In HKSAR v. Luk Kin Peter Joseph and Another (FACC 6/2016), the 1st Defendant (D1) and the 2nd Defendant (D2) were the directors of China Mining Limited, a listed company which carried on a blood cord banking business through its subsidiary, Cell Therapy. China Mining wholly owned Biogrowth, which subsequently held Cell Therapy. D1 and D2 later resigned as directors of China Mining but remained as the only directors of Biogrowth and Cell Therapy. China Mining changed its business plans later and decided to sell the blood cord business to United Easy Investments, where D1 was the beneficial owner. Intending to conceal the true state of facts, D1 and D2 signed the minutes of Biogrowth which contained a declaration stating that none of the directors was interested in the sale of the blood cord banking business (“Note”).

D1 and D2 were convicted for using the Note which to their knowledge was intended to mislead China Mining in breach of s.9(3) of the Prevention of Bribery Ordinance (“POBO”) and for the offering and accepting respectively of 1.5 million shares in China Mining for this act. The main issues on appeal are: (i) whether D1 and D2 were agents of China Mining for the purpose of s.9 POBO in acting to look for a purchaser of its blood cord banking business; and (ii) whether the shares offered to D2 amounted to a bribe.

The Court of Final Appeal (“CFA”) held that D1 and D2 were agents of China Mining under s.9 POBO, and that no pre-existing duty is required notwithstanding the fact they were not contractually the directors of China Mining (they were merely directors of the subsidiaries), following the ratio of R v Chong Chui Ha [1997] 4 HKC 518. As D1 and D2 had assumed responsibility to find a buyer on behalf of China Mining for its blood cord banking business, they were deemed an agent of China Mining and under a duty to do so in good faith and honestly. The lack of any preexisting obligation between China Mining and them did not preclude them from being agents of China Mining. They were therefore held liable for deceiving China Mining by failing to properly disclose their interests in the business transaction.

This case provides an opportunity for the CFA to reinforce the principles of agency and rules governing the attribution of knowledge of directors to the company. The CFA confirmed that if a person is in a position to act on behalf of another company even without any preexisting obligations, he can be considered to be an agent and have fiduciary duties towards that principal in the context of the POBO. In light of this CFA decision, it is advisable for corporates, especially listed companies, to pay more attention to the proper disclosure of interests in order to prevent committing the bribery offences. To accomplish this, we suggest that companies provide comprehensive guidelines to their management and employees across the entire corporate group on proper disclosure of interests as well as unwarranted acceptance or offering of advantages.