ISSUING AUTHORITY:

The Financial Services and Treasury Bureau of Hong Kong SAR

DATE OF PUBLICATION:

October 31, 2022

The Financial Services and Treasury Bureau (“FSTB”) issued a policy statement on the development of Virtual Assets (“VA”) in Hong Kong, setting out the Hong Kong government’s policy stance and approach towards developing a vibrant sector and ecosystem for VA in Hong Kong.

The FSTB’s policy statement acknowledges the significant potential of VA and proposes several new initiatives that the Hong Kong government hopes will cement Hong Kong’s status as an international cryptocurrency hub:

1. The Securities and Future Commission will conduct public consultations on changes that would allow retail investors to trade in VA, possibly via a new class of exchange traded funds.  Without such changes, retail investors will only be able to do so via overseas exchanges beyond the regulatory oversight of Hong Kong regulators.

2. Recognizing that Hong Kong’s hidebound legal system does not yet recognise either smart contracts or tokenised assets, the Hong Kong government will undertake a review of existing laws with a view to amending them so both of these can be properly regulated.

3. The Hong Kong Monetary Authority will follow up on its January 2022 discussion paper on expanding the regulatory framework to cover payment-related stable coins (i.e. cryptocurrency with its value pegged to fiat currency or some other asset).

4. The Hong Kong government also plans to launch pilot projects to explore proof-of-concept for possible introduction of tokenised ‘Green Bonds’ that could be issued by the Hong Kong government and an e-HKD akin to the Digital Yuan used in Mainland China.

As the tide of digital economy is unstoppable, equal emphasis must be placed on development and regulation. The exploration of Hong Kong on developing the VA industry may provide some useful experience for the subsequent development and supervision of the VA industry in Mainland China and may also become an opportunity for the digital economy products and services in Mainland China.

Reference:

Government issues Policy Statement on development of Virtual Assets in Hong Kong (info.gov.hk)

Hong Kong Legislative Council Passed the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill

ISSUING AUTHORITY:

Hong Kong Legislative Council

DATE OF GAZETTAL:

November 4, 2022

The Legislative Council of Hong Kong SAR passed the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill (the “Bill”) on October 26, 2022.  The Bill aims to provide a more comprehensive mechanism for reciprocal recognition and enforcement of judgments in civil and commercial matters between the two jurisdictions, thereby reducing the need to re-litigate the same disputes in both places.  The Bill was gazetted on November 4, 2022.

Compared with the Mainland Judgements (Reciprocal Enforcement) Ordinance (Cap. 597) currently in place, the Bill covers both monetary and non-monetary judgments in civil and commercial matters, as well as compensation or damages awarded in criminal proceedings.  It has also removed the requirement that the parties have to agree on exclusive jurisdiction clauses when signing the agreement.

In addition, a more comprehensive mechanism is introduced for the reciprocal recognition and enforcement of judgments.  Under the new mechanism, a judgment creditor under a Mainland Judgment (as defined in the Bill) may apply to the High Court of Hong Kong for an order to have the Mainland Judgment registered with the High Court on an ex parte basis, provided that certain conditions are met.  Once registered, a Mainland Judgment may be enforced in the same way as if it were a judgment originally given by the Hong Kong Court.

It is expected that the Bill can make cross-border enforcement of judgments in civil and commercial cases clearer and more predictable, reduce risks in cross-border enforcement, save costs and time, promote cross-border trade and improve the investment environment of both sides.

Reference:

Legislative Council of the Hong Kong Special Administrative Region - Bills (legco.gov.hk)

Hong Kong Revised Company Laws to Support Fully Virtual General Meetings

ISSUING AUTHORITY:

Hong Kong Legislative Council

DATE OF GATTETAL:

November 25, 2022

On November 25, 2022, the Hong Kong government gazetted the Companies (Amendment) Bill 2022 (the “Bill”), which aims to give Hong Kong companies sufficient flexibility to hold general meetings in different ways.

In recent years, the advancement of technology has made adoption of virtual means to hold and participate in meetings possible worldwide.  The existing Companies Ordinance of Hong Kong provides that companies may hold members’ meetings in two or more places using technology that allows effective communication and voting.  However, the current Companies Ordinance makes no reference to companies holding general meetings in a fully virtual manner or in a hybrid virtual and physical mode.  The Bill proposes amendment to the Companies Ordinance to expressly enable companies holding general meetings virtually or in hybrid mode, rather than holding general meetings only at physical locations.

After the Bill is passed and takes effect, the Companies Registry of Hong Kong may take measures to protect the rights and interests of shareholders, especially minority shareholders, for instance, by issuing circulars, developing good practice and organising seminars to remind companies of the issues to be noted when conducting virtual or hybrid general meetings.  For listed companies, the Stock Exchange of Hong Kong Limited may also provide further clarification and guidance on the points to be taken into account when Hong Kong registered issuers use technology to hold full virtual or hybrid general meetings in accordance with the law to protect the interests of public investors.

Reference:

Elegislation.Gov.HK - 20221125_Companies (Amendment) Bill 2022

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