and its subsidiaries, on an unconsolidated basis and for the Group
as a consolidated basis, for the 21 months ended September 30, 2024 (i.e the year ended December 31, 2023 and nine months ended September
30, 2024).

    For the year ended December 31, 2023 (unconsolidated basis)
    Concolidated

    MEGL
    GFHL
    GCL
    GIL
    MEIL
    GCSL
    Group

    HK$
    HK$
    HK$
    HK$
    HK$
    HK$
    HK$

    Revenue

      13,592,030

      200,000
      13,792,030

    Other income
      1,717,575
      -
      518,263
      1,293,527
      901,878
      39
      4,431,282

    Income from investment securities
      -
      -
      -
      -
      -
      -
      -

    Loss due to long-term investment
      -
      -
      -
      -
      (1,963,000 )
      -
      (1,963,000 )

    Net profit/(loss) after tax
      (679,057 )
      (9,955 )
      243,160
      1,011,418
      (1,072,417 )
      23,039
      (483,812 )

    % of revenue from investment securities
      0.0 %
      0.0 %
      0.0 %
      0.0 %
      0.0 %
      0.0 %
      0.0 %

    For the nine months ended Sept 30, 2024 (unconsolidated basis)
    Concolidated

    MEGL
    GFHL
    GCL
    GIL
    MEIL
    GCSL
    Group

    HK$
    HK$
    HK$
    HK$
    HK$
    HK$
    HK$

    Revenue

      -
      9,865,600
      -
      -
      -
      9,865,600

    Other income
      841,421
      -
      151,720
      1,066,079
      591,131
      151
      2,650,502

    Income from investment securities
      -
      -
      -
      -
      1,105,998
      -
      1,105,998

    Net profit/(loss) after tax
      (334,453 )
      (5,205 )
      (2,578,477 )
      777,845
      1,594,750
      (5,504 )
      (51,044 )

    % of revenue from investment securities
      0.0 %
      0.0 %
      0.0 %
      0.0 %
      N/A
      0.0 %
      11.2 %

As
set out in the table above, 100% of the revenue of the Company were derived from its provision of corporate finance advisory services
for the 21 months ended September 30, 2024. The Company and its subsidiaries also recorded other income of which substantially were bank
interest income from saving accounts and time deposits with maturity of not more than 3 months, for the 21 months ended September 30,
2024. During the year ended December 31, 2023, MEIL recorded a loss of HK$1,963,000 relating to the write down of investment cost in
Company C. MEIL recorded investment income of HK$1,105,998 during the nine months ended September 30, 2024, which was derived from the
disposal of the investment fund in July 2024. On a consolidated basis, the investment income only accounted to 0% and 11.2% of the Company’s
total revenue for the year ended December 31, 2023 and nine months ended September 30, 2024, respectively.

Based
on the above analysis, the Company is primarily engaged in the non-investment company business of provision of corporate finance advisory
services and is not an investment company under Section 3(a)(1)(A) of the Act.

The
other receivable of HK$14,500,000 as of September 30, 2024 under GIL, at unconsolidated basis and at Group’s consolidated basis
(being the same other receivable) represented the payment obligation arising from the redemption of investment in Company A. The Company
divested its long-term investment and requested for redemption of the investment in Company A at cost and the other receivable represented
the sum to be received by the Company. The other receivable represented the payment obligation to the received by the Company and bear
no interest and was due for payment by December 31, 2025.

The
Company cash balance consists of cash at bank and short-term time deposits with maturity not more than three months. The Company accounted
for cash balance in its financial statements in accordance with generally accepted accounting principal (“GAAP”) ASC 305,
“Cash and Cash Equivalents” and the general definition of cash and cash equivalents adopted by the SEC.

Under
ASC 305-10-20, cash equivalents are short-term, highly liquid investments that have both of the following characteristics:

a.
Readily convertible to known amounts of cash

b.
So near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

The
cash and short-term time deposits with maturity not more than three months of the Company fulfil the above characteristics that:

 (a) They
                                            are readily convertible to known amounts of cash upon maturity; and

 (b) All
                                            of the time deposits are short-term in nature with maturity of not more than 3 months and
                                            they present insignificant risk of changes in value because of changes in interest rates.

The
term “cash item” is not defined in the text of the Investment Company Act, or in rule 3a-1. In proposing rule 3a-l, the essential
qualities of a cash item for purposes of section 3(a)(I)(C) and rule 3a-1 is a high degree of liquidity and relative safety of principal.

All
of the short-term time deposits were placed in licensed banks in Hong Kong which are supervised by the Hong Kong Monetary Authority (“HKMA”).
The HKMA is responsible for the authorization, regulation and supervision of banking business and the business of taking deposits in
Hong Kong. In Hong Kong, all deposits denominated in Hong Kong dollars, Renminbi or other currencies held with the Hong Kong Offices
of a Scheme member are protected. The Hong Kong Deposit Protection Board (“HKDPB”) is an independent statutory body formed
under the Deposit Protection Scheme Ordinance of Hong Kong to oversee the operations of the Deposit Protection Scheme (“DPS”).
The DPS protects deposits placed with Scheme members and the protection is statutory.

According
to the DPS, the following types of deposits are protected in Hong Kong:

    ●
    Conventional
    deposits placed with Scheme members (e.g. savings account deposits, current account deposits and time deposits with a term not exceeding
    5 years)

    ●
    Deposits
    in personal, joint and company accounts

    ●
    Secured
    deposits

With
effect from 1 October 2024, the protection limit is HK$800,000 per depositor per Scheme member.

Under
the DPS scheme of Hong Kong, there is no difference between the risk level of any savings account deposits and short-term time deposit
with maturity not more than 3 months.

In
terms of liquidity, short-term time deposit with maturity of not more than 3 months have a high degree of liquidity. The short-term deposits
can be terminated any time with insignificant bank charge and considered highly liquid.

Another
detrimental factor to differential cash items and investment securities is investment intent. The Company carefully monitors its cashflow
for operation and put the surplus cash not immediate in use under short-term deposit with maturity not more than 3 months. There is no
investment intent for placing short-term time deposit:

    (i)
    the
    Company has been a financial services provider in Hong Kong principally engages in the provision of corporate finance services. The
    Company is not and does not intend to hold itself out as being engaged primarily, or proposes to engage primarily, in the business
    of investing, reinvesting, or trading in securities. The Company considers cash and short-term time deposits as cash items and the
    Company is not engaging in the business of investing cash into time deposit for revenue. As shown in the revenue breakdown of the
    Company above, the Company’s revenue was from the provision of corporate finance services and the Company accounts for bank
    interest income as other income;

    (ii)
    the
    Company has not represented that it is involved in any business other than the provision of corporate finance services. The Company
    does not represent that it is in the business of investing cash into short-term time deposit for an investment income; and

    (iii)
    the
    activities of the officers and directors align with the Company’s representation that it is not involved in any business other
    than the provision of corporate finance services in Hong Kong. The officers and directors spend a trivial and negligible time in
    renewing the short-term time deposits. They utilize substantially all of the time in the provision of corporate finance services
    in Hong Kong.

Based
on the above, it is crystal clear that there was no intent for investment by the placement of short-term time deposit.

The
Company considers that the treatment of cash and short-term time deposit as cash and cash equivalent aligns with the general definition
of cash and cash equivalent of the SEC. The Company notes that other listed companies adopt the same approach in presenting their financial
statements. For instance, section 210.5-02 of Regulation S-X governs the form and content of financial statements filed with the SEC
and provides guidance on the classification and presentation of cash and cash equivalents. The definition of cash and cash equivalents
under regulation S-X align with the ACS 305.

The
classification of short-term time deposit as investment securities would, however, create a conflict of the requirements of the SEC and
GAAP and result in a misleading result. Accordingly, the Company submits to the SEC that the re-calculation assuming time deposits are
investment securities are not applicable to the Company.

  2.
  The Company’s response to prior comment 2 states that
Company D “does not have readily determinable fair value.” Please note that, for purposes of the 1940 Act, the Company is
required to use the definition of “value” under Section 2(a)(41) of the 1940 Act which requires a good faith determination
of fair value (rather than solely relying on purchase price). Please ensure that, when assessing its compliance with the 1940 Act, the
Company and its subsidiaries value Company D, and any future investments, appropriately.

Response:
It is submitted that, as of the date of this reply, the Company has divested its investment in Company D. Accordingly, as of the
date of this reply, the Company has no long-term investment nor any investment in Company D, nor any investment securities.

  3.
  The Company’s response to prior comment 4 was cursory and did not contain sufficient information and analysis to permit the staff
to evaluate the Company’s position. Accordingly, we again reissue the comment in its entirety.

Response:
We respectfully  advise the Staff that the Company believes that it is not an investment adviser as defined under the U.S. Investment
Adviser Act of 1940 (the “Investment Adviser Act”)

Pursuant
to SEC. 202. [80b–2] (11) ‘‘Investment adviser’’ means any person who, for compensation, engages in the
business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability
of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates
analyses or reports concerning securities; but does not include (A) a bank, or any bank holding company as defined in the Bank Holding
Company Act of 1956, which is not an investment company, except that the term ‘‘investment adviser’’ includes
any bank or bank holding company to the extent that such bank or bank holding company serves or acts as an investment ad