China Updates- Public Holidays

The public holiday schedule for 2014 was announced, the main change being the elimination of Chinese New Year's Eve as a holiday, part of the Chinese government's strategy to gradually modernise Chinese holidays and to eliminate bottlenecks caused by everyone being on holiday at once (like Europe in August!). The total remains unchanged at 11 public holidays for the years.

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Hong Kong Updates- Data Privacy

Following is the Privacy Commission's attack on the well-known Hong Kong "Webb-Site" blog, which acts as a sort of watchdog on Hong Kong companies, for inclusion of Hong Kong ID ("HKID") numbers in it's publicly available database, the Privacy Commissioner has (December 6th) issued an enforcement notice against a major chain of gyms for "unnecessary" collection and retention of HKID copies and data of birth information. The chain has indicated that it will appeal, but the trend is a worrying one, give that, after 15 years in existence, the Privacy Commissioner seems suddenly to be taking more extreme positions in this area.

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Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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Primasia Corporate Services Limited
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Suite 1106-08, 11/F., Tai Yau Building, No. 181 Johnston Ro

Hong Kong Updates- Companies Ordinance

All our readers are reminded that the new Companies Ordinance comes into effect on the 3rd of March this year.

Primasia Corporate Services Ltd. can advise on the changes in detail but the main change directly affecting existing clients and anyone intending to set up a Hong Kong company is the new requirement for each Hong Kong private company to have at least one individual director. The grace period for existing companies is 6 months from the new Co implementation date, but parties are recommended to take action sooner rather than risk becoming noncompliance. We can advise and assist with this new requirement.

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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

China Updates- Company Laws

At the same time as Hong Kong is implementing its reform of its companies law, China has announced simplification of its company rules. 

The main proposed changes include:

• Removal of minimum registered capital requirements
• No required schedule for payment of full share capital,or proportion for the initial paid-in capital
• Relaxation of registration address requirements (Details unclear.)
• Cancellation of annual inspection and replacement with an annual reporting system
• Online access to company information such as registration and annual reports

The above proposals reflect the trend to continuing improvement of ease of doing business in China, such as the recent easing of company registration procedures in Shenzhen and in the new Shanghai Free Trade Zone. However, they are only proposals at this stage.

Hong Kong Updates- Companies Ordinance &Taxation

Companies Ordinance

3rd March 2014 has been named as the commencement date of the new Companies Ordinance.

Although all the 90 or so new forms should be used with effect from the commencement date, as a transitional arrangement, the Companies Registry will continue to accept existing forms for a further three months (subject to exceptions).

Taxation

The Court of Final Appeal handed down a decision favouring taxpayers, clarifying the relationship between business accounting (GAAP) and tax accounting. In so doing, they confirmed that profits can only be taxed when they are actually earned and realised, even if for accounting purposes the losses have been booked.

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Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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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

China Updates- Shanghai Free Trade Zone

The China (Shanghai) pilot Free Trade Zone (FTZ) opened in September. This is an amalgamation of four existing FTZs and a logistics park and several sets of regulations and a "negative list" have been issued. The negative list includes prohibited and restricted sectors including, curiously, salt wholesaling and, less surprisingly, making available new websites.Items not on the list do not have to be approved but have to be registered.

Although this has been "much anticipated", the importance is more as an experiment for China than as a real opportunity for foreign business. It is a toe in the water to see how relaxation of restrictions which remain in the rest of China would pan out.

Specific examples: allowing some Chinese banks to conduct offshore business; allowing foreign medical insurance companies to set up; various relaxations relating to shipping and aircraft, including finance leasing; "exploring" ways for Chinese and foreign law firms to work together; various measures for travel agencies, makers of games consoles, HR, construction, design and engineering, and credit checks.

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Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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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

Hong Kong Updates- New Companies Ordinance

Changes to company law in the New Companies Ordinance will become effective in March 2014.

All private companies which do not currently have at least one natural person as a director will have to appoint one or face penalties. 

Primasia Corporate Services is offering a personal director service through a specialist subsidiary, subject to conditions, to help meet companies meet this requirement. Please contact us for more information.

***
Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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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

China Updates- Visa Rules for Foreigners

It was announced that the new visa rules would come into effect on 1st September 2013. The old rules have been repealed, i.e. the new rules represent the entirety of the regulations on this area.

The key points are:

(1) Three definitions of illegal employment, viz., employment without a work permit, employment beyond the scope of the work permit (akin to a WFOE carrying on activities beyond its business licence), and (in some circumstances - but see below) employing a foreign student.

(2) In the case of breach of the regulations, both the employer and the employee individual may be penalised. For the employer, there is a potential fine of RMB10,000 per illegally employed person, capped at RMB100,000, with any "proceeds" of the illegal employment being subject to confiscation. For the foreign

employee, a fine of RMB5,000-20,000 may be imposed with, the possibility also of detention for up to 15 days. Agents are subject to penalties at half the rate of employers (but with full confiscation of "proceeds").

China Updates- M & A

In August 2013, MOFCOM (the Ministry of Commerce) continued its practice of issuing conditional approvals to M&A transactions cases under its 5-year old Anti-Monopoly Law. The two cases concerned were MediaTek's acquisition of MStar Semiconductor Inc and Baxter/Gambro.

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Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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Teresa Tam - Email 
--------------------------
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LinkedIn: Primasia
--------------------------
Primasia Corporate Services Limited
Tel: +852 2882 2088
Suite 1106-08, 11/F., Tai Yau Building, No. 181 Johnston Road, Wanchai, Hong Kong

Hong Kong Updates- Company Law

As at 31st August 2013, the effective date of the upcoming changes to Hong Kong's company law (In the New Companies Ordinance) had not been announced. We expect to be able to provide an update in the October newsletter and will provide a summary of all the key changes in a future newsletter.

***
Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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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

China Updates- Foreign Exchange

The State Administration of Foreign Exchange (SAFE) of China in July issued the Guidelines for the Administration of Foreign Exchange Under Service Trade under Circular 30 (effective September). Circular 30 simplifies foreign exchange rules for the service industry whilst abolishing numerous previous SAFE regulations.

The Guidelines provide that the State does not impose restrictions on international payments in services trade as long as the payments are based upon genuine and lawful transactions. Nor are banks required to inspect and verify the transaction documents for receiving and paying foreign exchange under services trade where the value of such funds is US$50,000 (or equivalent) or less. However, where the nature of the funds is unclear, banks should request the submission of transaction documents. Likewise, where the funds exceed US$50,000 or equivalent, transaction documents must be submitted to banks for approval before the transaction can be processed. In the case of dividend payments, for example, the bank must verify the annual financial audit report issued by a certified public accounting firm, the board resolution on profit distribution, and the company's most recent capitalverification report. 

Hong Kong Updates- Directors

The requirement for all Hong Kong private companies to have at least one natural person as a director is approaching and it is expected that this will apply to all new companies by 1st January 2014, and to all existing companies after a grace period of (possibly) 6 months.

Primasia Corporate Services Limited will offer a personal director services, subject to due diligence and conditions, to a limited number of companies.

***
Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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Need more information?
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--------------------------
Follow us on:
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

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".

Hong Kong Updates- Directors' Practice Notes Issue 2

The Hong Kong Institute of Directors has announced the release of its Directors' Practice Notes Issue 2 which provides guidelines for directors and recommendation of best-practice in Hong Kong. Most of the Notes apply specifically to listed companies. 

However, some are of general application, i.e. they will apply to directors of private companies, of which there are more than 1 million in Hong Kong. For example, the Notes reaffirm that directors are entitled to receive any information they require in order to meet their responsibilities as directors. The implication is that such information must also be timely. Against this, they are then entitled to rely on the accuracy of the information unless they have grounds to suspect that the information is not reliable. This will become increasingly important especially as the provisions of the new Companies Ordinance come into effect, including the requirement anticipated from 2014 (date to be confirmed) that every Hong Kong company, i.e. every one of the 1 million companies mentioned above, will have to have at least one natural person as a director. 

Primasia Corporate Services Limited will offer individuals directors to companies to fulfil this requirement, subject to the requisite information mentioned above being provided to Primasia.

***
Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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--------------------------
Follow us on:
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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

China Updates- Anti-Monopoly Law (AML)

In April, MOFCOM gave conditional approvals to two acquisitions involving overseas groups. The first wasthe acquisition by Glencore Group of the remaining shares of Xstrata plc., i.e. those which it did not already hold.

The second was the acquisition by Marubeni of Gavilon Holdings. Both involved strategically-sensitive global

markets where China is highly dependent on imports.

In the first case, MOFCOM sought (after very lengthy consideration) for the first time extraterritorial divestiture of assets as a condition of approval. Given that the anti-monopoly arguments were not strong, the decision appears to be strongly policy-influenced.Likewise, in the Marubeni case, MOFCOM subdivided the markets for consideration to include a separate market for imports, once again based on figures which would not in themselves have created a strong overall AML case. This again suggests that policy or strategic influences are at play, and that these will continue to be key factors.Again, in the Marubeni case, MOFCOM included extra-territorial conditions in its approval, reflecting its increasing confidence in its role.

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Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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--------------------------
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LinkedIn: Primasia
--------------------------
Primasia Corporate Services Limited
Tel: +852 2882 2088
Suite 1106-08, 11/F., Tai Yau Building, No. 181 Johnston Road, Wanchai, Hong Kong

Hong Kong Updates- Property market & Companies Ordinance

Property market – in a further attempt to cool Hong Kong’s property market, the Financial Secretary

announced on February 22nd a sudden change to the rates of valorem stamp duty ("AVSD").

Companies Ordinance - the first set of five pieces of subsidiary legislation for the implementation

of the new Companies Ordinance were gazetted on 1 February 2013, to cover the following topics:

Words and expressions in company names

(i.e. those not permitted),

Disclosure of company names and liability status

(e.g. at registered office and in certain documents),

Accounting standards,

Directors’ report, and

Summary financial reports.

***
Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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--------------------------
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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

China Updates- Employment-related issues

The Supreme People’s Court issued Judicial Interpretation IV on various employment-related issues, effective 1 February 2013. Key items include:

Non-compete Covenants

• The amount of compensation appropriate for non-compete obligations is indicated to be 30% of the previous 12 months’ salary.
• Previously, some amount has been required on the basis that the employee’s job-hunting prospects are damaged by a non-compete agreement, but there has been no national guidance available.
• If, during the non-compete period, the employer terminates the non-compete agreement, the employee will be entitled to an additional 3 months of non-compete compensation.
• If the employer fails to pay the non-compete compensation for 3 months, then the employee may terminate the agreement.
• Breach of a non-compete agreement by an employee does not relieve the employee of the obligation to comply, even if damages are awarded.
• The payment may apply even if the employer does not want to enforce the non-compete clause or the employee has no intention of breaching the clause. Hence, employers should consider whether they either need the clause in the first place or should release an employee from such a clause before the employee leaves.

Transfers of Employees: where a transfer of an employee is arranged by the employer, his or her years of service should be recognised by the new employer.

Oral Variation of Contracts - will be legally recognised if both the employer and the employee have acted in accordance with the oral variation for more than a month.

Expiry of Business Licence – does not relieve an employer from the obligation to pay severance pay.

Foreigners Without Work Permit: a foreigner without a work permit will not be able to seek redress in the Chinese courts.

***
Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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--------------------------
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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

Hong Kong Updates- Chief Executive’s Policy Address' employment-related issues

The Chief Executive’s Policy Address covered (among other things) the following employment-related issues:

• The shelving of public consultation about whether anti-discrimination law is necessary to protect people of different sexual orientation.
• A review to ensure that Hong Kong's approach is consistent with that of the United Nations Convention on the Rights of Persons with Disabilities.
• Imminent legislation on the introduction of 3 days’ paternity leave.
• Creation of a special committee in 1Q 2013 to consider the introduction of standard working hours.
• A review of social security and retirement protection.

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Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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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

China Updates- Minimum wage & Trademark

The Beijing Municipal Human Resource and Social Security Bureau has increased the statutory minimum wage from 1 January 2013 to CNY8.05 and CNY1,400 respectively for hourly and monthly minimum

wages in Beijing.

Also in Beijing, and following similar comments from the Chinese Trademark Office, the Chinese judiciary has publicly acknowledged the problem of trademark squatting. In a press conference given by the Beijing People's Court, the Court reported on its study into "the cause, characteristic and judicial response to trademark squatting" and stated that the courts should aim to deter squatting in order to enhance IP protection in China. At the same time, the court delivered 6 judgments against trademark squatters.

***
Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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Need more information?
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--------------------------
Follow us on:
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LinkedIn: Primasia
--------------------------
Primasia Corporate Services Limited
Tel: +852 2882 2088
Suite 1106-08, 11/F., Tai Yau Building, No. 181 Johnston Road, Wanchai, Hong Kong