Legislative Proposals to Allow Foreign Funds to Re-domicile to Hong Kong
ISSUING AUTHORITY:
Financial Services and the Treasury Bureau, Government of the Hong Kong SAR (the “FSTB”)
DATE OF ISSUANCE:
February 1, 2021
On February 1, 2021, the FSTB introduced legislative proposals to allow foreign investment funds to re-domicile to Hong Kong as Open-ended Fund Companies ("OFC”) or Limited Partnership Funds (“LPF”).
Under the proposed mechanism, a fund set up in corporate or limited partnership form under the laws of a jurisdiction outside Hong Kong is eligible to be registered as an OFC or LPF in Hong Kong respectively, if it meets the same set of eligibility requirements for a new fund to be registered as an OFC or LPF respectively. Upon re-domiciliation, the fund would have the same rights and obligations as any other newly established OFCs or LPFs in Hong Kong.
The proposed mechanism provides for the preservation of the continuity of the fund upon re-domiciliation, and is not intended to:
● create a new legal entity;
● prejudice or affect the identity or continuity of the fund as previously incorporated or registered before its registration in Hong Kong;
● affect any contract made, resolution passed or any other act or thing done in relation to the fund before its registration in Hong Kong;
● affect the rights, functions, liabilities or obligations, and property of the fund before its registration in Hong Kong; or
● render defective any previous legal proceedings by or against the fund.
The FSTB targets to introduce the bill into the Legislative Council for first and second reading in the second quarter of 2021.
Reference:
Legislative Proposals on Re-domiciliation Mechanism for Foreign Funds
SFC Published Consultation Paper on Bookbuilding, Placing Activities and Sponsor Coupling
ISSUING AUTHORITY:
Securities and Futures Commission of Hong Kong (the “SFC”)
DATE OF ISSUANCE:
February 8, 2021
On February 8, 2021, the SFC published the Consultation Paper on (i) the Proposed Code of Conduct on Bookbuilding and Placing Activities in Equity Capital Market and Debt Capital Market Transactions and (ii) the “Sponsor Coupling” Proposal (the “Paper”).
In the Paper, the SFC has formulated a new paragraph 21 in the Code of Conduct for Persons Licensed by or Registered with the SFC (the “Code of Conduct”) on Bookbuilding and Placing Activities in Equity Capital Market and Debt Capital Market Transactions (the “Proposed Code”). Key features of the Proposed Code include:
● defining the intermediaries involved in these activities as capital market intermediaries (“CMIs”) and further defining the overall coordinator (“OC”) as the head of syndicate by the activities it conducts;
● setting out the standards of conduct expected of CMIs, covering bookbuilding, allocation and placing activities, to address issues including inflated or opaque demand, preferential treatment and rebates, misleading“book messages”, proprietary orders which may negatively impact on the price discovery process and orders which conceal the identities of investors; and
● requiring that syndicate membership and fee arrangements be determined at an early stage and formal appointments of CMIs through written agreements specifying the roles and responsibilities and fee arrangements, to enhance accountability amongst syndicate CMIs and discourage undesirable behaviours.
The Paper has also introduced SFC’s “sponsor coupling”proposal, which would require that for IPOs at least one OC, which is either within the same legal entity or the same group of companies, also acts as a sponsor.
The consultation will end on May 7, 2021.
Reference:
Amendments to the Hong Kong Arbitration Ordinance
ISSUING AUTHORITY:
Government of the Hong Kong SAR
DATE OF ISSUANCE:
March 19, 2021
EFFECTIVE DATE:
May 19, 2021
On March 19, 2021, the Arbitration (Amendment) Ordinance 2021 was gazetted to amend the Arbitration Ordinance (Cap. 609) (the “AO”) to give effect to the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region.
Major amendments to the AO include:
●expanding the definition of “Mainland award” to become “an arbitral award made in accordance with the Arbitration Law of the People’s Republic of China”, eliminating the need for the arbitral award to be made by a “recognized Mainland arbitral authority” in the prescribed list of recognized Mainland arbitral authorities published by the government; and
● removing the restriction that a Mainland award is not enforceable in Hong Kong if an application has been made in the Mainland for enforcement of the award.
Going forward, parties who consider choosing the Mainland as the seat of arbitration and anticipating the need to enforce the arbitral award in Hong Kong will have a wider choice of the administering arbitral institution. Parties may also consider parallel enforcement of an award in the Mainland and in Hong Kong.
References:
Arbitration (Amendment) Ordinance 2021
Arbitration (Amendment) Ordinance 2021 (Commencement) Notice
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