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Insider Dealing: A Primer For Hedge Fund And Private Equity Managers

Whilst the objectives of restricting insider dealing are widely accepted and the conceptual framework is clear, Hong Kong statutory prohibitions on insider dealing can raise practical problems for hedge fund and private equity managers in their day-to-day activities. In this article, we summarize the relevant law and set out examples of common problems.

Global Employment Standards For Global Financial Institutions In Hong Kong

International banks, asset managers and other financial intermediaries with New York and London offices frequently second staff to their Hong Kong offices, potentially subjecting themselves and their staff to Hong Kong employment law. A recent interlocutory Court of First Instance decision suggests, however, that Hong Kong employment law may not apply in situations where the parties have designated the law of a different jurisdiction to govern their employment contract, even where the employee is based in Hong Kong.

Stock Exchange Of Hong Kong: Third Party Clearing At Last

With the introduction by the SEHK of third party clearing, brokers may delegate clearing and carrying broker functions to a third party. This development opens up the possibility for established clearing and carrying brokers and custodians to expand their scale of operations in the Hong Kong market and for brokers to focus on their core order execution franchise, leaving the clearing and, if desired, carrying functions to a third party.

Responding To SFC Enforcement Action: New Tactics?

A recent decision of the Hong Kong Court of Appeal has raised the issue of whether disciplinary proceedings against licensed and registered persons are civil or criminal in nature. While a subsequent decision of the SFAT has ruled that such proceedings are civil, the current state of the law remains unsettled with at least the possibility of a higher standard of proof available in certain instances. In this article, we examine these developments, and more importantly, what the repercussions could be for licensed and registered persons who find themselves in the crosshairs of the SFC.

Hong Kong: The Investment Fund Industry's Gateway To China

The QDII scheme enables PRC persons to invest in overseas financial products through QDII funds established by PRC banks and fund management companies. Limited in the types of investments which they can make, QDII funds may use SFC authorized funds to obtain global exposure. With applications to subscribe for 4 QDII investment funds reaching US billion in September and October, 2007 alone, global investment managers should not ignore the possibility of establishing an SFC authorized fund platform to access the growing PRC market.

Non-Hong Kong Investment Funds: Relaxation Of SFC Authorization Practices

This article looks at recent developments which suggest a relaxation of SFC authorization requirements for collective investment schemes based outside of Hong Kong. First, the SFC has expanded the ability of managers of authorized schemes to delegate their investment management functions to sub-managers in jurisdictions previously considered to be generally unacceptable. Secondly, the SFC appears to have softened its policy of insisting that investment management agreements and custodian agreements preserve the jurisdiction of the Hong Kong courts.

Take Private Transactions: Possible New Pitfalls For Private Equity

Proposals by the Securities and Futures Commission in Hong Kong to harmonize the regulatory treatment of asset purchases with the regulatory treatment of share purchases and schemes of arrangement will give minority shareholders greater veto power over acquisitions of Hong Kong public companies by asset purchase. As a result, private equity firms who wish to take such companies private will face an increasingly difficult environment.

Challenging The SFC: What Every Compliance Officer Needs To Know

Licensed and registered persons generally prefer to work with the SFC rather than against the SFC. Nevertheless, circumstances may arise where the SFC adopts a hostile posture or takes a position that is commercially undesirable. While it is the rare licensed or registered person who is unafraid to challenge the SFC, the past 4 years have demonstrated that where the SFC acts unreasonably, in bad faith or otherwise improperly, a remedy may be available through the SFAT. In this article, we review strategies for challenging the SFC through the SFAT.

How to Start a Hedge Fund in Hong Kong: A Legal Primer

Hong Kong is a premier centre for hedge fund management in Asia, boasting easy access to North Asia deal flow, world-class infrastructure, an internationally regarded regulatory framework and a relatively benign tax environment. This article provides the portfolio manager with an overview of the key legal issues that are likely to arise when establishing and managing a hedge fund in Hong Kong, covering the choice of fund structure, business licensing requirements and capital raising.

Take-Private Transactions: The Emergence Of A New Approach?

The past 5 years has seen changes in the approach to transactions in which companies listed on the Main Board of the Stock Exchange of Hong Kong have been taken private and delisted. Where the share purchase once dominated, the scheme of arrangement has gained favour. In this article, we argue that the change has been driven by developments on the regulatory front and set out the case that we may be at the beginning of a new shift from schemes of arrangement to asset purchases.

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