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Hong Kong: A Checklist To Recovering Monies Transferred As A Result Of Email Wire Fraud

Remote working arrangements during the COVID-19 pandemic have left businesses increasingly exposed to business email compromise attacks. Businesses whose monies are stolen by scammers must act quickly to recover the funds. Where the funds have been received in a bank account in Hong Kong, court proceedings should be immediately started to freeze the account and to gain further information to enable follow-up action to be taken if the funds have been withdrawn. In this article, we provide a checklist of act

Directors Of Insolvent Companies: Managing the Risk of a Disqualification Order

Directors of Hong Kong companies operate in an environment of personal liability – a liability that is brought into sharp focus where companies face financial difficulties. This liability may take not only the form of criminal or civil liability but also the form of a disqualification order, meaning an order to bar that director from being involved in the management of a company in the future. In this article, we explore the basis for a disqualification order and provide guidance for individual directors as to how they should conduct themselves in times of financial stress to avoid liability.

Personal Liability of Directors: Covid-19 and Trading in the Insolvency Zone

The coronavirus (Covid-19) pandemic continues to amplify the damage to a Hong Kong economy already battered by political unrest and an evolving reset in the relationship between the U.S. and China. As Hong Kong companies come under increasing cashflow pressure, directors should be aware that if their companies approach insolvency, their duties are increasingly owed to the creditors of their companies rather than to the shareholders of their companies. Pressure from suppliers and other creditors to make payments can place directors in a difficult position of incurring personal liability. In this article, we explore some of the features of this liability..

Debt Collection Post-Covid-19: Force Majeure, Frustration and Winding-Up in Hong Kong

Businesses who wish to take aggressive action to enforce contractual obligations may consider a statutory demand as a means to pressure a counterparty into performance. A statutory demand may result in the winding-up of the counterparty, resulting in the liquidation and dissolution of that counterparty. However, the counterparty may resist the winding-up, disputing that the obligation is in fact owed. The present coronavirus pandemic may provide a basis for the counterparty to argue that it should be excused from performing its obligations through the doctrine of frustration and force majeure. In this article, we explore the nature of a winding-up, how it may be used for debt collection and whether the present pandemic may provide a basis for resisting a winding-up.

Surviving the Covid-19 Virus: Debt Restructuring for Businesses Facing a Liquidity Crunch

Hong Kong businesses are undergoing a period of tremendous challenge, with the reset in economic relations between the U.S. and China, the Hong Kong protests and the Covid-19 virus battering the economy. In this environment, even businesses with strong long term prospects may face real short term working capital challenges. In this article, we explore some of the options available to address liquidity deficiencies.

Licensing of Private Equity Sponsors: A New Hong Kong Approach?

On January 7, 2020, the Securities and Futures Commission (“SFC”) issued its “Circular to private equity firms seeking to be licensed” (“PE Circular”) setting out its view on the licensing obligations of private equity firms. The PE Circular suggests that a number of activities frequently undertaken by private equity firms may trigger licensing obligations. As a result, private equity firms operating in Hong Kong without a license should consider their scope of activities and whether or not they do in fact wish to run the risk of operating without a license.

Heightened Regulation of the Stock Market: What Directors of Listed Companies Need to Know

The Securities and Futures Commission (“SFC”) and The Stock Exchange of Hong Kong Limited (“SEHK”) both shifted their enforcement strategies and priorities after the conclusion of their joint consultation in 2017 in relation to the regulation of listed companies. The SEHK has stepped up the number of investigations it conducts and the number of resulting sanctions has risen accordingly. At the same time, the SFC has adopted a more pro-active role in exercising its statutory powers to pre-empt corporate misfeasance.

A Primer on the Provision of Financial Assistance by a Company for the Purchase of its Own Shares

Like many other jurisdictions around the world, Hong Kong law restricts companies incorporated in Hong Kong from providing financial assistance for the purchase of their own shares. These restrictions may, for example, limit the ability of a purchaser of a company from using the assets of the company to secure the debts incurred by the purchaser in financing the purchase.

Enhanced Suitability Requirements for the Sale of Complex Products: A Pullback?

New enhanced suitability requirements applicable to the sale of complex products will come into force on July, 6 2019. Though heavy-handed and paternalistic on their face, recent guidance issued by the Securities and Futures Commission appears to soften the impact of these requirements. In this article, we discuss the major changes.

Hong Kong Judicial Assistance to Foreign liquidators: Ripe for Appeal?

Though Hong Kong has yet to enact legislation to deal with cross-border insolvency, the Court of First Instance has taken the pragmatic position that it has the jurisdiction to assist liquidators appointed under a winding-up in a foreign jurisdiction by making orders to recognize those liquidators in Hong Kong and to require persons in Hong Kong to produce documents to those liquidators, to submit to examinations by those liquidators and to stay proceedings. This is so even though the Hong Kong statutory provisions governing these matters in a winding-up in Hong Kong have not been invoked through a winding-up in Hong Kong. The absence of legislation providing jurisdiction for this position raises an issue as to whether persons in Hong Kong who are subject to such orders by a foreign liquidator may wish to consider challenging such orders.

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