The Financial Institutions (Resolution) Ordinance (Cap 628) ("FIRO") and the Financial institutions (Resolution) (Protected Arrangements) Regulation came into operation on 7 July 2017.

Under the FIRO, the Monetary Authority, the Insurance Authority and the Securities and Futures Commission are given the necessary powers to resolve financial institutions ("FI") in Hong Kong which have become non-viable.

To align with international standards and practices, Part 8 of the FIRO sets out clawback provisions which enable resolution authorities to make applications to the court to clawback received and deferred fixed and variable remuneration from officers of FI (e.g. a director or shadow director; the chief executive officer or deputy chief executive officer; a person who is employed by, or acts for or on behalf of the FI and who: (i) is principally responsible (alone or jointly with others) for — (a) the management of part of the business of the FI; or (b) the performance of one or more of the control functions of the FI; or (ii) has the potential to have a material impact on the risk profile of the FI).

The Court may make a clawback order against an officer if satisfied that:

a) the officer, in performing his/her functions, acted or omitted to act in a way that caused, or materially contributed to, the FI ceasing, or being likely to cease, to be viable; and

b) the act was done, or the omission was made, intentionally, recklessly or negligently.

A clawback order is an order that provides for either or both of the following:

a) that the officer repays or returns all or a specified part of the fixed or variable remuneration received by the officer in respect of services provided to the FI during the controlled period of three years (or any longer period of up to three years fixed by the Court) immediately before the date on which the resolution of the FI was initiated ("Controlled Period"); and/or

b) that the officer ceases to be entitled to receive all or a specified part of any fixed or variable remuneration that the FI had agreed during the Controlled Period to give, but had not yet given, to the officer.

Currently, the provisions regarding clawback of remuneration are not yet in force. It is considered that this part should come into operation after the Chief Justice has made rules regulating the Court's practice and procedure in connection with applications made.