Hong Kong voluntary code of conduct for ESG ratings and data products providers

The Securities and Futures Commission of Hong Kong (SFC) is sponsoring the International Capital Market Association (ICMA) to form a working group to develop voluntary code of conduct for environmental, social and governance (ESG) ratings and data products providers to provide ESG products and services in Hong Kong.

Greatest concerns

In 2022, the SFC conducted a survey to understand the business concerns over ESG products and services. In the SFC’s report on such survey published in October 2023, certain findings worthy of attention were highlighted such as:

  • ESG service providers use different approaches in sourcing data. Some also employ unique and proprietary methodologies to bridge any data gap or derive their ratings products. Therefore, ESG products from different providers for the same covered entity may not be correlated and comparable with each other.
  • Data unavailability and the quality of data being disclosed by covered entities are the most common challenges for ESG service providers.
  • There is, generally, a lack of standardised corporate sustainability disclosure standards in the market.
  • The major concerns of asset managers and other users of ESG products are also data quality and coverage, including the insufficiency of data on private companies and emerging markets.
  • Another challenge facing the asset managers is the lack of transparency on the part of ESG service products, e.g. their methodologies, assumptions, sources of raw data and pricing frameworks. Thus, asset managers have to conduct due diligence on the ESG service providers.
  • Certain asset managers even have their in-house ESG specialists, responsible for analysing the information provided by ESG service providers (i.e. not wholly relying on the service providers) before investment decisions are made.
  • Some asset managers may formulate ESG ratings for internal use or for their clients by utilising their own methodologies.
  • Conflicts of interest is another concern. Some asset managers worry about the possibility that an ESG service provider downgrades a covered entity’s ESG rating, while its business line subsequently solicits business with the downgraded entity.

The SFC concludes that the data availability and reliability issue stems from the lack of a standardised corporate sustainability disclosure framework. In this regard, the SFC envisages that the introduction of the International Sustainability Standards Board (ISSB) sustainability-related corporate disclosure standards and its collaboration with local stakeholders (including the Hong Kong Stock Exchange) to develop a comprehensive roadmap for adopting the ISSB standards in Hong Kong will help narrow the data gap gradually. However, these efforts may not address the lack of data on private, unlisted enterprises which do not have to attract investments from funds or asset managers.

The working group is established to address the other concerns by way of introducing “voluntary” code of conduct. This approach is also taken by the UK, Singapore and Japan, while the European Union elects to expand its regulatory remit to cover ESG service providers.

Tackling the issue

The SFC is the sponsor of the working group, while the ICMA acts as the secretariat. Its members include ESG service providers, asset managers, financial institutions and Hang Seng Indexes Company Limited. The Hong Kong Monetary Authority and the Insurance Authority sit as observers.

The objectives of the working group include…READ FULL ARTICLE

Note: This material has been prepared for general information purposes only and is not intended to be relied upon as professional advice for any cases. Should you need further information or legal advice, please contact us.

By: Rossana Chu

Yang & Yang Solicitors

Yang & Yang Solicitors LLP welcomes Dennis Yeung as a new Partner

Hong Kong, China – Yang & Yang Solicitors LLP is pleased to announce Mr. Dennis Yeung has joined our firm as a Partner on 1 April 2024. He has more than 20 years of legal experience in a wide variety of practice areas, including mergers & acquisitions, securities and public listings, private equity, regulatory compliance and corporate & commercial matters.  His clients include Chinese and multi-national corporations, fund houses, financial institutions, listing applicants and listed companies. Prior to joining the firm, Dennis was a Representative and Senior Counsel at Akin Gump Strauss Hauer & Feld in Beijing.

Dennis will bring a wealth of experience to our firm. At the same time, he will work closely with our strategic partner, East & Concord Partners, to further develop legal practices with clients in Mainland China.

For more information, please contact:

Mona Cheung

Yang & Yang Solicitors LLP

+852 3797 8242

Making Sense of Company Registration Requirements in Hong Kong

Starting a business in Hong Kong can be daunting, especially when it comes to understanding the company’s registration requirements. Many entrepreneurs struggle with navigating the complex process of registering their businesses and complying with all legal regulations in order to operate smoothly. 

Fortunately, there are several resources available that provide clear guidance on how to register a business in Hong Kong – from choosing a company name, selecting the right structure for your business, filing any necessary documents and more.

Is Registering A Company In Hong Kong Difficult?

With the right knowledge and resources, it is possible to successfully and easily establish a business in Hong Kong

The company registration process is easier than it may seem. In fact, the process can usually be completed in a matter of days. 

Before starting the registration process, it’s important to understand the different types of companies available and their specific registration requirements.  

Depending on the type of business activity that will be conducted, additional documents such as a Memorandum and Articles of Association may be required.

The Companies Registry offers a range of services, including the registration of companies and their subsequent management. It also provides guidance for compliance with all applicable laws and regulations. 

The registry also has a dedicated team to answer any questions about company formation and provide advice on corporate governance matters.

In addition to registering with the Companies Registry, businesses operating in Hong Kong must also register with the Inland Revenue Department (IRD). 

Companies must provide detailed financial statements, as well as proof of their annual income and expenditure. 

Businesses may also be required to obtain a business license from the relevant government department or statutory body. 

Main Types Of Company Structures In Hong Kong

When registering a business in Hong Kong, it is important to consider the different types of company structures available.  

The most common type of company structure used by local businesses is the limited liability company (LLC). 

This type of entity allows the owners to limit their personal financial risk, as they are not liable for any debts or obligations incurred by the company. 

Other types of company structures include the unlimited liability company, private limited companies and public limited companies.

While understanding company registration requirements in Hong Kong is crucial for businesses planning to start there, if you’re eyeing the U.S market, setting up an LLC (Limited Liability Company) might be an advantageous option. In this context, learning how to create an LLC sets up the fundamental base for your entrepreneurial journey. This process involves steps that provide legal protection, tax advantages, and more flexibility – all essential aspects for starting a business successfully.

The Costs Involved In Registering A Company In Hong Kong

The costs involved with registering a business in Hong Kong depend on the type of structure that is chosen. Generally speaking, setting up an LLC will cost less than an unlimited liability company. 

The other costs involved include the registration fee, which is based on the company’s authorized share capital, and the stamp duty fee, which is a flat rate of 0.1% for companies with an issued share capital of up to $50,000.

Professional fees such as legal and accounting services should also be taken into consideration when registering a business in Hong Kong. 

Requirements For Incorporation & Compliance

Incorporation in Hong Kong is a straightforward process, however it does come with certain steps and requirements that must be met. 

Companies are required to consider the various registration and compliance issues associated with setting up a business in such an important financial hub. 

Registration Requirements: 

Companies will need to register their business with the Companies Registry in Hong Kong, providing various documentation proving the legality of their business. 

This includes proof of identity for anyone involved in the company, such as directors, shareholders and secretaries. 

Companies must also provide a proposed company name that has not already been used by any other business and submit an application form with all relevant details to be registered. 

Compliance Requirements: 

Companies must also comply with various legal requirements and regulations, such as the Companies Ordinance

They will need to have a registered office in Hong Kong, as well as a company secretary who is a resident of the city. 

The company will also need to appoint at least one director and one shareholder, both of whom must be over 18 years of age and must not have been disqualified from being director or shareholder. 

Companies must also file an annual return with the Companies Registry each year, which includes details on the directors, shareholders and company secretary as well as other financial information. 

Additional Considerations: 

In addition to these requirements, companies may wish to consider a number of other factors that may affect their business. 

These could include things such as the type of ownership structure, any tax implications and how to protect against risks associated with setting up in Hong Kong. 

Key Considerations For Long-Term Success

Starting a business in Hong Kong may seem as an overwhelming task, especially when it comes to company registration requirements, but with the right knowledge and guidance, entrepreneurs can successfully navigate the process and establish their business for long-term success. 

By understanding these points ahead of time, you can ensure a smooth transition into launching your new venture.

Determine The Type Of Business Entity

The most common business entities established in Hong Kong are limited companies, private companies, and partnerships. 

Each type has its own advantages and disadvantages, so make sure to research the different types carefully before deciding which is best suited for your business’ needs.

Secure A Hong Kong Business Registration Number

All businesses in Hong Kong must apply for a business registration number (BRN) from the Companies Registry. 

The BRN is used to identify the company and its business activities.

Determine Your Company’s Capital Structure

After registering your company, you need to decide on its capital structure – that is, the amount and composition of share capital. 

The Companies Registry also requires that all companies have a minimum paid-up capital of at least HKD $10,000 to begin operations.

Appoint Directors

Companies registered in Hong Kong must appoint at least one director who is either a permanent resident or citizen of the city. 

It is important to note that public companies must have at least three directors.

Open A Bank Account

After your company is registered, you will need to open a bank account in the name of your business and deposit the minimum paid-up capital. This helps prove the existence and financial health of your company. 

Obtain Licenses And Permits

Depending on the type of business you operate, you may need to obtain licenses or permits from the relevant government departments. 

Make sure to research all applicable laws and regulations beforehand.

Maintain Compliance

Companies registered in Hong Kong are subject to periodic reporting requirements and must ensure that their records remain up-to-date. 

Companies must also keep proper records of their financial accounts and file an Annual Return with the Companies Registry. Failing to do so can result in hefty penalties.

Final Word

With the right knowledge and resources, it is possible to successfully and easily establish a business in Hong Kong. 

Whether you are looking for a company registration or simply want to open an account with one of the local banks, understanding all the requirements can help make sure that everything goes smoothly.

Leading ESG lawyer joins Ben McQuhae & Co in London

Hong Kong boutique law firm Ben McQuhae & Co has strengthened its environmental, social and governance (ESG) advisory practice with the appointment of Paul Watchman.

Watchman, who is also an honorary professor of the School of Law of the University of Glasgow, will be the global head of climate change and ESG transition, based in London.

“Climate change and ESG transition will continue to profoundly impact every business in every economy, and we want to support and accelerate change,” said founding partner Ben McQuhae.

“I have no doubt this will be a deeply rewarding journey for all of us and I look forward to seeing what we can build together.”

Watchman is a recognised leading figure in all areas of ESG and, through a long association with the UN, he closely scrutinises law firms and their developing ESG practices.

He has advised a wide array of clients internationally and has been influential in the development of policy, business and financial practice, legal norms and voluntary codes and standards.

He led the Freshfields team and was the principal author and project head of the UN report on fiduciary duties, known as The Freshfields Report, which was published in 2005 to provide legal foundation for ESG investment.

Watchman’s appointment represents Ben McQuhae & Co’s first expansion to build a multidisciplinary strategic advisory firm to support more clients in more key markets.

Established in 2021, Ben McQuhae & Co focuses on supporting clients to build sustainable finance and pledges to be a net-zero carbon law firm.

Katie Lau Joins Leaders in Law as the Exclusive Medical Aesthetics Member in Hong Kong

Leaders in Law, the leading platform in its field, is delighted to welcome Katie Lau as our exclusively recommended & endorsed Medical Aesthetics expert in Hong Kong.

For Katie, Founder of Dr. Katie Clinic, principles are of paramount importance, and the sole principle she has staunchly followed since the onset of her professional career is to help people in need. This principle of Katie has been one of the key factors that has made her one of the most admired and influential doctors in and around her space in Hong Kong. Katie graduated from the University of Hong Kong in 2006 and later completed three years of surgical training at its teaching hospital. Katie still needed hands-on experience as a practitioner to prover her mettle and absorb the knowledge of a professional practice, which led her to work in many organisations and helped her gain her initial clinical aesthetic experience. “After 3 years of basic surgical training, there were a few opportunities which led me into private practice. Before my clinic, I started off as a general practitioner, and after a few months I got involved in the study of cosmetic medicine”, says Katie.

Hong Kong: a world where the old and the new live side by side

Hong Kong SAR

  1. Hong Kong Limited Partnership Fund (“LPF”) Regime

Hong Kong is the second largest private equity hub in Asia after Mainland China. As an international financial centre, Hong Kong has a vital role to play in the Funds Industry, and is committed to strengthening its position as a jurisdiction of choice for Private Funds in Asia for investment and wealth creation in the region.

Significant milestone for private fund structuring in Hong Kong

The Hong Kong LPF Ordinance was enacted on 31 August 2020, aiming to allow Private Funds to set up and operate locally as Limited Partnerships. The new LPF regime provides an alternative investment vehicle for private fund managers who are raising funds or investing in Asia and looking for a regionally domiciled fund vehicle.

Main Features of the Hong Kong LPF

It is widely used by Closed-Ended Private Funds such as private equity, venture capital, real estate, infrastructure, debt and special situation funds;

  • Fund structure is governed by a Limited Partnership Agreement with General Partner (“GP”) and at least one Limited Partner;
  • A simple and user-friendly set-up process by registration with the Registrar of Companies by a Hong Kong registered law firm or solicitor;
  • Tax benefits: no capital duty and no stamp duty: LPF is typically in scope under the unified funds exemption and carried interest can be tax exempted.

Key parties and operation obligations

  • GP is responsible for daily management and control of the LPF, assuming unlimited liability;
  • Investment Manager must be SFC-licensed if undertaking regulated activities in Hong Kong;
  • Auditor is appointed to perform independent fund audit annually;
  • AML responsible person is to carry out anti-money laundering compliance functions;
  • Proper custody management is required;
  • A registered office is maintained in Hong Kong;
  • Independent party such as fund administrator may be engaged for fund valuation and investor services as necessary and applicable.

It is proposed that the LPF regime will allow re-domiciliation of offshore funds to Hong Kong provided that the migrating offshore fund meets the same set of eligibility requirements of an LPF. Hence the new LPF regime will no doubt provide ample opportunities and long-term growth for the Fund Industry and the Private Equity sector in Asia.

2. Trust or Company Service Providers license

To enhance the due diligence commitments on the designated non-financial businesses and professionals, a licensing regime was introduced under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance on 1 March 2018.

Any person who carries on a trust or company service business as defined in the guideline is required to obtain a Trust or Company Service Providers license (“License”) from the Registrar of Companies. The License will be granted for three years’ period and the Licensee needs to renew it subject to a ‘fit and proper’ test.

Anyone who carries on the relevant business without a TCSP license is liable on conviction for a fine of HK$100,000 and imprisonment for 6 months.

3. Legal update

Waiver of registration fees for annual returns (except for late delivery) for 2 years.

With effect from 1 October 2020, registration fees for annual returns delivered to the Companies Registry on time and within the concession period from 1 October 2020 to 30 September 2022 (both dates inclusive) are waived. This applies to all private and public companies having share capital, companies limited by guarantee and registered non-Hong Kong companies.

Increase of stamp duty rate on transfer of Hong Kong stock

With effect from 1 August 2021, the rate of stamp duty payable on sale or purchase of Hong Kong stock is increased from 0.1% to 0.13% of the consideration or value of each transaction payable by buyers and sellers respectively.

New Inspection Regime under the Companies Ordinance

Proposals have been made to the Legislative Council on the timing of implementation of the new inspection regime by the public about the Usual Residential Addresses (“URAs”) and full identification numbers (“IDNs”) (collectively “Protected Information”) of directors, company secretaries and other relevant persons as follows:

Phase 1 – from 23 August 2021, companies may replace URAs of directors with their correspondence addresses, and replace full IDNs of directors and company secretaries with their partial IDNs for public inspection on their own registers;

Phase 2 – from 24 October 2022, Protected Information on the Index of Directors on the Register of the Registry will be replaced with correspondence addresses and partial IDNs for public inspection. Protected Information in the documents filed with the Registry after commencement of this phase will not be provided for public inspection.

Phase 3 – from 27 December 2023, data subjects could apply to the Registry for protecting from public inspection their Protected Information contained in documents already registered with the Registry before commencement of Phase 2, and replace such information with their correspondence addresses and partial IDNs.

Notwithstanding the above, specified Persons could apply to the Registry for access to Protected Information from Phase 2 onwards

Please do not hesitate to contact us should you require any further information.


CEO – Sino Corporate Services GroupSino Group

Singapore jostles with London for top arbitration spot

Singapore now rivals London as the most popular seat for international arbitration, with Hong Kong coming a close second, a global survey has found.

A study by international firm White & Case, in partnership with Queen Mary University of London, has revealed that the popularity of Asian arbitral hubs has grown significantly in the past five years. Asked to select their preferred seats, 54% of respondents chose London and Singapore – the latter making the top spot for the first time. Meanwhile, half of the 1,200 respondents picked Hong Kong.

In 2015, Singapore garnered just 19% of the votes, while Hong Kong was picked by 22% of arbitration users.

According to the report, the increases enjoyed by Asian seats ‘may correlate with a relative reduction in the percentage of respondents who included traditionally dominant European seats, such as London, Paris and Geneva, in their answers.

‘London was selected by 64% of respondents in 2018, making it the most selected that year, but it dropped to 54% in this edition of the survey. Paris fell even further, from its second place showing in 2018, with 53% of respondents including it in their selections, to fourth place this year, as a seat of choice for 35% of respondents.’

The report also revealed a lack of enthusiasm for remote proceedings among arbitration users. While just 16% of respondents said they would ‘postpone the hearing until it could be held in person’, only 8% would actively prefer to hold substantive hearings remotely rather than in-person or using a mix of in-person and virtual formats.

The survey found a significant preference for international arbitration in conjunction with alternative dispute resolution (ADR) as opposed to on a stand-alone basis. This follows a trend over recent years.


IFLR Asia-Pacific Awards 2021 Shortlist Announced

Conyers is once again shortlisted in the IFLR Asia-Pacific 2021 Awards.

We are pleased to be nominated as Offshore Firm of the Year this year again, an award that we won in 2020.

In addition, five of our significant matters advised by our Hong Kong and Singapore based lawyers are shortlisted as Deals of the year:-

The IFLR Asia-Pacific awards celebrate legally innovative cross-border transactions, teams and firms in the region. The results will be announced virtually on Thursday, 25 March 2021. For more information on the nominations, please visit:


UN express concerns over Hong Kong National Security Law

Seven UN human rights experts signed a letter to the Chinese government expressing concerns about whether China is complying with its international obligations for human rights standards. The letter, made public Friday, specifically questioned The Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, or the “National Security Law.”

As noted in the letter, sent September 1, the UN has expressed concerns regarding this law before and has exchanged several communications with Chinese officials about it. The UN members who wrote this letter also cited numerous obligations imposed by the UN requiring greater care in the passage of laws, such as by encouraging specific laws so as to “prevent ill-defined and/or overly broad laws which are open to arbitrary application and abuse and may lead to arbitrary deprivation of liberty.”

The National Security Law at issue was passed on July 1, and it went into force that same day. It specifies four categories of offenses that are said to endanger national security: “secession, subversion, terrorism and collusion with a foreign country or with external elements.”

Terrorism is defined broadly as including damage to physical property “such as sabotage of transport facilities or public services.” A UN Special Rapporteur released a thematic report in 2019 stating that “[d]efinitions of terrorism that include damage to property, including public property … seriously affect the right to freedom of assembly … [and] can be used against individuals engaging in social movements where damage to property is unwittingly incurred.”

In light of these and other concerns expressed in the letter, the UN requested a response to their points, an explanation of how the law does not infringe on the rights that China is obligated to provide under international law, how the country will be enforcing the law to not infringe on such rights, and the positive measures and oversight of the exercising of this law.

A Foreign Ministry spokesperson, Hua Chunying commented on the UN letter during a press conference on Friday, stating “We urge [the UN] to earnestly respect the purposes and principles of the UN Charter, discard ignorance, prejudice and double standards, and stop interfering in Hong Kong affairs and China’s internal affairs.” Chunying also stated that the law is widely accepted in Hong Kong, despite the many ongoing protests against the law throughout the region.


K&L Gates Expands Hong Kong Office With Former Orrick Team

K&L Gates has recruited a team of three partners specializing in an integrated funds and private equity practice.

Sook Young Yeu, Scott Peterman and William Ho all join from Orrick Herrington & Sutcliffe, which has decided to close its Hong Kong office. Yeu and Peterman, both funds specialists, were partners with Orrick while Ho, who advises on private equity transactions, was of counsel with the firm. The trio are joined by two associates at K&L Gates.

Yeu, who led Orrick’s Hong Kong office since joining in 2005 through Orrick’s takeover of legacy Coudert Brothers’ China offices where she had been practicing since 1989. She’s advised Asian investors on investing U.S. and other cross-border funds and on private equity investment.

Peterman has an active fund formation practice advising the structuring of various private, investment and real estate funds. Last year, he advised Hong Kong-based fund manager Pacific Hawk Ltd. on launching the first open-ended fund in the city following legislative change. He joined Orrick in 2017 from Jones Day where he was of counsel. Before that, he was a partner with Sidley Austin.

Ho focuses his practice on advising private equity houses and companies on fund raising transactions, investments and mergers and acquisitions. In May, he advised Taiwan-based live streaming site operator M17 Entertainment Ltd. on a $26.5 million Series D from investors including Singapore-based venture capital fund Vertex Growth Fund. Ho joined Orrick in 2018 from Paul, Weiss, Rifkind, Wharton & Garrison where he was an associate for three years. Earlier in his career, he trained and practiced with Slaughter and May.

The trio bring in-depth industry experience in the technology, media, telecommunications, and fintech sectors, said David Tang, K&L Gates’ Hong Kong-based Asia managing partner, in a statement. “The additions of Sook, Scott, and Will significantly broaden and deepen our funds and private equity practices in Asia,” he said.

Last year, K&L Gates added in Hong Kong capital markets partner Guiping Lu from elite Chinese firm Haiwen & Partners.