On 25 November 2021, the UK Law Commission published an announcement, together with its paper titled “Smart legal contracts – Advice to Government”, confirming that the flexibility of the common law can accommodate and apply to smart contracts, in particular, “smart legal contracts”, without the need for statutory law reform. The analysis in the report may be of value to the businesses and legal practitioners in Hong Kong, which retains its common law system under the Basic Law.

As explained in the report, a smart legal contract is a legally binding contract, in which some or all of the contractual obligations are defined in and/or performed automatically by a computer programme. There are two main features of a smart legal contract, namely, (i) some or all of the contractual obligations under the contract are performed automatically by a computer programme, and (ii) the contract is legally enforceable.

The use of smart legal contracts is expected to help business increase the speed of contractual performance, reduce the costs of contract management via automation, achieve faster contract execution, etc. While there is a growing interest in smart legal contracts, there are legal questions relating to how current legal principles can apply to them, and the report provides an analysis of the current law in the UK as it applies to smart legal contract in respect of formation and enforceability, interpretation, remedies, vitiating factors, etc. Among other things, a number of issues were also identified for contracting parties to address in the terms of their smart legal contracts in order to reduce uncertainties and potential dispute.

For further details, please refer to UK Law Commission paper on smart legal contracts here.

On 29 October 2021, the Securities and Futures Commission (SFC) released its consultation conclusions on (i) the proposed code of conduct on bookbuilding and placing activities in equity capital market and debt capital market transactions and (ii) the “sponsor coupling” proposal. The consultation conclusions clarified the roles played by intermediaries in capital market transactions and set out the standards of conduct expected of them in bookbuilding, pricing, allocation and placing activities. It was also concluded that for Main Board initial public offerings, there needs to be  “sponsor coupling”, which in broad terms, means, at least one of the intermediaries which heads the syndicate, also acts as a sponsor.

Consequential amendments made to (i) the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission and (ii) the Guideline to sponsors, underwriters and placing agents involved in the listing and placing of GEM stocks have been gazetted on 5 November 2021 and will become effective on 5 August 2022.

For further details, please refer to SFC’s consultation conclusions here.

MinterEllison sponsored St. James’ Settlement (SJS) in organising a new community event called Sunday Café at the Blue House, a landmark historic building in Wanchai, Hong Kong.  The event, which will run on several Sundays, is organised for the children with special educational needs and their parents with an aim to provide social activities for the children and a means to support the parents.  The event was originally scheduled to take place in 2020, but postponed due to the COVID-19 pandemic.

On 31 October 2021 and 7 November 2021, MinterEllison joined hands with SJS in hosting the first ever Sunday Café where our Community Investment Committee members worked together with the participating children in the arts and crafts sessions.  MinterEllison will continue to collaborate with SJS in the upcoming Sunday Café in December 2021.

On 7 October 2021, our Partner Desmond Yu and Associate Iris Cheng delivered a seminar on “Internal Investigations on Misfeasance, Bribery, Fraud and Employee Misconduct” organized by the Hong Kong Chamber of Commerce (HKGCC).  Apart from fundamental issues relating to employment, secrecy requirements and legal professional privilege, they also shared practical advice on how to plan and carry out internal investigations.

See further at the HKGCC’s website here.

Changes to the Companies Ordinance (Cap. 622) are already underway for the implementation of the so-called “new inspection regime” for the Companies Register, which is maintained by the Hong Kong Companies Registry.  The key driver for the change is to usher in a regime that protects the sensitive personal data of certain individuals, such as directors and company secretaries, by limiting inspection of such data by the general public.

The new inspection regime is being implemented in three phases:

• Phase 1 – Since 23 August 2021, companies have been able to withhold from public inspection the usual residential addresses (URAs) of directors and the full identification numbers (IDNs) of directors and company secretaries from their registers of directors and company secretaries respectively. This means that, for public inspection purposes, companies may replace the URAs of directors with their correspondence addresses and replace the full IDNs of directors and company secretaries with partial IDNs.  In effect, companies now have the option to keep two sets of the registers of directors and company secretaries – one for internal records and one for public inspection.
• Phase 2 – Commencing on 24 October 2022, the URAs and full IDNs (together the Protected Information) will not be available for public inspection on the Index of Directors on the Companies Register. Any Protected Information contained in documents filed at the Companies Registry after 24 October 2022 will not be available for public inspection, but certain Specified Persons (see below) can apply to the Companies Registry for access to Protected Information of directors and other persons.
• Phase 3 – Starting from 27 December 2023, data subjects (i.e. the persons to whom the personal data relates) will be able to apply to protect their Protected Information contained in documents filed at the Companies Registry prior to Phase 2, and to replace the same with their correspondence addresses and partial IDNs. Specified Persons (see below) will also be able to apply to the Companies Registry for access to the Protected Information of directors and other individuals.

Specified Persons include the person to whom the personal data relates (i.e. a data subject), a person who has been given written authorisation by a data subject, shareholders, public officers and public bodies, lawyers, practising accountants and financial institutions.

This updates an earlier news update published by MinterEllison LLP on 4 August 2021.