Execution of documents electronically

Written by Cliff on Tuesday 4 November 2014 at 12:31 pm

Unless you are executing a deed or an agreement in relation to land, it is possible and often desirable to have the signatures done remotely or electronically via email. I won’t discuss the vagaries of fax, because fax is a backwards technology. So how do email signatures work, are they enforceable?


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Expert Determination by Certified Public Accountants

Written by Cliff on Tuesday 23 September 2014 at 12:05 pm

Occasionally, parties to a contract may find themselves in a difficult situation where they don’t agree on some accounting figures, but don’t want to ruin their relationship either through litigation or arbitration. Neither do they want to waste time on mediating a ‘trivial’ issue.

It may be wise on such occasions, to make a request  (“Request“)to the Hong Kong Institute of Certified Public Accountants (“Institute“) to nominate a third party certified public accountant (“CPA“) to do the accounting work and give a number that both parties will agree upon.

Requests are sent to the President of the Institute (“President“) to nominate a practice of certified public accountants CPAs registered with the Institute to perform statutory audits, professional service of valuing company shares, taking custody of property in dispute as well as other services of similar nature.

Such Requests will be considered by the Institute on a case by case basis.


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You Company may be facing daily fines

Written by Cliff on Tuesday 5 August 2014 at 3:00 pm

Under the Companies Ordinance, the statutory books of a company must be kept up to date and in order and be ready to be inspected by the public upon request. If not, the company and each of its responsible persons (directors, senior management, etc) may be liable to daily fines and imprisonment.

Do make sure your company secretary is doing its job right, and please do review your company records from time to time to ensure it reflects reality.

Re-read your letters now – these writing styles may change the way you sign off

Written by Cliff on Monday 21 July 2014 at 4:49 pm

When writing letters, many people simply use random salutations and sign offs without knowing that there is actually a preferred, ‘correct’ form as provided below:

If you don’t know the name of the recipient:
Yours faithfully is British usage. It is used when the recipient is not addressed by name, as in a letter with a “Dear Sirs” salutation.
Yours truly is the American equivalent of “yours faithfully”. When you begin a letter “Dear Sir,” close it with “Yours truly.”

When you do know the name of the recipient:
Yours sincerely is also British. Americans tend to reverse the order, as with everything they can get away with, and write Sincerely yours.
Sincerely is a common and acceptable close for American business letters.

Only the first word is capitalized:
  Yours faithfully,
  Yours sincerely,
  Sincerely yours,

Assess your business now – you may be in breach of Hong Kong tax law

Written by Cliff on Wednesday 21 May 2014 at 4:14 pm

The draconian tax law of Hong Kong requires any person who carries on business in Hong Kong to register with the Inland Revenue Department. This registration costs a few thousand dollars and is evidenced by a business registration certificate (BR).

Most businesses have no problems with this because if they do set up a company and trade in Hong Kong, the application process automatically involves obtaining a BR.

But what if you are an e-merchant in Lancaster, UK, who sells predominantly to Hong Kong residents residing in Hong Kong? Technically, you may be doing business in Hong Kong, and the source of your profits will also highly likely be regarded as Hong Kong. You can check the FAQ and departmental practice notes yourself. That means that you are obliged, under the HK tax law, to register a BR for your business and be liable to Hong Kong tax.

Needless to say, if you live in HK and: are a private tutor, sell things over taobao to other HK people, or do any other business, you may be liable too.

There are certain exemptions for small business with less than $30,000 turnover involving HK, but you still need to actively apply for a certificate of exemption.

If you have concerns about this, you can get an advance ruling from the tax authorities by sending them some forms, and an appropriate cash bribe: http://www.ird.gov.hk/eng/pdf/e_dipn31.pdf

Telling tales

Written by Cliff on Thursday 24 April 2014 at 12:55 pm

The recent implementation of Dodd Frank-like whistle-blowing proposals in the US and UK and other Asian countries has brought the act of reporting your own company’s misconduct into fashion. However, Hong Kong resists the change, citing that no thought has gone into that direction.

there are myriad, colourful names for Chinese people who betray their families

After all, the Chinese population is not too accustomed to laying bare their family’s problems, as is Confucian custom. To do so and gain rewards is betrayal and there are myriad, colourful names for Chinese people who betray their families, their state and their organisations since the age of fire.

However, Hong Kong sits uncomfortably at the seams between traditional Chinese custom and western management practice. The government and regulatory authorities have, since their establishment, been balancing the gut instinct of Chinese people and the need to gain some sort of respect and compatibility with Western corporate governance practices.

So what happens if a director, vested with fiduciary duties towards his company, wanted to report the misconduct of either the company or his fellow directors to a regulatory authority, e.g. the ICAC or the SFC? It is a vexing question indeed. Is it a breach of fiduciary duty? A breach of confidence? Misuse of proprietary information? Can he be fired? Can he be sued? What will become of his reputation?

Hong Kong has no general ‘whistleblower’ protection law to speak of. People open their mouths at their own risk. There are anonymous reporting programs operated by the ICAC and less formally provided by the SFC but that’s about it. Courts around the world have generally come to the conclusion that reporting would be in the best interests of the company because to delay may land even harsher penalties when any misconduct is discovered by the authorities, so that might help with the breach of fiduciary duties part.

All in all, a director might find it useful to resign before opening his mouth. Better quit first before being made to do so!

The above is for leisure reading only.

Casenote: Kao, Lee & Yip v Steph Lau and Fion Tsui FACV 7/2008

Written by Cliff on Wednesday 23 April 2014 at 6:47 pm

Court of Final Appeal (!)

Case highlight: Ribeiro PJ lashes out at law firm for taking it out on law-abiding newly qualified lawyers wanting to leave. It’s only 50 paragraphs!

Issues: (1) Whether an employer or employee can unilaterally terminate employment relations. (2) Whether employee can opt to reduce his notice period using annual leave in lieu or simply work more and receive payment for accrued annual leave.

Decided with high degree of certainty that: (1) Either the employer or employee can terminate employment relations unilaterally in accordance with law and contract; and (2) an employee may choose to reduce his notice period using accrued annual leave days, or he may work for the full notice period and receive payment for the accrued annual rest days in accordance with statute. Join the forum discussion on this post – (11) Posts

LLB Tort Law past paper

Written by Cliff on Wednesday 19 March 2014 at 5:57 pm

A past paper on tort law has been contributed by a student and added to our collection under Education.

Family Tree

Written by Cliff on Tuesday 18 March 2014 at 10:06 am

Family Tree
This diagram is useful in both legal and social contexts – recalling those massive family gatherings over new year during which you cannot remember how to address each person you meet! In the legal context, this diagram can help determine corresponding interests of directors, who must declare their interests in company transactions. For public/listed companies, this diagram becomes useful to unravel possible connected transactions where family members may be associates of the director concerned.

Old Companies Ordinance

Written by Cliff on Sunday 9 March 2014 at 12:05 am

This is the old Companies Ordinance Cap.32 prior to the the new CO Cap.622 – Companies Ordinance (Cap 32).

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