The Securities and Futures Commission (the “SFC”) recently publicly reprimanded and imposed a fine in the sum of HK$400,000 on a Money Laundering Reporting Officer (“MLRO”) / Compliance Officer of a SFC licenced firm for his failure to discharge his duties as a member of the firm’s senior management, including failures to conduct adequate enquiries before approving unusual or suspicious third party fund transfers, to maintain proper records of enquiries, to ensure proper and adequate systems were in place to mitigate money laundering risks, etc.
In this case, the MLRO is not a licensed person under the Securities and Futures Ordinance (“SFO”), but comes within the definition of a “regulated person” under section 194(7) of the SFO for being a person involved in the management of the business of a licensed corporation.
This case serves as a reminder that the SFC continues to focus on anti-money laundering in its supervision and enforcement work, and will exercise its disciplinary powers against members of senior management of a licenced firm irrespective of whether they are licensed or registered with the SFC.
For more information, please refer to the SFC’s website at LINK.
Our client bulletin for June 2021 covers the following topics:
Please click here to view the bulletin.
Pursuant to the new Part 4A and Schedule 7 of the Financial Reporting Council Ordinance (FRCO) gazetted on 17 May 2021, starting from 1 January 2022, the Financial Reporting Council (FRC) will begin to collect levies from (i) sellers and purchasers of securities (i.e. FRC Transaction Levy); (ii) public interest entities (PIEs); and (iii) PIE auditors.
The FRC Transaction Levy for the seller is at a rate of 0.00015% of the consideration for the sale and for the purchaser at a rate of 0.00015% of the consideration for the purchase. The FRC Transaction Levy will be collected on behalf of the FRC by Hong Kong Exchanges and Clearing Limited. No levy is payable for a sale and purchase of a stock option.
For more details about the FRC levies, please visit the FRC’s website.
In June 2021, worldwide construction industry consultant Arcadis published its 2021 Global Construction Disputes Report.
The report shows that in 2020, an exceptional year for many, the worldwide average value of construction disputes increased significantly to US$54.26m (from US$30.7m in 2019), while the average length of the dispute period continued to drop to 13.4 months (from 15 months in 2019).
More than 60 percent of survey respondents encountered project impact due to COVID-19. Not surprisingly, force majeure and third-party impacts entered into the top three causes of disputes in 2020, with owners/contractors failing to understand and/or comply with contractual obligations taking the top spot, moving up from third in 2019. A party’s failure to understand and/or comply with contractual obligations, the report states, has an easy cure: adequate training and effective advice before and during contract performance.
According to the report, the top three most important factors for early resolution of disputes are: (1) owner/contractor’s willingness to compromise, (2) accurate and timely schedules and reviews by project staff or third parties, and (3) transparency of cost data in support of claimed damages. These are all important considerations to keep in mind as construction activity across the globe continues to increase while there are labour and material shortages worldwide.
Read the full 2021 Global Construction Disputes Report here:https://www.arcadis.com/en/knowledge-hub/perspectives/global/global-construction-disputes-report.
On 22 June 2021, the HKIAC released an updated report as to the average cost and duration of arbitrations conducted under their rules over the past seven years. The headline figures are impressive: the mean average arbitration cost some US$137,000 and concluded within 17 months from commencement. However, when considering these figures, it should be noted that approximately 24% of the arbitrations reviewed were conducted under the HKIAC’s expedited rules, which dramatically increases the speed with which an award is produced, to a mere 9.3 months on average. The costs quoted also omit party costs, i.e. legal fees, counsel fees, witnesses, etc.
While not every case will follow the average, the latest figures provide a useful indication of the timelines and costs to expect when considering whether to arbitrate at the HKIAC.
The full report can be found here: https://www.hkiac.org/news/hkiac-releases-average-costs-and-duration-report
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