Hong Kong Updates- Privity of Contract & Anti-trust

Privity of Contract

The Contracts (Rights of Third Parties) Ordinance comes into force on 1^stJanuary 2016. We will report on this in more detail in our January newsletter but, in summary, the new Ordinance reforms the privity of contract rule that only a party to a contract may enforce it.

Anti-trust
The Competition Ordinance entered into force on 14^th, December 2015.

This new legislation makes unlawful arrangements with competitors which could lead to price fixing, including fixing of wages, or other anti-competitive practices such as boycotting of competitors. A significant aspect of the legislation is its application to employment, rather than just to market fixing on the supply side.

Under the Ordinance, there are two key prohibitions, taking the form of "Conduct Rules".

The "First Conduct Rule" prohibits agreements and concerted practices (i.e. cabal-type behaviour) that restrict competition. 

The "Second Conduct Rule" prohibits a business with significant market power from abusing that power through behaviour that restricts competition.

A Commission will oversee the interpretation and application of the Conduct Rules. 

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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- Counter-Terrorism Law

In December 2015, China introduced a new Counter-Terrorism Law, effective from 1st January 2016. Two requirements in the draft have been dropped, namely that ISPs should relocate their related servers and domestic user data to China and allow the Chinese government a backdoor into those servers and hence the data contained therein.

Retained provisions, however, include the requirement that encryption keys be made available to the Chinese government and assistance should be provided by the ISPs to monitor content.

Whether the dropped provisions are a real concession given the ambit of those retained is a matter of debate.

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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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Need more information?

Please contact:

John Barclay -Email

Teresa Tam - Email 

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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- Personal Data Protection & Taxation – Group Loss Relief?

Personal Data Protection

A further conviction has been handed down (end-December 2015) for breaches of the direct marketing provisions under the Hong Kong Personal Data (Privacy) Ordinance (PDPO), following the first three such convictions in previous months. Although the fine was nominal (at HK$5,000) and although one of the accused was convicted, the case was significant in that it was the first conviction against an individual for unauthorised  transfer of personal data to a third party for use in direct marketing.

Taxation – Group Loss Relief?

The Hong Kong Inland Revenue Department (IRD) has issued a guidance note about the tax treatment of profits in a court-free amalgamation, a procedure introduced by the new Companies Ordinance which became effective in 2014. No amendments have yet been made to the corresponding (Inland Revenue) ordinance to cover this, and nor has Hong Kong historically given group relief for losses. The guidance note goes some way to removing the uncertainties this situation has produced.

In (very) brief, losses in a company may be carried forward into the merged or amalgamated entity provided that the IRD are satisfied that the intention behind the amalgamation is not to obtain the loss relief.

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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

Hong Kong Updates- Hong Kong a "Super Jurisdiction"

Hong Kongers and frequent visitors to Hong Kong will be familiar with the famous Yung Kee goose restaurant, and the former will be aware of the long-running family dispute (as a result of which part of the family is asking for a winding up petition) over the running of the restaurant.

A key (no pun intended) preliminary question has been over whether Hong Kong courts have jurisdiction over the case as the ultimate holding company is a BVI company. The case went to Hong Kong’s Court of Final Appeal which this month delivered its judgement on this issue, deciding that Hong Kong does indeed have jurisdiction to hear the substantive case.

The Court’s reasoning was that there is "sufficient connection" with Hong Kong, the criteria being whether the petitioner would derive significant benefit from a winding-up order in Hong Kong even though the company is incorporated elsewhere, and whether it is just and equitable to wind up the company in Hong Kong after considering all the circumstances.

The decision is significant specifically in terms of the facts of the case, namely the “sufficient connection” including the presence of shareholders and directors in Hong Kong, but more importantly in general terms as it shows that the use of an offshore company to run a business in Hong Kong does not necessarily remove the jurisdiction of Hong Kong courts.

In more general terms still, this illustrates both the operation of the common law process and principles in Hong Kong, as well as Hong Kong’s robustness as a jurisdiction.

In this respect, Primasia Corporate Services Ltd. was pleased to be quoted in an article in the South China Morning Post this month (“Offshore Backlash A Boon For Hong Kong”) in which Hong Kong’s rule of law and smooth bureaucracy are mooted as a reason for Hong Kong’s rise, as a ‘super jurisdiction’, at the expense of offshore jurisdictions such as the BVI, Cayman and Singapore.

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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!

===================================================================

Need more information?

Please contact:

John Barclay -Email

Teresa Tam - Email 

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

Follow us on:

Website: Primasia HK / Primasia China

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

Taxation

The Inland Revenue (Amendment) (No.2) Ordinance 2015 has exempted specific types of offshore private equity funds from profits tax in Hong Kong. The purpose of this amendment is clearly to encourage more funds of various types to operate in Hong Kong and to strengthen Hong Kong as an international asset management hub.

Double Tax Agreement

The Italy/Hong Kong tax treaty will take effect in Hong Kong on 1 April 2016.

Employment

Section 30 of the Labour Tribunal Ordinance gives the Labour Tribunal the power to order a party to proceedings in front of it to provide security for the payment of an award that has been or may be made. In a welcome pro employer decision, this power has recently been exercised in favour of an employer, by requiring an ex-employee with a possibly frivolous claim to provide security before proceedings could commence.

Data Privacy

The Office of the Privacy Commissioner for Personal Data has upheld a complaint by a former employee that the collection of her fingerprint data for the purposes of accessing the employer’s offices and monitoring employee attendance was unnecessary and excessive. The basis of the decision was primarily that fingerprint data are unique to an individual and therefore of too personal a nature to justify their use in this way.

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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!

===================================================================

Need more information?

Please contact:

John Barclay -Email

Teresa Tam - Email 

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

Follow us on:

Website: Primasia HK / Primasia China

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

Primasia at InterSME Breakfast Seminar

Primasia was at the InterSME Breakfast Seminar- "How to Expand and Transform your SME into a Bigger Corporation" yesterday. The seminar was held at Conrad Hotel Hong Kong by Italian Chamber of Commerce and Danish Chamber of Commerce together with other chambers. 

The five speakers of the seminar were from different fields and industries, however, they have one thing in common which is they grew their business from SME size to a bigger corporation. The speakers were Sandeep Sekhri (Managing Director and Founder of Dining Concepts), Joshua Han Miller (CEO of OKAY.com), Giacomo Stoppa (General Manager of People&Projects Ltd), Stefano Bassanese (General Manager of Jean Louis David Hong Kong), and Manó Markovits (CEO of 3 P.M. Limited). They shared their success stories and their experiences in transforming their companies into a bigger company. 

It was a very inspiring seminar!

===================================================================

Need more information?

Please contact:

John Barclay -Email

Teresa Tam - Email 

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

Follow us on:

Website: Primasia HK / Primasia China

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

China Updates- Real Estate

Real Estate

Rules governing foreign investment in real estate were relaxed, including lowering the equity to debt ratio, facilitation the obtaining of loans, and simplifying forex registration. The relaxations are clearly in response to current market conditions, on a needs must basis, and it should be remembered that, when it suits the government’s needs, tightening of the rules has taken place in the past and could take place again.

***
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!

===================================================================

Need more information?

Please contact:

John Barclay -Email

Teresa Tam - Email 

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

Follow us on:

Website: Primasia HK / Primasia China

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