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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
On 2 June 2021, the Court of First Instance granted orders sought by the SFC under section 213 of the Securities and Futures Ordinance against 3 unlicensed entities purportedly based in Hong Kong which defrauded 75 investors. The unlicensed entities solicited investors through cold calls to open trading accounts on their websites (www.broadspansecurities.com ; www.shepherdshillhk.com ; www.richfutureshk.com ) and asked them to deposit funds into 6 Hong Kong bank accounts. None of the investments in securities and/or futures products agreed with the investors were executed on any recognised / licensed exchange.
The recent orders follows injunctions obtained by the SFC in December 2014 to freeze the 6 bank accounts held by the boiler room fraudsters and orders obtained by the SFC in January 2015 restraining them from carrying on unlicensed activities. Administrators have been appointed by the High Court to receive proceeds in the 6 bank accounts in the sum of approximately HK$4.3 million for distribution to the 75 investors on a pro rata basis.
See the judgment of Deputy High Court Judge Maurellet SC:-
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