Monday, 29 July 2013

Hong Kong Updates- Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012

We previously reported, in our September 2012 newsletter, the impending reform of Hong Kong’s trade descriptions legislation. The Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012 ("the Ordinance") comes into force on 19 July 2013 and we now report on the legislation in its final form. We will restrict our comments to the “service” aspects of the new legislation, which the original Trade
Descriptions Ordinance did not cover. In addition to including services, other aspects of descriptions (such as those indicating price or availability) are now covered.

The revised Ordinance:
• Extends the prohibition on false trade descriptions to services as well as goods;
• Creates five new “unfair trade practices” offences;
• Strengthens enforcement mechanisms.

Trade Descriptions
It is now an offence for a trader to apply a false trade description to a service. Trade descriptions include
anything in respect of goods or services or any part of them and could include the price, how the price is
calculated, what is included (or excluded - see “Misleading omission”), the existence of any price advantage or discount, or claims that the service is "the best" or "the most popular".

In this respect, a price quoted for, say, a Hong Kong company secretarial service which did not include the cost of all the services required to be carried out by a Hong Kong company secretary (such as preparation and filing of the Annual Return, preparation of the AGM, etc.), would be misleading and an offence under the new rules.Even if the description stated (say) that only a named company secretary would be provided, it could be argued that this is misleading as it replies on the customer not knowing the full responsibilities of a Hong Kong company secretary. Primasia Corporate Services Limited’s fees include all the works which the company secretary is required to do under the legislation, and all our fees are transparent.

The five offences created under the new Ordinance are:
• Misleading omissions
Omitting or hiding material information (such as extra charges for preparing the Annual Return) regarding a service.

• Aggressive commercial practices
Use of harassment, coercion, etc.

• Bait advertising
Where a seller offers services at a price without being able to supply those services at that price.

• Bait and switch
Where a seller intends to promote a different service from that offered.

• Wrongly accepting payment
Where at the time of accepting payment, the trader does not intend to supply the service but still accepts payment.

There are both financial and criminal penalties of up to HK$500,000 and imprisonment for up to 5 years.
Directors, managers and other officers of a company must be aware that they may now have personal liability under the Ordinance.

Primasia will post the updates of Hong Kong and China from time to time. Follow us on our WebsiteBloggerLinkedIn and stay tunned for our updates!
Need more information?
Please contact:
John Barclay -Email
Teresa Tam - Email 
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Website: Primasia HK / Primasia China
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Primasia Corporate Services Limited
Tel: +852 2882 2088
Suite 1106-08, 11/F., Tai Yau Building, No. 181 Johnston Road, Wanchai, Hong Kong

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