Stefan Lo on The Stillborn Statutory Corporate Rescue Procedure in Hong Kong: Lost Opportunities and Future Possibilities (JICL)

"The Stillborn Statutory Corporate Rescue Procedure in Hong Kong: Lost Opportunities and Future Possibilities"
Stefan Lo
Journal of International and Comparative Law, Vol 12 Issue 2, pp. 263-298
Published online: December 2025

Abstract: The process for reform of corporate restructuring laws in Hong Kong to facilitate the rehabilitation of companies in financial distress has been a difficult and protracted one. Since the late 1990s, the Hong Kong government has attempted, unsuccessfully, on a number of occasions to enact a statutory corporate rescue procedure to address gaps and problems in the existing law. The most recent attempt had led to a draft Companies (Corporate Rescue) Bill that was close to finalisation in 2020–2021, but the Bill was in the end not introduced into the legislature due to opposition from some stakeholders (such as the labour sector and small businesses) on aspects of the proposed procedure. The reform process is now stalled. It is argued in this article that the perceived difficulties were to a large extent already addressed by the draft Bill and that it is imperative for the Hong Kong government to re-start the reform process to enact reforms which are long overdue and which are vital for development and maintenance of Hong Kong’s status as an international centre of commerce and finance.

New book by Stefan Lo and ELG Tyler on the Butterworths Hong Kong Company Law Handbook (27th edition)

Butterworths Hong Kong Company Law Handbook (27th edition)
ELG Tyler, Stefan Lo
LexisNexis
Published in June 2025

Abstract: The Butterworths Hong Kong Company Law Handbook - 27th Edition aims to deal with the intricacies of the Companies Ordinance (Cap 622) in an easily accessible form. This Handbook reproduces the text of the Ordinance as currently in force along with section-by-section annotations and examines relevant case law and significant judicial decisions. The annotations also provide definitions of words and phrases, discussions on practical aspects and contentious issues with reference to each section and other authoritative materials including cross-jurisdictional references. As this series has been cited with authority in over one hundred court cases in the Hong Kong Court of First Instance, Court of Appeal and Court of Final Appeal, this Handbook will no doubt be an invaluable source of information for practitioners, legal advisers, company secretaries, students and anyone interested in the laws governing companies in Hong Kong.

Stefan Lo on Privacy (New book chapter)

"Privacy"

Stefan Lo

in Hon Mr Justice Bokhary, Normann Witzleb, Neerav Srivistava (eds), Tort Law and Practice in Hong Kong (4th edition, Sweet and Maxwell, April 2025), Chapter 21
Published in April 2025

Abstract: This chapter examines tort actions protecting privacy of persons under the common law, with a focus on the tort of misuse of private information. This tort has developed significantly in the United Kingdom in the past two decades. Although there is little case authority on the tort in Hong Kong, there are some observations of the Hong Kong courts supporting the existence of the tort in Hong Kong. Apart from this tort, the chapter also examines how other torts can effectively protect privacy, including the tort of nuisance as set out by the UK Supreme Court in Fearn v Board of Trustees of the Tate Gallery [2024] AC 1.

Stefan Lo on Liabilities of Controlling Shareholders for a Company’s Torts: A Reform Proposal (C&SLJ)

"Liabilities of Controlling Shareholders for a Company’s Torts: A Reform Proposal"
Stefan Lo
Company and Securities Law Journal, Volume 41
Published in March 2025

Abstract: There are inefficiencies and moral objections to controlling shareholders being able to avoid bearing liability for a company’s torts while being able to profit from the company’s tortious activities. This article argues for a statutory model of liability for controlling shareholders in respect of corporate torts which lead to personal injury or death and puts forward a concrete model for reform, to impose liability on shareholders with control of a company and who can be regarded as being at fault in respect of the company’s torts. Existing concepts of control and due diligence in the law are analysed and adapted to provide the basis of the proposed model provisions on liability. The model provides a workable solution that promotes accountability of corporate controllers, while at the same time ensuring that ordinary investors and minority shareholders who do not wield real control over a company are still protected by limited liability.

Dr Stefan Lo Cited by UK Supreme Court

Congratulations to Dr Stefan Lo whose articles (“Liabilities of Directors as Joint Tortfeasors” [2009] Journal of Business Law 109 and “Dis-attribution Fallacy and Directors’ Tort Liabilities” (2016) 30 Australian Journal of Corporate Law 215) were cited with approval by the UK Supreme Court in Lifestyle Equities CV v Ahmed [2025] AC 1, [2024] UKSC 17. The case concerned the issue of the circumstances in which a director of a company may be liable as an accessory in tort where the company is the main tortfeasor. A main thesis of the above articles from Dr Lo is that directors do not hold any special position by reason of being a director and that they, similar to employees or agents of a company, may be a joint tortfeasor with the company pursuant to the general principles of accessory liability and joint tortfeasors in tort law. Lord Leggatt SC agreed with this view in handing down his judgment (with which the other members of the Supreme Court agreed). Lord Leggatt SC (at para 35) adopted the terminology of “dis-attribution fallacy” as coined by Dr Lo (also referred to as a “dis-attribution heresy” by Campbell and Armour) – namely that it is a fallacy to suppose that attribution of acts of a director to a company necessarily results in dis-attribution of those acts from the director for all legal purposes. A number of Australian decisions have, in Dr Lo’s views, committed this fallacy. Lord Leggatt cited Dr Lo’s research on the Australian position (at para 71) and agreed with the view asserted by Dr Lo that to limit directors’ personal liabilities due to their acts being regarded as the company’s is incorrect. Earlier English cases had been moving towards this position as favoured by Dr Lo but there was also a suggestion by the English Court of Appeal that there remains a “constitutional exception” under which directors cannot be liable as joint tortfeasor with the company merely where their authorisation of the tortious act is done via their constitutional role in voting at a board meeting (MCA Records Inc v Charly Records Ltd (No.5) [2002] BCC 650, [2001] EWCA Civ 1441). Dr Lo argued that any such exception that effectively provides a ”safe harbour” for directors is inappropriate as a matter of both principle and policy. Lord Legatt SC agreed (at para 81).

Stefan Lo on Nature of Corporate Veil-Piercing and Revitalization of the Evasion Principle (Law Quarterly Review)

"Nature of Corporate Veil-Piercing and Revitalization of the Evasion Principle"
Stefan H C Lo
Law Quarterly Review, Volume 139, Issue Jul

Published: July 2023

Abstract: The doctrine of veil-piercing remains one of the enigmas of company law. The imagery of piercing of the corporate veil vividly symbolises the fact that veil-piercing strikes at the core of the concept of a company as a legal entity separate from its members. As such, the doctrine continues to be controversial. The Supreme Court in Prest v Petrodel Resources Ltd confirmed the existence of the doctrine under the common law and Lord Sumption in that case attempted to provide clarity on the scope of the doctrine. In some respects, his Lordship's views have assisted in clarifying the principles but, in other respects, his judgment has added to confusion. Many have also interpreted 'Prest' as narrowing the scope of veil-piercing, rendering the doctrine almost meaningless in practice. The Supreme Court's observations in the recent decision of Hurstwood Properties (A) Ltd v Rossendale BC lend support to such scepticism on the import of the doctrine.

Stefan Lo on Corporate Governance in the Context of Insolvent Companies (Journal of International and Comparative Law)

"Corporate Governance in the Context of Insolvent Companies"

Stefan Lo

Journal of International and Comparative Law, Volume 10, Issue 1

Published: June 2023

Abstract: Corporate governance has been for many years an important aspect of company law attracting much academic interest. The extensive literature on corporate governance has not often dealt with insolvent companies. Yet governance remains critical for both financially distressed companies which have not yet entered into formal insolvency proceedings and insolvent companies which are subject to formal insolvency proceedings. This article looks at particular aspects of governance involving the board of directors in the former scenario and insolvency office-holders in the latter. It surveys the law and practice relating to distressed or insolvent companies, from the time before actual insolvency through to the time of insolvency proceedings. This is done through a review of Keay, Walton and Curl’s Corporate Governance and Insolvency: Accountability and Transparency.

New Book edited by Stefan Lo: Company Law in Hong Kong – Practice and Procedure 2022 (Sweet and Maxwell)

Company Law in Hong Kong – Practice and Procedure 2022
General Editor: Dr Stefan H C Lo
Sweet and Maxwel1
January 2022
900 pp.
Preface by the General Editor

Company Law in Hong Kong – Practice and Procedure covers the main areas of core company law, including major parts of the Companies Ordinance (Cap.622) (“CO”).

     The main legislative development in 2021 in the company law field relates to commencement of some of the provisions of the CO that had not been commenced when the rest of the CO came into operation in 2014 (following enactment in 2012). These are the provisions introducing certain privacy protections for inspection of personal particulars of directors and others in the Companies Register (as maintained by the Companies Registrar), as well as in companies’ own registers of directors and secretaries. These provisions were not commenced in 2014 due to controversies arising at the time as to whether the new provisions unduly undermine transparency regarding company controllers. In the original public consultation on the topic in 2009 and 2010 (see Financial Services and the Treasury Bureau, CO Rewrite – Draft Companies Bill First Phase Consultation Paper (December 2009) and Consultation Conclusions (August 2010)), there was majority support for the new proposals from respondents to the consultation and the provisions in the Companies Bill were duly enacted by the Legislative Council. It was only when draft subsidiary legislation (setting out certain details of the new regime) was published for public consultation towards the end of 2012 (see Financial Services and the Treasury Bureau, New Companies Ordinance – Subsidiary Legislation for Implementation of the New Companies Ordinance Phase 2 Consultation Document (November 2012)) that the topic became controversial amongst the public. The Government could not reach a consensus with stakeholders at the time and the decision was made not to commence the relevant provisions (mostly contained in Parts 2 and 12 of the CO) when the rest of the CO commenced in 2014. The Government had then indicated that it will consult stakeholders and the public again at a later time, with the reforms to be revisited in due course. In the event, the Government in 2021 announced that the uncommenced provisions will now come into operation in three phases in the period 2021 to 2023. The first phase has been implemented, with the uncommenced parts of CO ss.643, 644 and 651 coming into operation on 23 August 2021, enabling companies to replace the residential address of directors in their registers of directors with a correspondence address and redacting part of the identification number of directors and company secretaries in the registers of directors and company secretaries. See further the Company Records (Inspection and Provision of Copies) (Amendment) Regulation 2021 and the Companies Registry’s External Circular No.1/2021 – Commencement of New Inspection Regime Phase 1 (16 August 2021).

     As is the case each year, there have been a number of new Hong Kong cases dealing with company law handed down in the past year. One interesting decision is that of the Court of Appeal in Wang Pengying v Ng Wing Fai [2021] 1 HKLRD 997, dealing with the common law derivative action pursuant to the fraud on the company exception to the proper plaintiff rule in Foss v Harbottle (1843) 2 Hare 461. Most derivative actions nowadays are commenced via the statutory route in CO ss.732 and 733. But the common law derivative action was not abolished when the statutory derivative action was introduced in Hong Kong and there are still cases on the common law action which arise from time to time in Hong Kong. In the Wang Pengying case, the court considered the scope and nature of the fraud exception under the common law, albeit the comments were by way of obiter. The case is discussed in Chapter 8. Other notable cases in the past year include Chen Pao Tzu v Chen Sheng Kuei [2021] 1 HKLRD 1071, dealing with the irregularity principle in the context of general meetings (see Chapters 5 and 8) and China Metal Recycling (Holdings) Ltd v Chun Chi Wai [2021] HKCFI 378, dealing with directors’ duties and liabilities of third parties involved in a director’s breach (see Chapter 11 in the context of recovery for improperly paid dividends).

New Book edited by Stefan Lo: Company Law in Hong Kong – Insolvency 2022 (Sweet and Maxwell)

Company Law in Hong Kong – Insolvency 2022
General Editor: Dr Stefan H C Lo
Sweet and Maxwel1
January 2022
750 pp.
Preface by the General Editor

Company Law in Hong Kong – Insolvency covers major aspects of corporate insolvency law in Hong Kong. As mentioned in the Preface to the 2021 edition of this work, reform in this area of law in Hong Kong has been ongoing in recent years. Following changes made by the Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 (14 of 2016) to the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32) (“CWUO”) in the “Improvement of Corporate Insolvency Law” reform exercise, the Government has been working on a bill for the new statutory corporate rescue procedure referred to as provisional supervision, together with new insolvent trading provisions. In late 2020, the Government had announced that the Companies (Corporate Rescue) Bill will be tabled in the Legislative Council in the first quarter of 2021. Alas, expectations were dashed and the Bill has still not been finalised. Aspects of the proposals on provisional supervision expected to be in the Bill are outlined in Chapter 13. It is to be hoped that the Government re-focuses priority on the Bill for introduction in the Legislative Council in 2022.

     There have continued to be a large number of cases handed down in the past year in Hong Kong on winding up law. Three specific areas are mentioned here. Firstly, the courts in recent times have developed and refined the principles on the duty of directors to take into account creditors’ interests when a company is insolvent or likely to be insolvent. Wing Hong Construction Ltd v Hui Chi Yung [2020] HKCFI 2985 is another case dealing with this duty. The case is particularly useful in discussing the test of insolvency in this context (see Chapter 1). Secondly, a number of cases in recent years have grappled with the intricacies of CWUO s.182, which voids dispositions of a company’s property following commencement of winding up (unless the disposition is validated by the court). The winding up of Hsin Chong Construction Co Ltd has spawned a number of such cases, including the Court of Final Appeal decision in Hsin Chong Construction Co Ltd (in liq) v Build King Construction Co Ltd [2021] 4 HKC 590 (nature of a disposition) and the Court of First Instance case of Re Hsin Chong Construction Co Ltd (No.3) [2021] 1 HKLRD 582 (whether mandatory MPF contributions are to be validated by the court): see Chapter 9. Thirdly, there has also continued to be new cases on cross-border insolvency, as discussed in both Chapters 4 and 12, dealing with winding up of foreign companies (Re China Huiyuan Juice Group Ltd [2021] 1 HKLRD 255) and recognition and assistance to foreign insolvency office-holders under the common law (Re FDG Electric Vehicles Ltd [2020] 5 HKLRD 701; Re Moody Technology Holdings Ltd [2020] 2 HKLRD 187; Re China Bozza Development Holdings Ltd [2021] 4 HKC 560). The past year also saw the entering into of a pilot scheme between the Supreme People’s Court (“SPC”) and the Hong Kong Government to facilitate mutual recognition of insolvency office-holders between Intermediate People’s Courts in certain designated pilot areas on the Mainland and the High Court in Hong Kong: see Chapter 12 and the Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region (14 May 2021). The scheme is the product of some years of negotiation between the SPC and Hong Kong’s Department of Justice. From the Hong Kong perspective, it is hoped that the scheme can assist in overcoming some of the difficulties which have faced Hong Kong liquidators in recovering Mainland assets of companies being wound up in Hong Kong. 

HKU Law Welcomes Dr Stefan Lo, new Principal Lecturer in the Department of Law

The Faculty welcomes Dr Stefan Lo who has joined the Department of Law as a Principal Lecturer. Stefan was educated in Australia and is a graduate of the University of Sydney. Prior to joining HKU Law, he was a Deputy Principal Government Counsel (Ag) at the Department of Justice, heading the team in the Civil Division responsible for advising the Government on company and insolvency law reform. Previously, he had practised law as a solicitor and barrister in Sydney and had also taught law as Assistant Professor at the School of Law of the City University of Hong Kong. Stefan has published widely in company law and other areas of law, including articles in local and international journals. His published works include Law of Companies in Hong Kong, currently in its third edition (Sweet and Maxwell, 2018), In Search of Corporate Accountability: Liabilities of Corporate Participants (Cambridge Scholars, 2015) and Privacy Law in Hong Kong (Sweet and Maxwell, 2020). He is General Editor of Company Law in Hong Kong – Practice and Procedure / Insolvency (Sweet and Maxwell) and Hong Kong Company Law – Legislation and Commentary (LexisNexis).