SFC announces "Manager in Charge" regime to heighten senior management accountability for financial institutions in Hong Kong
In its recent circular (including annexes 1 and 2 and a set of FAQs), the Securities and Futures Commission (SFC) introduced new measures to heighten the accountability of the senior management of all licensed corporations (LCs). The circular clarifies who should be regarded as the senior management of a LC and requires the LCs to designate fit and proper individuals to be “Managers In Charge” of certain Core Functions (MICs, MIC Regime). The SFC's increased focus on senior management accountability is part of a global trend to make it easier for regulators to hold individuals to account, following, as it does, the recent introduction in the UK of the Senior Managers and Certification Regime. While the SFC emphasises that the MIC Regime does not impose any additional civil or criminal liability on the senior management of LCs, individuals must consider carefully whether they should be appointed as MICs and, if so, what their responsibilities for the designated Core Function are. Click here to view our full ebulletin.
Former Hong Kong leader Donald Tsang on trial for corruption
A trial against Former Chief Executive Donald Tsang Yam-kuen commenced in early January. Charges against Tsang include misconduct in public office at common law and bribery ("chief executive accepting an advantage”) under the Prevention of Bribery Ordinance. The charges relate to Tsang's renting of a three-storey penthouse in Shenzhen that he failed to disclose when he was in office. Tsang faces a maximum HKD 500,000 fine and seven years imprisonment if found guilty. On the first day of trial, Tsang pleaded not guilty to all charges. Tsang was in power between 2005 and 2012 and is the highest ranking officer in Hong Kong ever to stand trial for corruption.
Acting for another – Hong Kong court of final appeal issues important clarification under the prevention of bribery ordinance
In the recent case of HKSAR v Luk Kin Peter Joseph & Yu Oi Kee (FACC 8/2016), the Hong Kong Court of Final Appeal (CFA) clarified the scope of agency in the context of group companies for private sector offences under the Prevention of Bribery Ordinance (POBO).The CFA examined whether an agency relationship existed between directors of a subsidiary as agent and the parent company as principal, and held that for the purpose of section 9 of POBO, an agency relationship can arise without any pre-existing duty (legal, contractual or fiduciary). The mere acceptance of a request to act in relation to the principal’s affairs or business may itself create an agency relationship.
This is an interesting decision for directors, particularly in the context of group companies in Hong Kong. It is common for companies to adopt a group structure whereby the various businesses of the parent company are conducted through its directly-owned and/or indirectly-owned subsidiaries, with different people holding directorships in the parent company and the subsidiaries. The CFA's broad interpretation of "agent" under section 9 of POBO means that directors should be more cautious as to the possibility that a duty to act with good faith has been imposed on them with respect to their conduct of affairs related to companies in which they do not hold directorships. Click here to read our e-bulletin on this case.