Feb 16 Legal Update
Top stories
Competition Commission published FAQs: what you should note for forthcoming board meeting
What you should do:
- Compliance with competition law is a key focus of (i) “annual review of internal controls effectiveness” (i.e. compliance controls); (ii) disclosure in (new) “business review” of annual reports
- Note the potentially “anti-competitive” behaviours highlighted
- “Exchange of competitively sensitive information” (e.g. on prices, costs, sales volume and market shares) prohibited; which are not uncommon local business practices
SFC published its Q3 2015 report
What you should do:
- Make sure your “disclosure of inside information” monitoring system is adequate. SFC had been conducting a daily review of corporate announcements under this regime, with follow-up actions
- Directors should note that SFC also focuses on enforcing directors’ duties. It highlighted a successful court case to obtain “disqualification orders” against directors for breach of duties
Summaries and how they affect you
Regulators
The Securities and Futures Commission (“SFC”)
SFC published its quarterly report for Oct-Dec 2015.
What you should know:
- SFC conducted a daily review of corporate announcements under the “inside information disclosure” regime during the quarter
- Follow-up actions include exercising its power to compel production of listed company records for further investigation, and enquiries with a number of companies
- SFC successfully obtained from the court, “disqualification orders” against directors based on breach of directors’ duties
- Click here for our October 15 newsletter for a summary of the First China Financial Network Holdings Limited case
What you should do/watch for:
Listed company management must make sure its system regarding determination of “Disclosure of inside information” is adequate. Independent directors should also note that “directors’ duties” is also a SFC focus area.
Legislation
Competition Commission published FAQs
What you should know:
- The FAQs clarified some misconception as to what constitute “anti-competitive behaviours”, particularly as applied to SMEs
- Listed companies should focus on what actions are likely to constitute “anti-competitive” behaviours :(i) in general (First Conduct Rule) (ii) where they have “substantial market power” (Second Conduct Rule)
- (First Conduct Rule example) “exchange of competitively sensitive information” (e.g. on prices, costs, sales volume and market shares); which are not uncommon local business practices
What you should do/watch out for:
- Competition law compliance must be adequately addressed in the forthcoming board meeting, in the context of (i) “annual review of internal controls effectiveness” (ii) disclosure in the “Business Review” of annual report
- Click here for our FAQs summary and list of possible director questions
Employment (Amendment) Bill 2016
What you should know:
The Bill was gazetted on 12 February. It proposes to amend the Employment Ordinance to provide that where an employee is unreasonably and unlawfully dismissed (ie by breaching specified provisions of the Ordinance), the Labour Tribunal may make a reinstatement or re-engagement without the consent of the employer.
What you should do/watch out for:
Employers should monitor developments; also in the wider context of other developments in employment legislation (e.g. discussions on “standard working hours”; elimination of severence and long-service payments against MPF benefits).
Click here for a more detailed summary by Mayer Brown JSM’s specialist team