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 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.

Peter Chau and Lusina Ho on Agreement and Restitutionary Liability for Mistaken Payments (OUP book chapter)

"Agreement and Restitutionary Liability for Mistaken Payments"
Peter Chau, Lusina Ho
in Sagi Peari (ed.), Warren Swain (ed.), Rethinking Unjust Enrichment: History, Sociology, Doctrine, and Theory, (Oxford University Press,December 2023),pp. 181-200
Published online: December 2023

Abstract: This chapter considers two recent attempts that claim a defendant’s actual or hypothetical agreement as grounds for restitutionary liability for mistaken payments. With respect to Alexander Georgiou’s attempt based on an actual but tacit agreement, it argues that his account: (1) confuses the motivating causes of the payment with the terms of the payment; (2) rests on a long chain of inference that raises doubt as to the general applicability of his argument to cases of mistaken payment; and (3) offers little guidance on when restitutionary liability should be imposed. With respect to Titiana Cutts’s argument, which is inspired by TM Scanlon’s idea of reasonable agreement, the chapter argues that: (1) the principles considered in her contractualist pairwise comparison are unduly limited and (2) the considerations she takes into account in deciding between principles, such as the security of a party’s plans and the impact on people with limited means, are not specific enough for her conclusion. For example, these considerations cannot explain why reasonable people must choose a principle that gives payors who paid upon a relevant mistake a general right to restitution, but not when they paid upon a misprediction.

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).

Brian Tang on Independent AI Ethics Committees and ESG Corporate Reporting on AI (new book chapter)

"Independent AI Ethics Committees and ESG Corporate Reporting on AI as Emerging Corporate and AI Governance Trends"

Brian Tang

in Suanne Chishti, Ivana Bartoletti, Anne Leslie & Shân M. Millie (eds), The AI Book: The Artificial Intelligence Handbook for Investors, Entrepreneurs and FinTech Visionaries (1st Edition), (Wiley & Sons Limited, 2020), pp.180-185.

Introduction: This chapter explores two emerging trends relating to artificial intelligence (AI) governance of listed public companies that create and use AI in their services and products.

    First, the chapter explores independent AI ethics committees, which emerged from academic independent human research review committees, as corporate governance tools that can provide fascinating opportunities (Axon) as well as challenges (Google). 

    Second, the chapter expands upon environmental, social and governance (ESG) corporate and regulatory reporting relating to AI as a way forward for better explainability and accountability to investors, users and regulators alike regarding many of the AI “black boxes” being introduced... 

Syren Johnstone & Frederick Long on Hong Kong’s Paperless Prospectus Law (HK Lawyer)

"Hong Kong’s Paperless Prospectus Law"

Syren Johnstone & Frederick Long

Hong Kong Lawyer

Published in January 2020

Introduction: With limited exceptions, companies seeking a listing for their equity shares in Hong Kong will normally also engage in a public offering that invokes the prospectus provisions of the Companies (Winding-up and Miscellaneous Provisions) Ordinance (Cap. 32) (CWUMPO). In addition to the requirements of the CWUMPO, it will be necessary to comply with the non-statutory listing rules of The Stock Exchange of Hong Kong Limited (SEHK), which require a listing document to be produced - this will be combined with the CWUMPO-compliant prospectus into a single document (together, the prospectus). While the prospectus is typically produced in a physical print run of around three to five thousand copies that are made available at banks and other financial services providers, Alibaba’s recent secondary listing (26 November 2019) and public offer was achieved on a paperless basis – the prospectus and the application forms were only made available electronically.

      As a wholly paperless public offering is a first for the Hong Kong market, this article explores the underlying legal and regulatory requirements and considers whether Hong Kong must remain wedded to paper when competitor markets are not. It queries the necessity of the waivers obtained by Alibaba to go paperless and suggests that regulatory clarity - and regulator proaction - is required to facilitate Hong Kong more clearly moving forward to a paperless system that reflects the modernisation of public offering and placement processes. This has become essential in view of developments internationally, commercial and environmental considerations, and local realities... Click here to read the full text. 

Angela Zhang, Author of the Best Asian Antitrust Academic Article, 2018 Concurrence Antitrust Writing Awards

Congratulations to Angela Zhang whose article “The Antitrust Paradox of China, Inc.” has been recognised as the best academic article in Asian Antitrust in the 2018 Concurrence Antitrust Writing Awards.  These awards reward the best articles published in peer-reviewed journals in 2017.  The Antitrust Writing Awards aim to "promote competition scholarship and to contribute to competition advocacy".  Each year around 100 articles are selected by the Editorial Committee and the readers nominate 20 of these articles.  The Board finally elects 10 winning articles in 10 individual categories.  

     Dr Zhang's article (download here) was published in the New York University Journal of International Law and Politics (2017, Vol 50).  The abstract reads as follows:

Common ownership by the Chinese State caused a stir in Europe recently. During its review of a joint venture involving a Chinese nuclear power company, the European Commission (“Commission”) held that it would treat all Chinese state-owned enterprises (SOEs) in the energy sector as a single entity. This decision carries significant legal and practical implications for both businesses and the regulator. It also contradicts the Commission’s previous approach to European SOEs. In this Article, I argue that the legal framework under the E.U. Merger Regulation (EUMR) is unsuited to deal with the anticompetitive effects of state ownership. While the delineation of the boundary of an undertaking is a prerequisite for merger review, ownership and control are not absolute. Importantly, the extent to which the coordination by the Chinese State has lessened competition is a quantitative question, rather than a qualitative one. Consequently, a bright-line approach to defining an undertaking is both over and under-inclusive. To address the European Union’s dilemma in handling Chinese SOEs, I propose that the Commission should view national security review as a complement to its merger review. The optimal regulatory response to Chinese acquisitions hinges not only on economics, but also, perhaps more importantly, on politics.

Say Goo's Economic Efficiency Approach to Reforming Corporate Governance (Asian J L & Soc)

"An Economic Efficiency Approach to Reforming Corporate Governance: The Case of Multiple Stakeholder Boards"

Say Goo
Asian Journal of Law and Society
July 2017, published online, pp 1-18

Abstract: This paper points out the problems of the current law on directors’ duties that forces directors to ignore stakeholder interests, with the unintended consequences of misallocation of resources and the weaknesses of a traditional legal approach to law reform, and uses multiple stakeholder boards as an example to demonstrate how an economic efficiency approach to law reform, adopting economic principles, could avoid some of the unintended consequences of a legal approach to law reform and help design better rules that promote allocative efficiency for the benefit of society as a whole. It argues that international organizations should take the lead in promoting the use of stakeholder directors in the board of directors of multinational corporations that have a history of corporate abuses for corporate decisions that have an impact on all stakeholders.

HKU Class of 2016 Graduates (Law PhD and SJD)

Congratulations to our 14 PhD and 1 SJD graduates who had their degrees conferred upon them at the 196th Congregation on 1 December 2016 at the University of Hong Kong.  The Congregation also saw the graduation of 461 other Faculty of Law students: 24 LLM, 21 LLM in Human Rights, 83 LLM in Corporate & Financial Law, 38 Master of Common Law, 4 LLM in Chinese Law, 27 LLM in Information Technology and Intellectual Property Law, 37 LLM in Arbitration and Dispute Resolution, 38 JD and 189 LLB. The newest members of our RPg alumnae family include the following:

1. Dr Yue LUO, The Myth of Chinese Well-Known Marks: Formation, Debunking and Judicial Practice.  Supervisors: Alice Lee and Po Jen Yap

2. Dr Che Singh KOCHAR-GEORGE, A Disciplinary Model of the Asylum Process: Case Studies from the United Kingdom and Hong Kong.  Supervisors: Simon Young and Kelley Loper

3. Dr Henan HU, Re-examining Territorial Sovereignty in International Law: A New Perspective of the Settlement of the China Sea Disputes.  Supervisors: Hualing Fu and Tony Carty

4. Dr A-Jull LIM, Professional Failure and the Degradation of International Humanitarian Law: Narcissist Responses to the Post 9/11 So-called War on Terrorism.  Supervisor: Hualing Fu

5.  Dr Erick Onyango KOMOLO, Regime Fragmentation and Interaction: A Case Study of Kenya's Marine Fisheries Regulation.  Supervisor: Shahla Ali

6. Dr Huimiao ZHAO, Government Intervention in the Reorganization of Listed Companies in the context of Socialist Market Economy of China.  Supervisors: Xianchu Zhang and Emily Lee

7.  Dr Guy Samuel Charles LIPERT, Consumers and Banks in Dispute - From Litigation to Mediation: How Outlier Consumers and Banks in Hong Kong Engaged in Dispute Resolution in the Wake of GFC.  Supervisors: Shahla Ali and Katherine Lynch

8. Dr Uzma ASHRAF, The Need and Prospects for an Enforcement Mechanism in the Post-crisis Reconstruction of International Financial Regulatory Architecture.  Supervisor: Douglas Arner

9.  Dr Maria Adele CARRAI, A Genealogy of Sovereignty in Modern China, 1840-Today.  Supervisor: Albert Chen

10.  Dr Annelotte Jorien WALSH, A Children's Right Audit of the International Criminal Court.  Supervisor: Scott Veitch

11.  Dr Han ZHU, Social Movements and the Law in Contemporary China: A Comparative Approach.  Supervisor: Albert Chen

12.  Dr Man Lung CHENG, Emergency Powers and the Constitution: A Case Study of the Republic of China (1912-1991).  Supervisor: Albert Chen

13. Dr Anna Eirini BAKA, The Dialectic of the Cave: Self-determination, Constitution and the Phenomenology of Deprivation.  Supervisor: Tony Carty

14.  Dr Wenwen LU, Emergency Powers and Law in China.  Supervisors: Hualing Fu and Tony Carty

15.  Dr Sha LI, Fiction and Human Rights Discourse in China 1897-1927.  Supervisor: Marco Wan.

Junzheng Shen on Comparative Dual Class Share Structures (HKLJ)

"The Anatomy of Dual Class Share Structures: A Comparative Perspective"
Shen Junzheng (PhD Candidate)
Hong Kong Law Journal
2016, Vol. 46, Part 2, pp 477-510

Abstract: To delineate the merits and demerits of dual class share structures, we should compare them to dispersed ownership structures with control contestability, concentrated ownership structures and other control-enhancing mechanisms. Dual class structures facilitate long-term business strategies, firm-specific investments, equity financing and risk-taking, and they are simple, transparent and stable; but they insulate corporate controllers from shareholder monitoring, proxy contests and hostile takeovers, exacerbate tunnelling and shirking problems and enable corporate controllers to achieve an extreme voting-cash flow rights divergence and to infringe existing shareholders’ voting rights. The law can deal with most disadvantages of dual class structures, except shirking problems. Policymakers should ensure that the law provides shareholders with sufficient protection and then make a choice between dual class structures’ benefits and constraints on shirking derived from concentrated corporate ownership.

Ernest Lim on Attribution and the Illegality Defence (Modern Law Review)

"Attribution and the Illegality Defence"
Ernest Lim
Modern Law Review
May 2016, Vol. 79, Issue 3, pp. 476-487

Abstract: In Jetivia SA v Bilta (UK) Ltd (in liquidation) all seven judges of the Supreme Court affirmed the decision of the Court of Appeal by holding that the illegality defence could not be raised as a defence against the claim made by the company because the wrongdoing of the directors and shareholder cannot be attributed to the company. Although all the judges unanimously agreed on the outcome of the case, their reasoning concerning the approach to attribution and the different circumstances under which attribution should or should not take place differed. Further, the Supreme Court was divided on the issue of the correct approach to the illegality defence.

Winner of the Intersentia Prize 2014-2015 (Best PhD Thesis in Law)

Congratulations to Dr Zuo Changwu for winning the 2014-2015 Intersentia Prize for the Best PhD Thesis in Law.  Dr Zuo's thesis is entitled "An Analysis of Rules Governing Limited Liability Companies in China: Between Contracts and Regulation", and her supervisor was Professor Yu Guanghua.  The runner-up was Dr Kalana Senaratne for his thesis "A Critical Exploration of Internal Self-Determination under International Law, with Particular Reference to the Sri Lankan Conflict", supervised by Professor CL Lim.  The Intersentia Prize was established in 2012 to acknowledge, support and encourage outstanding PhD and SJD research.  The prize winner is chosen by an international prize committee on a yearly basis.  The value of the prize is GBP500, and both the winning and runner-up theses will be considered for publication by Intersentia.

Ernest Lim on Contracting Out of Fiduciary Duties (CLWR)

"Contracting out fiduciary duties"
Ernest Lim
Common Law World Review

Dec 2015, Vol. 44(4), pp. 276-297

Abstract: A significant implication arising out of an increasingly influential view that fiduciary duties are terms expressed or implied into voluntary undertakings is that all express or implied fiduciary duties can be excluded. This article critiques this implication by advancing the argument that this implication is doctrinally unjustified and normatively questionable through an analysis of the circumstances in which directors’ fiduciary duties have been contracted out under English law.

HKU Class of 2015 Graduates (Law PhD, SJD and MPhil)

Congratulations to our 7 PhD, 4 SJD and 1 MPhil graduates who will have their degrees conferred upon them at the 194th Congregation on 3 December 2015 at the University of Hong Kong. The newest members of our RPG alumnae family include the following:

1. Dr. Man Ho AU (PhD). Rethinking access regulation from the transaction cost economics perspectives : a comparative analysis of the legal and policy developments for first and next generation access networks in the US, the UK, Australia and Hong Kong.  Supervisor: Richard Wu.  Examiners: Mark Williams (University of Melbourne), Kevin Pun (HKU), Felix Chan (HKU).

2. Dr. Shan CHI (PhD).  Chinese inventiveness criteria and their impacts on industry : inspiration from bio-patents.  Supervisor: Yahong Li.  Examiners: Benjamin Liu (John Marshall Law School), Yun Zhao (HKU), Haochen Sun (HKU).

3. Dr. Li GAO (PhD).  Promoting the development of green technology in China : using patent law as an environmental instrument.  Supervisors: Yahong Li and Jolene Lin.  Examiners: Bryan Mercurio (CUHK), Michael Ng (HKU), Shahla Ali (HKU).

4.  Dr. Evan Corby GIBSON (PhD).  Managing financial stability and liquidity risks in Hong Kong's banking system : what is the optimum supervisory model?  Supervisors: Douglas Arner and Lee Aitken.  Examiners: Michael Taylor (Moody's), Berry Hsu (HKU), Emily Lee (HKU).

5. Dr. Peng HAN (PhD).  An analysis of the changing nature of law and social solidarity in contemporary China : the application of Durkheim's theory of solidarity to Chinese society. Supervisor: Scott Veitch.  Examiners: Zheng Ge (Shanghai Jiaotong), Albert Chen (HKU), Hualing Fu (HKU).

6.  Dr. Jieying LIANG (PhD).  Party autonomy in contractual conflict of laws: a Chinese perspective on the adjudication of the enforceability of choice of law clauses.  Supervisor: Michael Tilbury.  Examiners: Brian Opeskin (Macquarie), Anselmo Reyes (HKU), Xianchu Zhang (HKU).

7.  Dr. Herman Yung Sing TO (PhD).  Microfinance in China - the postal bank and credit cooperatives as key players.  Supervisor: Douglas Arner.  Examiners: Zhou Zhongfei (Shanghai University of Political Science and Law), Say Goo (HKU), Xianchu Zhang (HKU).

8.  Dr. Ida Kwan Lun MAK (SJD).  Institutionalizing the effective use of ADR for the resolution of shareholder disputes in Hong Kong.  Supervisors: Katherine Lynch and Shahla Ali.  Examiners: Kun Fan (CUHK), Yun Zhao (HKU), Anna Koo (HKU).

9.  Dr. Xiao PAN (SJD).  Private non-enterprise institutions in China in an era of charity law reform.  Supervisor: Say Goo.  Examiners: Wei Shen (Shanghai Jiaotong), Douglas Arner (HKU), Hualing Fu (HKU).

10.  Dr. Xue PENG (SJD).  Corporate governance of Chinese privately owned enterprises listed in Hong Kong : an empirical study of three levels of agency problems.  Supervisor: Douglas Arner.  Examiners: David Donald (CUHK), Say Goo (HKU), Xianchu Zhang (HKU).

11.  Dr. Zhongyi TAO (SJD).  Fair use regime in China : findings from an exploration into judicial experiences.   Supervisors: Yahong Li and Po Jen Yap.  Examiners: Irene Calboli (Marquette), Hualing Fu (HKU), Alice Lee (HKU)

12.  Ms Yuchen SONG (MPhil).  Exploring derivative action in Japan and China.  Supervisor: Guanghua Yu.  Examiners: Hui Huang (CUHK), Douglas Arner (HKU).

Maisie Ooi on the Effect of Intermediation on Investor Rights (LQR)

"Intermediation and its Effect on Investor Rights"
Maisie Ooi
Law Quarterly Review
2015, Vol 131, pp. 536-542
Secure Capital SA v Credit Suisse AG [2015] EWHC 388 (Comm); [2015] 1 Lloyd’s Rep. 556 considered an issue of immense importance to investors who purchase and hold securities on an intermediated holding system. Do they enjoy the same rights in relation to those securities as would have accrued to them had the securities not been on the intermediated system? The answer was decided by the court’s choice of the applicable law, underlining the importance of conflicts law to corporate and securities transactions these days. As these transactions are increasingly cross-border it is no longer sufficient for corporate and securities lawyers to be familiar only with the substantive law relating to these matters. 

     This note analyses the scope and application of the court’s choice of the governing law of the securities to determine the investor’s rights in relation to intermediated securities. The securities were two tranches of notes (Notes), a form of debt security, which had been issued by Credit Suisse. Secure Capital sued Credit Suisse for breach of a term of the Notes that it had taken all reasonable care to ensure accuracy of information on the Notes. 

     The Notes had been issued in bearer form which meant that transfer of title was by delivery of their certificates. Had Credit Suisse (very unusually) decided against placing the Notes on an intermediated system, Secure Capital, which acquired some of the Notes at issuance, would have been issued with the relevant certificates making it the legal owner. This would also have made Secure Capital counterparty to Credit Suisse in relation to the Notes contracts. Secure Capital would, then, indubitably have been entitled to sue for breach of the terms of the Notes. 

     Credit Suisse had however, as is common these days, placed the Notes on an intermediated system, specifically Clearstream. This was done by depositing with the Common Depository, which held the Notes for Clearstream, a global certificate representing the entire issue of each tranche, constituting it their legal owner. In place of the certificates Secure Capital’s acquisition was reflected by a credit entry in its securities account with its intermediary on Clearstream.... Full article is available from Westlaw or from the author.

New Issue: SSRN Legal Studies Research Paper Series (HKU)

Vol. 5, No. 3, 24 April 2015

1. Attribution and the Fraud Exception

Ernest Lim, University of Hong Kong - Faculty of Law

2. Independence Referendum, State Sovereignty and International Law: International Legal Review of Independence Referendum from the Perspective of Theoretical Foundation and Global Practice

Anlei Zuo, The University of Hong Kong, Faculty of Law, Students

3. Can International Law Help Resolve the Conflicts Over Uninhabited Islands in the East China Sea?

Michael C. Davis, The University of Hong Kong - Faculty of Law

4. The Shadow Banking System — Why It Will Hamper the Effectiveness of Basel III

Emily Lee, The University of Hong Kong - Faculty of Law

5. Comparing Hong Kong and Chinese Insolvency Laws and Their Cross-Border Complexities

Emily Lee, The University of Hong Kong - Faculty of Law

Jin Sheng (PhD 2010)'s New Book on China's Listed Companies

China's Listed Companies: Conflicts, Governance and Regulation
Jin Sheng (PhD 2010)
Wolters Kluwer
March 2015, 416 pp.
Series: Vol. 25 of the International Banking and Finance Series

Description: The number of interactions between China’s stock markets and markets in other parts of the world continues to grow prodigiously. However, as in many transitional economies, insider control and inefficient law enforcement pose serious problems for the corporate governance of Chinese listed companies. China’s legal infrastructure and enforcement is poor, allowing controlling shareholders to easily manipulate control rights and to maximize their own benefit rather than that of investors. 

    Using a law and economics approach, this book first analyses the types of pervasive misconduct of large shareholders in China’s listed companies, and then offers concrete reform proposals toward effective protection of minority shareholders in the interwoven areas of regulation, enforcement, and the judiciary. The author addresses the necessity for recognizing the fiduciary duty of controlling shareholders, for improving voting rights for minority shareholders, for enhancing the disclosure system, and for restricting insider trading and market manipulation. Among the issues and topics examined are the following: 

• the pervasive use of ‘tunnelling’ and misappropriation; 
• how pyramidal structures, cross-holdings, and control of management enlarge the rights of controlling shareholders and some institutional investors; 
• the state’s continuing involvement in many control transactions, either as a market regulator or as an owner of state-owned assets; 
• the special protection given state-owned shares and assets; 
• asymmetric information between large shareholders and minority shareholders, and between institutional investors and individuals; and 
• the feasibility of developing an investor protection–oriented regulatory system through a cautious integration of legal transplants and indigenous legal resources. 

     This research analyses the roles of three interest groups: controlling shareholders, institutional investors, and minority shareholders. In addition to case studies, interviews, and comparative studies, game theory models are used to test the relationship among the three groups and to show how conflict can be reduced. With its in-depth description and analysis of the current reality of China’s stock markets, this book has no peers in its insightful recommendations on how to improve minority investor protection in China. Of particular value to multinational corporate counsel, it is sure also to find a place near the desk of everyone interested in Chinese markets, whether from a legal or a business standpoint.  Click here for more information.

Ernest Lim on Attribution and the Fraud Exception

"Attribution and the Fraud Exception"
Ernest Lim
Lloyd's Maritime and Commercial Law Quarterly
[2015], pp. 14-18

Should the fraud of the company’s management be attributed to the insolvent company so as to deny the latter’s application for refund of the excess tax paid out by the company to the Inland Revenue authority? That was in short the central issue which the Court of Final Appeal in Hong Kong in Moulin Global Eyecare Trading Ltd (in liq) v Commissioner of Inland Revenue had to address. Lord Walker of Gestingthorpe, sitting as a non-permanent judge, gave the leading judgment for the court and answered the question in the affirmative. The facts can be briefly stated. The fraudulent directors of the company deliberately inflated the company’s profits and, as a result, it paid excess tax amounting to, according to the liquidator, almost HK$89m (approximately £7m) to the Commissioner of the Inland Revenue. The liquidators submitted an application, which was rejected by the Commissioner, for a refund of the excess tax under the Inland Revenue Ordinance Cap 112 (“IRO”) on the ground that the excess tax was paid because of an error in the tax return. Whether there was an error depends on whether the fraud of the company’s management should be attributed to the company. That in turn depends on whether the fraud exception (sometimes referred to as the Hampshire Land principle)—where the agent commits a fraud or breach of duty, the knowledge of the agent should not be attributed to the principal—is applicable. After a detailed and extensive survey of the cases, Lord Walker emphatically concluded: “The fraud exception must be limited to its proper, limited role, that is of barring an unmeritorious defence in claims by corporate employers against dishonest directors or employees, or accomplices who have conspired with them.” In a remarkable and unequivocal admission, Lord Walker said: “I should state clearly that I now see that I was wrong, in para.145 [of Stone & Rolls Ltd (in liquidation) v Moore Stephens (a firm)], to regard the fraud exception as being of general application, regardless of the nature of the proceedings… .”  In other words, the fraud exception applies only to a “redress” situation whereby a company sues its directors, employees or their accomplices for wrongdoing committed against it but not to a “liability” situation under which a company is liable to a third party for the dishonest conduct of a director or employee...  Click here to download the paper.