Between 29-30 May 2021, our firm’s Partner and Head of Litigation and Dispute Resolution department, Ms. Heidi Chui, and her team Senior Associate Mr. Kyle Lo, Associate Mr. Calvin Huang and Paralegal Mr. Harold Gan, participated in the 5th AllBright Law Offices Virtual Moot Court Competition (the “Competition”).

The Competition was organised by Shanghai AllBright Law Offices and co-organised by Shanghai AllBright (Hefei) Law Offices, AllBright Litigation and Arbitration Committee, and Anhui University. Due to the pandemic, the Competition was held online, and a total of 22 teams from all across China participated in the Competition.

The opening ceremony of the Competition was host by Mr. Guo Rui, Senior Partner of AllBright Law Offices, and Mr. Lawrence Zhu, Senior Partner of AllBright Law Offices delivered the opening address.

Senior Partner of AllBright Law Offices, Mr. Guo Rui

Senior Partner of AllBright Law Offices, Mr. Lawrence Zhu

Our Partner Ms. Heidi Chui was invited to judge one of the moot competitions and gave her detailed views and comments on the performance of both plaintiff and defendant teams.

Our firm’s team led by our Senior Associate, Mr. Kyle Lo, consisted of Associate Mr. Calvin Huang, and Paralegal, Mr. Harold Gan. After a stiff challenge against the team from Wuhan, our firm’s team successfully won the first round in the competition.

The 5th AllBright Law Offices Virtual Moot Court Competition has been a great success. The Competition has fostered the mutual understanding of legal practice between the Mainland and Hong Kong and deepened the exchanges and cooperation
between the two firms.

Please contact our Partner Ms. Heidi Chui （heidichui.office@sw-hk.com）for any enquiries or further information about this event.

IFLR1000 has recently released their 31st edition rankings. Stevenson, Wong & Co. is pleased to announce that we have been ranked in Financial Services Regulatory.

IFLR1000 evaluates law firms and lawyers by practice area based on transactional evidence and client feedbacks. Firms are recognized for advising on some of the most complex or innovative transactions in their markets and receiving excellent feedback for their work.

About IFLR1000

The IFLR1000 is an international legal market’s leading guide focusing on financial and corporate law firms. Since 1990, IFLR1000 has published over 750 practice area rankings across 235 jurisdictions globally.

Please contact our Partners Mr. Hank Lo, Ms. Cornelia Chu, Mr. Rodney Teoh, Mr. Osbert Hui, or Ms. Erica Cheng for any inquiries or further information.

Please click here to see the full rankings.

On 26 May 2021, our Senior Associate, Mr. Gordon Tsang, and Senior Manager of Commercial and Corporate Finance Department, Dr. Rain Huang, was invited by Lex Omnibus to present a webinar on “Rules and Regulations on IPO” to the lawyers and in-house counsel.

During the course, Gordon and Rain gave a comprehensive introduction to Hong Kong’s IPO market rules and practices. They also discussed the latest updates to the listing requirements and accountability of professionals. The course also include updating the latest developments to dual listing, and the reorganisation of Red-Chips listing, H-shares listing, VIE arrangements, and comparison with US listing.

Please contact Mr. Gordon Tsang for any enquiries or further information.

Background

On 10 May 2021, The Securities and Futures Commission of Hong Kong (the “SFC”) announced the implementation of the Hong Kong Government’s grant scheme (the “Grant Scheme”) to provide subsidies for setting up qualified open-ended fund companies (the “OFCs”) and real estate investment trusts (the “REITs”) in Hong Kong.  The Grant Scheme covers 70% of eligible expenses paid to Hong Kong-based service providers, subject to a cap of HK$1 million per OFC and HK$8 million per REIT.

Grant Scheme for OFCs and REITs

The application period of the Grant Scheme is three years starting from 10 May 2021 until 9 May 2024 on a first-come-first-served basis[1].  The table below sets out a general summary of the Grant Scheme:

Applicants are recommended to consult the Investment Products Division of the SFC for further details.

According to Mr. Ashley Alder, the Chief Executive Officer of the SFC, the Grant Scheme “will reinforce Hong Kong as a leading capital raising venue and its status as an international assets and wealth management centre”[2].

Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.

This newsletter is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

(中文) 2021年5月14日，最高人民法院与香港律政司签署了《最高人民法院和香港特别行政区政府关于内地与香港特别行政区法院相互认可和协助破产程序的会谈纪要》（以下简称“《会谈纪要》”）。为了细化、落实《会谈纪要》，最高人民法院制定《关于开展认可和协助香港特别行政区破产程序试点工作的意见》（以下简称“《试点意见》”）。

这是内地和香港首次就跨境破产协助出台专门性文件，《试点意见》在案件受理、审查条件、认可对象、协助方式、破产财产分配等方面提供了契合时间的明确指引，开内地和香港跨境破产专门性文件之先河，符合开展跨境破产协助的需求趋势。

本文将为读者简要介绍《试点意见》的主要内容。

一、 试点地区范围

《试点意见》明确支持在内地采用试点方式，划定试点地区。考虑到与香港相互投资的规模、港资企业数量等因素，《试点意见》将内地试点地区划定为上海市、福建省厦门市、广东省深圳市，并由这三个城市的中级人民法院开展认可和协助香港破产程序的试点工作。

对于香港而言，香港依据普通法原则认可和协助内地破产程序，协助的范围不限于上述试点地区人民法院所进行的破产程序。在此前上海华信国际集团有限公司 [2020] HKCFI 167一案和深圳市年富供应链有限公司[2020] HKCFI 965一案中，香港法院已经以内地法院的破产程序与香港清盘程序一致，是一项集体清盘程序，且在不损害债权人利益的情况下，认可并协助了内地的破产管理人。

二、 申请内地法院认可和协助的香港破产程序的主体

《试点意见》第3条规定，香港破产程序中的清盘人和临时清盘人可作为申请内地法院认可和协助的香港破产程序的主体，即定义为“香港管理人”。

三、 适用案件范围

（一）破产程序的性质

在破产案件的程序性质方面，《试点意见》适用于内地与香港之间具有相似性的集体性债务清理程序。内地和香港的破产程序分别包括：

• 内地的破产程序：包括破产清算、重整以及和解程序。
• 香港的破产程序：在《试点意见》第2条指出“香港破产程序”是指依据香港特别行政区《公司（清盘及杂项条文）条例》《公司条例》进行的集体清偿程序，包括：
  　　　(1)　公司强制清盘；
  　　　(2)　公司债权人自动清盘；
  　　　(3)　由清盘人或者临时清盘人提出并经香港特别行政区高等法院依据香港特别行政区《公司条例》第673条批准的公司债务重组程序。

不予认可或者协助的香港破产程序

另外，《试点意见》也对内地法院应当裁定不予认可或者协助的香港破产程序的情形作出了规定，包括：

　(1)　债务人主要利益中心不在香港特别行政区或者在香港特别行政区连续存在未满6个月的；
　(2)　不符合《中华人民共和国企业破产法》第二条规定的；
　(3)　对内地债权人不公平对待的；
　(4)　存在欺诈的；
　(5)　人民法院认为应当不予认可或者协助的其他情形；及
　(6)　香港破产程序违反内地法律的基本原则或者违背公序良俗

（二）管辖要求

《试点意见》第4条对破产程序的地域以及时间作出了标准判断。第4条规定，适用于香港特别行政区系债务人主要利益中心所在地的香港破产程序。

“主要利益中心”一般指债务人的注册地。同时，人民法院也会综合考虑债务人主要办事机构所在地、主要营业地、主要财产所在地等因素认定。

对于时间标准，《试点意见》第4条也规定，香港管理人申请认可和协助时，债务人主要利益中心应当已经在香港特别行政区连续存在6个月以上。

（三）连接因素

《试点意见》第5条明确了香港破产程序与内地试点地区的连接点，包括债务人在内地的“主要财产”位于试点地区、在试点地区存在“营业地”或者在试点地区设有“代表机构”，香港管理人可以依据《试点意见》向该试点地区的中级人民法院提出申请认可和协助香港破产程序。

如果向两个以上有管辖权的人民法院提出申请的，由最先立案的人民法院管辖。

四、  香港管理人在内地的履职的职责范围

《试点意见》第14条规定，人民法院认可香港破产程序后，香港管理人可以依申请在内地履行相关职责。

然而，如香港管理人履行的职责涉及放弃财产权益、设定财产担保、借款、将财产转移出内地以及实施其他对债权人利益有重大影响的财产处分行为，需经人民法院另行批准。

另外，香港管理人履行职责，不得超出《中华人民共和国企业破产法》规定的范围，也不得超出香港特别行政区法律规定的范围。

五、  认可香港破产程序后的法律效力及临时措施申请

（一）在内地法院申请保全
《试点意见》第9条规定，内地法院在收到认可和协助申请之后、作出裁定之前，可根据香港管理人的申请，依法采取保全措施。

（二）法律效力
在内地法院认可香港破产程序后，即发生与内地启动破产程序类似的效力，例如：
　　(1)　债务人对个别债权人的清偿无效；
　　(2)　已经开始而尚未终结的有关债务人的民事诉讼或者仲裁应当中止；在香港管理人接管债务人的财产后，该诉讼或者仲裁继续进行；
　　(3)　有关债务人财产的保全措施应当解除，执行程序应当中止。

六、  协助方式

《试点意见》指出了内地法院认可和协助香港破产程序的两种方式：

（一）依申请允许香港管理人在内地履职。履职范围限于两地法律规定的交集部分，即香港管理人在内地履职不得超出其在香港破产程序中的职权范围，也不得获得超过内地管理人的更优待遇。

（二）依申请指定内地管理人，由其负责债务人在内地的事务和财产，两地管理人进行最大限度的合作。具体采用何种协助方式，由法官根据案件情况和申请事由来判断。

七、  总结

跨境破产协助利益关涉重大、法律问题复杂、实践经验不足，通过原有模式开展协助难度较大。内地和香港法律人一直以来不断探索解决问题的新思路新方案。《会谈纪要》的签署和《试点意见》的颁布，是内地和香港在民商事司法协助上取得的重大突破。这充分彰显了“一国两制”的独特性，使得香港进一步与内地实现优势互补，共同开展跨境破产协作机制。

《试点意见》为内地和香港破产程序相互承认与协助提供了明确的指引，我们期待《试点意见》未来的实际适用，并不断扩大其适用范围，为两地的跨境破产清盘提供更广阔的前景，进一步促进两地经济贸易的发展。

本文由本所合伙人，诉讼及争议解决部主管徐凯怡律师、卢家俊高级律师和甘子豪律师助理共同合著。若阁下想了解更多详情，请联络本所徐凯怡律师 (heidi.chui@sw-hk.com) ，或点击参阅《试点意见》和《会谈纪要》的全文。

于本文中提供的一切资料仅供参考，不构成任何法律意见，资料亦受制于适用规定及法例不时的更新与修改。若需取得相关法律意见，须咨询法律顾问。

On 1 January 2021, a tabloid reported the suicide of a 55-year-old American man, found inside a private car in Sai Kung. This was hardly sensational and would have easily gone unnoticed – except perhaps by the princes and barons of the financial sectors.

The deceased was Mr. Paul Lincoln Heffner (“Heffner”), the Founder/CEO/Managing Partner of Adamas Asset Management (HK) Limited (“Adamas”).

Flash back to the end of 2019, the Securities and Futures Commission (the “SFC”) penalised Adamas for regulatory breaches. This may have set in motion a chain of events ultimately leading to Heffner’s tragic demise.

The Prologue

Adamas is a Hong Kong company incorporated in August 2011. It has, since February 2013, been licensed under the Securities and Futures Ordinance (Cap. 571) (the “SFO”) to carry on Type 9 (asset management) regulated activity and used to act as a fund manager and adviser of various offshore funds offered specifically to professional investors.

In December 2019, the SFC announced that Adamas was reprimanded and fined HK$2.5 million for failing to make prompt and proper disclosure of its notifiable interests in the shares of eight companies listed on the Stock Exchange of Hong Kong (the “SEHK”) held in the client portfolios it managed between February 2013 and March 2016.

Adamas applied to the Securities and Futures Appeals Tribunal for a review of the SFC’s sanction but aborted it soon thereafter.

Regulatory Requirements

The SFC’s sanction on Adamas is a reminder of the all-too-familiar disclosure and regulatory requirements, including, inter alia:

• Where a person acquires an interest in, or ceases to be interested in, voting shares in a listed corporation, or any change occurs affecting a person’s existing interest in voting shares in a listed corporation, such person may come under a duty of disclosure[1];
• The notifiable percentage level for notifiable interests is 5% and the specified percentage level for changes to notifiable interests is 1%[2].
• Notification should be given to the SEHK and the listed corporation within three business days after the day on which the relevant event occurs[3].
• A licensed corporation should comply with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of clients and the integrity of the market[4].
• A licensed corporation should comply with, and implement and maintain measures appropriate to ensuring compliance with the law, rules, regulations and codes administered or issued by the SFC[5].

Hefty fine aside, it is curious how Adamas, being the manager and advisor of funds offered to professional investors, could have made the apparently “rookie” mistakes?

SFC’s Winding-up Petition & Appointment of Provisional Liquidators

Since Heffner’s death, all of Adamas’ employees have resigned and all of its operations and business activities had come to a standstill.

It transpired that Heffner was Adamas’ sole beneficial owner and director, thus no one other than Heffner was authorised to manage and handle the assets of the funds managed by Adamas and be the bank signatory of Adamas.

Against the backdrop that the business matters of Adamas had been left unattended, the SFC brought a winding-up petition against Adamas on public interest grounds (the “Petition”) and applied for the appointment of provisional liquidators to Adamas pending determination of the Petition pursuant to section 193 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (the “SFC’s Application”).

It appears that the SFC had over the years only sought to wind up a handful of companies, amongst which Adamas is the exceptional one not listed on the SEHK.

In March 2021, the High Court published a judgment in Securities and Futures Commission v Adamas Asset Management (HK) Ltd[6] in relation to the SFC’s Application.

The judgment sets out the Court’s reasons for allowing the SFC’s Application: –

• There is a strong prima facie case that Adamas should be wound up in the public interest so as to:

• The circumstances of the case rendered it appropriate and necessary to appoint provisional liquidators pending the hearing of the Petition.

The Epilogue, or the end of the First Chapter?

Underneath its professional façade, the ironically named Adamas was a flimsy one-man band, and its operation came to a grinding halt after the unexplained death of Heffner. This was followed by surreptitious attempts by unknown persons to usurp the control of the now unmanned company.

We expect this matter to spawn further regulatory and criminal investigations.

At the moment, we have more questions than answers.

Please contact our Partner Osbert Hui and Senior Associate Dominic Lau for any enquiries or further information.

This newsletter is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

References:

1. Cap. 32 Companies (Winding Up and Miscellaneous Provisions) Ordinance
2. Cap. 571 Securities and Futures Ordinance
3. News article titled “American man who committed suicide in a Tesla in Sai Kung was the CEO of Adamas Asset Management, ex-wife’s father – founder of Dragon Air (Updated)”: https://www.dimsumdaily.hk/american-man-who-committed-suicide-in-a-tesla-in-sai-kung-was-the-ceo-of-adamas-asset-management-wifes-father-founder-of-dragonair/
4. News article titled “SFC fines Fidelity and Adamas”: https://fundselectorasia.com/sfc-fines-fidelity-and-adamas/
5. SFC media release titled “SFC reprimands and fines Adamas Asset Management (HK) Limited $2.5 million”: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=19PR122
6. Securities and Futures Commission v Adamas Asset Management (HK) Ltd [2021] HKEC 1107 (HCCW 88/2021, Hearing Date: 9 March 2020; Date of Judgment: 24 March 2021)

[1] Section 310(1) of the SFO.
[2] Section 315 of the SFO.
[3] Section 325(1)(a) of the SFO.
[4] General Principle 7 of the Code of Conduct for Persons Licensed by or Registered with the SFC (the “Code of Conduct”)
[5] Paragraph 12.1 of the Code of Conduct
[6] HCCW 88/2021, Hearing Date: 9 March 2020; Date of Judgment: 24 March 2021