Hong Kong: Business Crime 2019

The ICLG to: Business Crime Laws and Regulations covers common issues in business crime – including criminal law enforcement, organisation of courts, corporate criminal liability, statutes of limitations, initiation of investigations, procedures of gathering information – in 29 jurisdictions.

Published: 12/09/2018

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1. General Criminal Law Enforcement

1.1        What authorities can prosecute business crimes, and are there different enforcement authorities at the national and regional levels?

Hong Kong is a Special Administrative Region of the People’s Republic of China (“PRC”) and retains judicial and administrative autonomy by virtue of the “one country two systems” principle enshrined in the Bill of Rights (“BOR”), the constitution governing Hong Kong within the PRC.  Accordingly, Hong Kong enforcement authorities function independent of the PRC.

Commercial fraud, money laundering and complex organised crime

There are specialist units within the the Hong Kong Police Force (“the police”) that deal with business crimes.  The Commercial Crime Bureau, the Narcotics Bureau and the Organised Crime and Triad Bureau are responsible for investigating commercial fraud, money laundering, complex organised crime and sophisticated and syndicated criminal activity.  The Cyber Security and Technology Crime Bureau is responsible for technology and cybersecurity crime. 

Bribery and corruption

The Independent Commission Against Corruption (“ICAC”) is the independent law enforcement agency that prosecutes bribery and corruption offences in the private and public sectors in Hong Kong.  The ICAC Commissioner is also empowered to investigate any commercial fraud, money laundering or business crime offences that may be revealed during a bribery or corruption investigation.

Securities and futures regulation

The Securities and Futures Commission (“SFC”) is an independent statutory body that regulates the securities and futures market in Hong Kong.  It also has extensive powers to investigate, discipline and prosecute anyone for offences relating to financial market fraud including insider dealing, false trading, price rigging, market manipulation, unlicensed dealing, intermediary misconduct and other regulatory offences.

Copyright and trademark infringements and other trade-related offences

Another authority that prosecutes business crimes in Hong Kong is the Customs and Excise Department that will investigate copyright and trademark infringements, false trade descriptions, unfair trade practices, illegal imports and exports of dutiable commodities. 

Visa fraud

The Immigration Department prosecutes investment/business/employment visa fraud.

Tax and public revenue/employment/companies

The Inland Revenue Department will investigate failures to furnish or make incorrect or false tax returns and other public revenue offences.  The Labour Department prosecutes failures to purchase employees’ compensation insurance, failures to pay wages and other employment-related offences.  The Companies Registry will investigate offences under the Companies Ordinance (Cap. 622) (“CO”).


The Agriculture, Fisheries and Conservation Department, the Buildings Department, the  Department of Health, the Environmental Protection Department, the Fire Services Department, the Food and Environmental Hygiene Department, the Home Affairs Department, the Housing Department, the Marine Department, the Office of the Communications Authority, the Trading Standards Department, the Transport Department and the Water Supplies Department are all empowered by statute to investigate and prosecute mostly summary offences as defined in each empowering statute.

1.2        If there is more than one set of enforcement agencies, how are decisions made regarding the body which will investigate and prosecute a matter?

Each enforcement authority set out in question 1.1 above has the power to initiate investigations into offences it is prescribed by statute to investigate.  Once the investigation is complete, the Department of Justice (“DOJ”) will generally prosecute.  The Commissioner of the ICAC is empowered to prosecute ICAC cases but must seek consent from the DOJ.  The Director of Immigration will prosecute Immigration cases and most of the authorities listed above are empowered to prosecute offences defined in the empowering statute.

The DOJ has the power to intervene and take over any prosecution including private prosecutions.  The DOJ and those authorities statutorily empowered to prosecute offences will follow the Prosecution Code when determining whether to prosecute an offence and the manner in which the case is prosecuted.

The Prosecution Code, issued by the DOJ, is a set of statements and instructions primarily aimed to guide prosecutors in conducting prosecutions.  It is generally treated as a set of guidelines used by the prosecution to promote fair, just and consistent decision-making at all stages of the prosecution process.  The defence can refer to the principles set out in the Prosecution Code throughout the course of criminal proceedings, in particular when making applications for a plea bargain, for a (civil) bind over in place of a criminal charge, for a discount in sentence for rendering assistance to prosecution enforcement authorities and in requesting immunity from prosecution. These applications are considered in more detail below.

1.3        Is there any civil or administrative enforcement against business crimes? If so, what agencies enforce the laws civilly and which crimes do they combat?

In general, criminal offences are not prosecuted in a civil court.  There are statutory exceptions the SFC may enforce such as provisions of the Securities and Futures Ordinance (Cap. 571) (“SFO”), which establishes a comprehensive criminal and civil regime in relation to misconduct in the Hong Kong financial markets in the Market Misconduct Tribunal (“MMT”) where the available evidence will not sustain a prosecution in the criminal court.  The MMT, comprising of a judge and two lay persons, can impose civil sanctions for market misconduct such as disqualification of directors, prohibition from dealing in the Hong Kong financial market, financial penalties and restitution, and permanent injunctions against misconduct activity.

The SFC may also start disciplinary action for market misconduct and impose civil sanctions including revocation or suspension of licences, prohibition of application for licences, fines and public or private reprimand.

The SFC is also empowered to petition to the Court of First Instance of the High Court (“CFI”) for the winding up of a Hong Kong-listed company under section 212 of SFO.  It is necessary for the SFC to satisfy the court that it is in the public interest and therefore just and equitable to wind up a company to protect the company’s minority shareholders, creditors and the investing public.

In addition, the Hong Kong Monetary Authority, Hong Kong’s banking regulator, can take disciplinary actions for certain misconduct and contravention of anti-money laundering laws and regulations by banks and bank officers.

1.4        Have there been any major business crime cases in your jurisdiction in the past year?

HKSAR v Tsang Yam Kuen Donald

In September 2017 the former Chief Executive Donald Tsang was re-tried on an indictment alleging one count of accepting an advantage as Chief Executive.  He was first tried on the same charge before the same judge in February 2017 sitting with a jury.  The jury was unable to reach a verdict and a re-trial was ordered.  After the re-trial the new jury were similarly unable to reach a verdict.  The court then ordered that the charge be left on the Court file marked not to be addressed without the leave of the Court.

In the same trial, Tsang was, however, convicted of another count of misconduct in public office and was sentenced to 20 months’ imprisonment on 22 February 2017, which was reduced to 12 months by the Hong Kong Court of Appeal (“CA”).

In short, Tsang was found guilty of misconduct over his failure to disclose renting a luxury flat in mainland China from the shareholder of a broadcast company whose licence applications he approved.  To date, Tsang is the most senior Hong Kong official to stand trial for corruption in Hong Kong.

The Securities and Futures Commission v Young Bik Fung (1st Defendant), Lee Kwok Wa (2nd Defendant), Patsy Lee Siu Ying (3rd Defendant), Stella Lee Siu Fan (4th Defendant)

On 9 November 2017, the CA dismissed the appeal by a solicitor and his two sisters against the judgment by the CFI finding them guilty of insider dealing and fraud.  The prosecution concerned their dealings in the shares of a Taiwan-listed bank in 2006 and in the shares of a telecommunications company in 2007.  The CFI found that all the defendants had contravened the SFO by insider dealing in the company shares and had contravened section 300 of the SFO by engaging in fraud or deception in transactions involving the shares of the Bank.

This case is the first reported case on section 300, which makes it an offence to employ fraudulent or deceptive schemes in transactions involving securities.  Section 300 was held applicable to the purchase and sale of securities listed on an overseas stock exchange.


2. Organisation of the Courts

2.1        How are the criminal courts in your jurisdiction structured? Are there specialised criminal courts for particular crimes?

There are three levels of criminal court in Hong Kong.  All criminal prosecutions start in the Magistrate Court.  The Magistrate will determine a wide range of less serious offences and can impose a sentence of up to two years’ imprisonment and a fine of HK$100,000.

The Magistrate will conduct initial hearings for the more serious cases which will later be transferred to the District Court or committed to the CFI to be heard at trial.  A District Court Judge can impose a maximum term of imprisonment of seven years.  There are no sentencing restrictions on a CFI Judge who can impose the maximum sentence applicable for any given crime up to a sentence of life imprisonment.  There is no death penalty in Hong Kong.

The CFI also has an appellate jurisdiction to hear appeals from criminal cases heard in the Magistrates’ Courts.  Criminal appeals, from the District Court and CFI cases are heard by the CA and the Court of Final Appeal (“CFA”).

There are no specialised criminal courts for particular crimes.

2.2        Is there a right to a jury in business crime trials?

In Hong Kong the defendant in criminal proceedings does not have a right to a “trial by jury”.  A trial by jury occurs in the CFI only.  The DOJ has absolute discretion and control to decide on the venue for trial.

Business crimes tried in the Court of First Instance are tried by juries.  Offences that carry lesser sentences are tried in the Magistrates and District Court, without juries.


3. Particular Statutes and Crimes

3.1        Please describe any statutes that are commonly used in your jurisdiction to prosecute business crimes, including the elements of the crimes and the requisite mental state of the accused:

  • Securities fraud

The SFO prohibits various forms of securities fraud, for instance, it is an offence to make a fraudulent or reckless misrepresentation in order to induce another to invest in securities (section 107), to do anything likely to create the appearance of false price (section 295), to enter a fictitious or artificial transaction likely to change a security’s price (section 296(1)(b)), to disclose false or misleading information likely to induce the sale or purchase of a security (section 298(1)), to employ a device, scheme or artifice with intent to defraud or deceive (section 300(1)(a)), and to engage in an act, practice or business which is fraudulent or deceptive, or operates as such (section 300(1)(b)).

Misrepresentations include forecasts (i.e. opinions) that are misleading.  The prohibition on false pricing and fictitious transactions additionally engage in respect of overseas markets (sections 295(4), 296(2)(b)), provided that the conduct would also be an offence had it been carried out in that jurisdiction (section 306(3)).  References to “transactions”, “sale” and “purchase” in the provisions are defined broadly to include offers and invitations.

With the exception of the section 300 offences, all offences may be committed recklessly, i.e. by being subjectively aware that there is a risk of the applicable consequence, and going ahead to take that risk.

  • Accounting fraud

False accounting is an offence under section 19(1) of the Theft Ordinance (Cap. 210) (“TO”).  It is committed where a person destroys, defaces, conceals or falsifies an account or record or document made or required for an accounting purpose, or where he/she furnishes information for accounting purposes that may be misleading.  He/she must act dishonestly and with intent to gain, and where furnishing is charged he/she must additionally have knowledge that the material is or may be misleading.  Section 19(2) adds that making or concurring in an entry that may be misleading is to be treated as falsification.

Section 21 additionally creates an offence of publishing a false statement, being a company director, with intent to deceive members.

Section 163 of the SFO creates the offence of destroying, concealing or altering accounts with intent to obstruct an audit.  Part 9 of the CO contains a number of regulatory criminal offences relating to the preparation, content, approval and preservation of company accounts.      

  • Insider trading

In Hong Kong the term “insider dealing” is used.  According to sections 270 and 291 of the SFO, the offence of insider dealing is committed if any of the following situations occurs:

  1. a person with inside information of a listed company knowingly deals in (or counsels or procures another person to deal in) relevant securities or derivatives;
  2. a person with inside information about a takeover of a listed company deals in (or counsels or procures another person to deal in) relevant securities or derivatives other than for the purpose of the takeover;
  3. a person with inside information of a listed company discloses it to another person, knowing such information will be used to deal, or counsel or procure another person to deal, in the relevant securities or derivatives;
  4. a person with inside information about a takeover of a listed company discloses it to another person, knowing such information will be used to deal, or counsel or procure another person to deal, in the relevant securities or derivatives;
  5. a person receiving inside information of a listed company knowingly deals in (or counsels or procures another person to deal in) the relevant securities or derivatives;
  6. a person receiving inside information about a takeover of a listed company knowingly deals in (or counsels or procures another person to deal in) the relevant securities or derivatives; and
  7. a person fulfilling any of the circumstances above counsels or procures another person to deal in the relevant securities or derivatives on overseas stock markets, or discloses  inside information with the knowledge that such information will be used for dealing in the relevant securities or derivatives on overseas stock markets.
  • Embezzlement

Embezzlement is not a separate offence in Hong Kong.  Conduct of this sort is often charged as theft, fraud or obtaining property by deception under the TO, or a conspiracy to defraud at common law. 

The offence of theft comprises the dishonest appropriation of property belonging to another, with intent permanently to deprive that other of it (section 2(1)).  Whether the thief intends to gain or take or obtain a benefit is immaterial (section 2(2)). 

Fraud is now a statutory offence (section 16A(1)), committed where a person induces another to act or not act by deceit, resulting in a benefit, prejudice or substantial risk of prejudice, to some person other than the victim.  “Deceit” is defined broadly to include acts, omissions, words and conduct, regarding law, fact, past, present and future circumstances and the fraudster’s own intentions.  The fraudster must intend to defraud.

Section 17 creates the offence of deliberately or recklessly using deception to obtain ownership, possession or control of property, or that enables another to.  “Deception” is similarly broadly defined at section 17(4) to include acts, omissions, words, conduct, regarding law, fact, past, present and future circumstances and the deceiver’s own intentions.

Additionally, section 16A(4) of the TO and section 159A(2) of the Crimes Ordinance (Cap. 200) expressly preserve the common law offence of conspiracy to defraud, which is made out where a person agrees with another to use dishonest means either (i) in order to cause another economic loss or risk economic interests, or (ii) to make aware that those means may cause such loss or risk.  The conspirator must intend to defraud, though whether detriment was caused to the victim is immaterial.

  • Bribery of government officials

A series of offences related to the bribery of public officials was introduced by the Prevention of Bribery Ordinance (Cap. 201) (“POBO”) in 1971, following a history of corruption within the territory that has since been judicially described as “notorious” and “endemic”. 

Section 4(1) makes it an offence to offer an advantage to a public servant to induce or reward an act of hers in her public servant capacity, or to affect a transaction between a business and public body.  Conversely, by section 4(2) it is an offence for a public servant to solicit or accept any such advantage.  These prohibitions are extra-territorial, applying whether or not the conduct takes place in Hong Kong.

Section 6(1) makes it an offence to offer an advantage to affect a tender for any contract with a public body.  Conversely, section 6(2) makes it an offence to solicit or accept any such advantage.  Section 7 prohibits similar conduct in relation to auctions conducted by or for public bodies.

The offender need only intend to do the proscribed acts.  In the case of offering, the public servant’s intentions are immaterial.  Similarly, it does not matter what the recipient of a solicited advantage intended to do (section 11).

It is a defence to these charges to have “lawful authority” or “reasonable excuse”, which is for the defendant to prove on the balance of probabilities.  It is no defence that the advantage is customary in the profession, trade, custom or calling in question.

Bribery additionally remains an offence at common law, though it is less commonly used in relation to government officials given the extensive statutory provisions.

  • Criminal anti-competition

Hong Kong’s competition law regime does not criminalise anti-competitive conduct as such, but instead protects the Competition Commission’s investigative power with a series of criminal prohibitions.  It is thus an offence not to comply with a requirement or prohibition issued by the Commission (section 52 of the Competition Ordinance (Cap. 619)), to destroy, falsify or conceal a document the Commission has demanded (section 53), to obstruct a search (section 54), to provide false or misleading documents or information (section 55), and to make a false or misleading representation to the Commission (section 172).

Liability is extended to corporate officers and partners that lend their consent or connivance to a company or firm’s commission of these offences, or whose negligence contributes to them (section 175).

  • Cartels and other competition offences

Cartel operation is not the subject of a specific criminal offence, though it falls within the definition of “serious anti-competitive conduct” at section 2(1) of the Competition Ordinance.

Consequently, the Competition Commission may bring enforcement proceedings, including a pecuniary award, without first issuing a Warning Notice as it would otherwise have to (section 82(1)(b)).  Additionally, undertakings with a turnover of HK$200 million or less are caught by the prohibition, whereas they would otherwise be excepted (paragraphs 5(1) and 5(2) of schedule 1).

Many instances of bid-rigging will amount to fraud, chargeable under section 16A of the TO, and/or conspiracy to defraud contrary to common law.

  • Tax crimes

A series of statutory offences at section 80 of the Inland Revenue Ordinance (Cap. 112) (“IRO”) concern the provision of information to the Commissioner.  They include making an incorrect return, claiming a deduction on the basis of an incorrect statement, providing incorrect information that affects liability and failing to furnish a return.  The statute permits fines of up to 300% of the tax due to be imposed, though does not provide for imprisonment.  These offences are generally subject to a defence of acting with “reasonable excuse”.

Section 82 of the IRO prohibits a number of tax evasion offences, each committed “wilfully and with intent to evade” or assists another in evading taxes.  They include failing to make a return, making a false statement, signing a statement or return without reasonable belief in its truth, giving a false answer to a question, preparing, maintaining or authorising incorrect books or accounts, or using any fraud, or act  of contrivance.  Case law provides that an immediate custodial sentence will almost always be imposed for tax evasion, and it is often ordered in addition to a fine.

Additionally, cheating the public revenue remains an offence at common law and can be committed by mere omission together with innocent intent, where, for example, a business owner fails to file returns or does not register for an applicable tax.  A charge at common law is preferred in egregious cases where imprisonment is sought, as the parallel statutory offences at section 80 carry only fines.

The liability of a company is extended to its directors in relation to the company making incorrect returns, providing incorrect information or assisting in evading tax.

  • Government-contracting fraud

Government-contracting fraud is not identified as a specific offence in Hong Kong, though conduct of this sort will be prosecuted as fraud under the TO or, where an offer of advantage is made or solicited, under the POBO, as both discussed above.  A number of statutes concerning government bodies provide that it is an offence to make a false representation to them, which will include doing so in order to obtain a public contract.  They typically carry a maximum penalty of two years imprisonment and/or a fine.

  • Environmental crimes

Environmental offences are principally contained in four ordinances that concern water pollution, air pollution, noise control and waste disposal.  Further offences can be found in ordinances concerning dumping at sea, radiation, merchant shipping and ozone protection.  Most environmental offences are interpreted as of strict liability, on the basis that they are regulatory rather than truly criminal, and provide for matters of social concern.

  • Campaign-finance/election law

The Elections (Corrupt and Illegal Conduct) Ordinance (Cap. 554) provides for a large number of election related offences, targeted at the integrity of the candidates, the electorate, campaign financing and the election process itself.  So-called corrupt conduct is punished more severely than illegal conduct, the maximum sentence being seven years’ imprisonment and a fine of HK$500,000.  Additionally, on a conviction for corrupt conduct, a court must (not may) order such payments as were received, or part of them, to be paid into court.

Corrupt conduct regarding candidates and the electorate includes bribery, the threat or use of force, and deception.  It is corrupt to impersonate a voter or candidate and to deface nomination or ballot papers.  Providing or meeting the cost of refreshment or entertainment to induce or reward a vote is also corrupt conduct, as is the improper use of election donations and the lodging of misleading returns.  Illegal conduct includes the publication of false or misleading statements regarding candidates and their support, and the incurring of unauthorised election expenses.  Attempts to commit the various offences are also expressly prohibited.

  • Market manipulation in connection with the sale of derivatives

The misrepresentation, false price, fictitious or artificial transaction, false or misleading information and fraudulent device, scheme or artifice offences, prohibited under the SFO and discussed above, applies as regards futures contracts and derivatives offered to the public.

  • Money laundering or wire fraud

It is an offence to deal with property either knowing or having reasonable grounds to believe that it directly or indirectly represents the proceeds of an indictable offence, under section 25 of the Organized and Serious Crimes Ordinance (Cap. 455) (“OSCO”).  “Dealing” is defined broadly to include receiving, disposing of, concealing and converting.  The launderer need not know the property’s provenance: it is enough that he had grounds to believe it was tainted, suffice those grounds were objectively reasonable.  It is thus not necessary for the prosecution to prove that the property is in fact the proceeds of an indictable offence.  A statutory defence is available where the accused intended to disclose his belief to law enforcement.  The maximum sentence is 14 years’ imprisonment and a fine of HK$5million.  Laundering from or to a foreign jurisdiction is always an aggravating factor that will increase a sentence.

Failing to disclose the belief that property represents the proceeds of an indictable offence within a reasonable time is also an offence separately under section 25A of the OSCO.

  • Cybersecurity and data protection law

It is an offence to access a computer with intent to commit an offence, with dishonest intent to deceive, with a view to dishonest gain, or with a view to causing another loss, under section 161 of the Crimes Ordinance.  It is also an offence to use telecommunications to obtain unauthorised access to a program or data held on a computer, by section 27A of the Telecommunications Ordinance (Cap. 106).  Causing damage to files may also amount to criminal damage, since “property” is defined broadly in the Crimes Ordinance to include a program or data held in a computer.

The Personal Data (Privacy) Ordinance (Cap. 486) (“PDPO”) governs data protection.  It is an offence to disclose personal data obtained without consent, punishable with up to five years’ imprisonment and/or a fine.  Defences obtain where the accused reasonably believed they had consent, where disclosure was necessary to prevent or detect crime, where it has been ordered by a court, is required by a rule of law, and where it is reasonable to believe that it is in the public interest.

There are numerous additional offences that assist the Commissioner’s investigation and enforcement powers.  Most are punishable by fine.  Recent amendments additionally target direct marketing practices, punishable with up to three years’ imprisonment and/or a fine of up to HK$500,000.

  • Trade sanctions and export control violations

Trade and export offences appear across a range of Hong Kong ordinances.  Charges are frequently laid under the Dutiable Commodities Ordinance (Cap. 109), section 17(1) of which contains a general offence of exporting goods to which that ordinance applies, without or not in accordance with such requirements as it imposes.  Section 17(2) prohibits possession of such goods, subject to a defence where the accused has good reason to believe that that Ordinance’s requirements have been complied with.

Exporting goods with a false trade description is an offence by section 12(1) of the Trade Descriptions Ordinance (Cap. 362) (“TDO”) and section 60 of the Import and Export Ordinance (Cap. 60) makes it an offence to export cargo not listed on a manifest.  Exporting a copyright work from Hong Kong without a licence is also an offence, unless solely for private domestic use, by section 118(1)(b) of the Copyright Ordinance (Cap. 528). 

There are additionally various health and safety based prohibitions on export concerning, chemicals, pharmaceuticals, endangered species (transposing provisions of the Convention on International Trade in Endangered Species of Wild Fauna and Flora, 1973) and firearms and ammunition.

Export offences are generally of strict liability, though a defence of reasonable mistaken belief (that export requirements have been met) has been implied at common law, into the section 17(1) offence, and may well be discerned in respect of other offences.

Various further offences in Part 3B of the Customs and Excise Service Ordinance (Cap. 342) target the provision of false reports and information to customs officers exercising their investigatory powers, as well as the treatment of such officers.

  • Any other crime of particular interest in your jurisdiction

A number of successful prosecutions have been pursued under the 2013 amendments to the TDO, which introduced new offences aimed at the reduction of sharp commercial practice and the protection of consumers.  The provisions have extra-territorial effect, engaging where the accused is in or has a place of business in Hong Kong but targets overseas customers.

A recent decision of the Competition Tribunal holds that an employer cannot rely on privilege against self-incrimination to exclude answers given by its employees to the Commission, pursuant to an investigation into alleged bid rigging.  An employee cannot refuse to answer a question on the basis that it may incriminate their employer, and since the Commission often enquire of employees, businesses will find it difficult to rely on self-incrimination privilege of their own in the future.

3.2        Is there liability for inchoate crimes in your jurisdiction? Can a person be liable for attempting to commit a crime, whether or not the attempted crime is completed?

A person attempts to commit an offence where they do an act “more than merely preparatory” to its commission, with intent to commit it. Attempts are generally prohibited by section 159AG of the Crimes Ordinance. It does not matter that the crime did not take place, nor even that its commission would have been impossible.


4. Corporate Criminal Liability

4.1        Is there entity liability for criminal offences? If so, under what circumstances will an employee’s conduct be imputed to the entity?

Pursuant to section 3 of the Interpretation and General Clauses Ordinance (Cap. 1), unless expressly provided otherwise, the term “person” in any Hong Kong statute covers any public body and any body of persons, corporate or unincorporated.  As such, a company by definition can be liable under most statutory offences.

In establishing the corporate criminal liability of a company, the courts in Hong Kong generally adopt the “identification” test where senior officers and employees of a company are the “directing mind and will” and their criminal acts and states of mind are attributable to the company and the liability of such senior officers and employees will be imputed to the company; and the “vicarious liability” principle where in exceptional cases (for example, under statutory offences imposing strict or absolute liability), the company as an employer will be criminally liable for acts of its employees, despite the absence of any proof of the employee’s mental state.

4.2        Is there personal liability for managers, officers, and directors if the entity becomes liable for a crime? Under what circumstances?

Many statutory provisions expressly provide for personal liability of the officers and management of a company.  Section 101E of the Criminal Procedure Ordinance (Cap. 221) (“CPO”) provides that if the company commits an offence with the consent or connivance of a director or other officer concerned in the management of the company, or any person purporting to act as such director or officer, such director or officer shall be guilty of the like offence.  Section 20(1) of the TO provides that a director, manager, secretary or other similar officer of a company will be liable for certain offences committed by the company under that ordinance if the said offence is committed with their consent or connivance.  Section 64B of the Employment Ordinance (Cap. 57) provides that the director, manager, secretary or other similar officer of the company commits an offence if the company fails or delays in payment of wages with their consent or connivance or was attributable to any neglect on their part.

4.3        Where there is entity liability and personal liability, do the authorities have a policy or preference as to when to pursue an entity, when to pursue an individual, or both?

Please see question 4.2 above.

4.4.       In a merger or acquisition context, can successor liability apply to the successor entity?  When does successor liability apply?

When a merger or acquisition is conducted by way of transferring all the shares in the target company, except in rare cases (e.g., lifting the corporate veil), it is unlikely for the successor (i.e., the purchaser of the shares) as a separate legal entity to be liable criminally for the acts of the target company.

When a merger or acquisition is conducted by transferring the business from the target company to a successor, section 3(1) of the Transfer of Businesses (Protection of Creditors) Ordinance  (Cap. 49) provides that the successor (the transferee) of a business is liable for all the debts and obligations arising from the carrying on of a business, unless certain required procedures are carried out, or unless any exception applies. 

This statutory provision overrides any contractual arrangements between the transferor and the transferee, and there is no requirement for the creditor to prove any intention to prejudice the successor.  To avoid liability, the successor of the business needs to give a “notice of transfer” to the creditors not more than four months and not less than one month before the date of transfer, and such notice must have become complete at the time of transfer.  It should be noted that the successor’s liability under the ordinance is civil rather than criminal in nature.


5. Statutes of Limitations

5.1        How are enforcement-limitations periods calculated, and when does a limitations period begin running?

There are generally no limitation periods in prosecuting serious crimes defined in Hong Kong as “indictable” offences save in a few instances where prescribed by statute.  However, for all minor offences that are defined as Summary Offences, an Information (a statement made by the complainant person) must be laid with the Magistrate within six months from the commission of the offence.

In general, a limitation period will run from the date of the commission of the offence unless prescribed otherwise by statute.

5.2        Can crimes occurring outside the limitations period be prosecuted if they are part of a pattern or practice, or ongoing conspiracy?

Since there is generally no limitations period for indictable offences in Hong Kong, conspiracy to commit an indictable offence would not be subject to any time limitation.

5.3        Can the limitations period be tolled? If so, how?

No, it cannot.


6. Initiation of Investigations

6.1        Do enforcement agencies have jurisdiction to enforce their authority outside your jurisdiction’s territory for certain business crimes? If so, which laws can be enforced extraterritorially and what are the jurisdictional grounds that allow such enforcement? How frequently do enforcement agencies rely on extraterritorial jurisdiction to prosecute business crimes?

Generally, Hong Kong enforcement agencies will investigate offences committed in Hong Kong.

Some offences may be made out and prosecuted in Hong Kong by reference to conduct that has occurred in a foreign jurisdiction.  They include offering an advantage to a public servant from outside Hong Kong, bribery of a foreign public official from Hong Kong, taking part in a commercial surrogacy arrangement, misconduct in relation to a foreign securities market (as discussed above) and conspiracy elsewhere to commit a crime in Hong Kong.

Enforcement agencies have powers under the Mutual Assistance in Criminal Cases Ordinance (Cap. 525) and the Fugitives Offenders Ordinance (Cap. 503) to investigate extraterritorially suspects of Hong Kong crimes and have them arrested and extradited to Hong Kong.

6.2        How are investigations initiated? Are there any rules or guidelines governing the government’s initiation of any investigation? If so, please describe them.

The police and other enforcement agencies listed above will initiate investigations into offences they are prescribed by statute to investigate.  Investigations can be initiated in many different ways through reports from victims, conscientious citizens, anonymous sources, news media, business self-reporting, and monitoring by government agencies.

There are no rules or guidelines governing the initiation of an investigation except having reasonable suspicion that a crime has been committed.

The Securities and Futures Commission additionally monitors the public trading of shares in real time and often exercises its statutory power of investigation having observed unusual market activity.

6.3        Do the criminal authorities in your jurisdiction have formal and/or informal mechanisms for cooperating with foreign enforcement authorities? Do they cooperate with foreign enforcement authorities?

Hong Kong is a party to 31 bilateral agreements regarding mutual legal assistance in criminal cases of which 29 are in force, namely Australia, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, India, Indonesia, Ireland, Israel, Italy, Japan, Malaysia, Netherlands, New Zealand, Philippines, Poland, Portugal, Singapore, South Africa, South Korea, Spain, Sri Lanka, Switzerland, Ukraine, the UK and the USA.

The agreements commonly provide that each party shall assist in the taking of oral evidence, search and seizure of material, travel arrangements and service of process about criminal investigations in the other party’s jurisdiction.

In addition, Hong Kong has surrender of fugitives agreements in place with 19 countries namely the Netherlands, Canada, Australia, Malaysia, Philippines, the USA, Indonesia, India, Singapore, the UK, New Zealand, Sri Lanka, Portugal, the Republic of Korea, Ireland, Germany, South Africa, Finland, and the Czech Republic. Applications can be made between Hong Kong and the countries listed above  pursuant to the provisions of the Fugitives Offenders Ordinance to arrest and extradite fugitives.


7. Procedures for Gathering Information from a Company

7.1        What powers does the government have generally to gather information when investigating business crimes?

The BOR protects a citizen’s rights to property and privacy.  However, this is balanced with the public interest to investigate crime.  Each law enforcement authority has authority by statute and in common law to seek a Magistrate or Judge to grant warrants to enter and search business premises to seize documents for the purpose of an investigation.  Authorities also have the power to arrest and question suspects under caution.

In particular circumstances enforcement agencies can obtain a court order to compel a suspect or third party to produce materials or answer questions relevant to the investigation.  In public and private bribery investigations, the ICAC is empowered to apply for a court order from the CFI to compel any person (not only a suspect) to produce relevant materials and render assistance to its investigation pursuant to section 13 of the POBO.

Document Gathering:

7.2        Under what circumstances can the government demand that a company under investigation produce documents to the government, and under what circumstances can the government raid a company under investigation and seize documents?

The empowering statute will define the circumstances in which an enforcement agency can apply for and a Magistrate or Judge can issue  a warrant or court order to search and seize or for the company to produce documents.  Generally there should be a reasonable cause to believe that the company has the documents in its possession and that such documents contain information relevant to the investigation or that there are reasonable grounds for suspecting the business crime has been committed.

The empowering statute and/or the common law will regulate the prescribed terms in which the Magistrate or Judge should issue the  warrant or court order to ensure only material relevant to the investigation is seized or obtained.

7.3        Are there any protections against production or seizure that the company can assert for any types of documents? For example, does your jurisdiction recognise any privileges protecting documents prepared by in-house attorneys or external counsel, or corporate communications with in-house attorneys or external counsel?

A company can assert legal professional privilege (“LPP”) to protect against the production of documents containing communications between legal advisers (including in-house counsel) and the company.

The two main types of LPP are:

(i) legal advice privilege which covers communications between clients and their legal advisers made for the dominant purpose of the company obtaining legal advice.  The protection also extends to cover communications between the in-house lawyer and the management and employees of the same company; and

(ii) litigation privilege which covers all communications between lawyers and clients and third parties for the dominant purpose of the company obtaining legal advice, obtaining or collecting evidence or obtaining information which may lead to the obtaining of such evidence where litigation is on foot or is contemplated.

When an LPP claim is made, the documents shall be sealed at the time of seizure and cannot be used for investigation purposes until the company has applied to Court and the Judge has determined the issue.  The onus to prove LPP is on the company.

Hong Kong law recognises partial waiver of LPP and if the company is prepared to hand over documents to authorities in investigations, it must be clearly stated in writing that any waiver of LPP is limited to the purposes of that investigation alone.  This protects against any inadvertent waiver of LPP where the documents are sought by third parties for some other purpose such as another criminal investigation by another authority.

7.4        Are there any labour or privacy laws in your jurisdiction (such as the General Data Protection Regulation in the European Union) which may impact the collection, processing, or transfer of employees’ personal data, even if located in company files? Does your jurisdiction have blocking statutes or other domestic laws that may impede cross-border disclosure?

The PDPO is the main legislation regarding data protection in Hong Kong and applies to any data:   

(i) relating directly or indirectly to a living individual, i.e. the data subject;        

(ii) from which it is practicable for the identity of the data subject to be ascertained; and

(iii) in a form in which access to or processing of the data is practical. 

The PDPO imposes various obligations on the data controllers regarding collection, use, disclosure, retention, granting of access and correction of personal data.  Personal data may only be disclosed for the purpose for which it was originally collected, a directly related purpose or with the consent of the data subject.  The data subject is entitled to access and correct his personal data.  In the context of criminal proceedings, some of these requirements may be exempted pursuant to section 58 and 60B of the PDPO.

There is currently no restriction in PDPO on cross-border disclosure of personal data.  However, section 33 of PDPO, which is not yet in operation, forbids the transfer of personal data to a place outside Hong Kong unless an exception applies.

7.5        Under what circumstances can the government demand that a company employee produce documents to the government, or raid the home or office of an employee and seize documents?

The same principles apply as described in questions 7.1, 7.2 and 7.3 above.

7.6        Under what circumstances can the government demand that a third person or entity produce documents to the government, or raid the home or office of a third person or entity and seize documents?

Only through a court order or warrant legally obtained and issued can anyone in Hong Kong be compelled to produce documents or the enforcement agencies are empowered to seize documents.  Search warrants can be issued in respect of a third party, a non-suspect and/or their premises.  In rare circumstances, e.g., by an order under section 13 of the POBO, non-suspects can be compelled to provide documents.

Questioning of Individuals:

7.7        Under what circumstances can the government demand that an employee, officer, or director of a company under investigation submit to questioning? In what forum can the questioning take place?

Usually only upon arrest can an enforcement agency formally question an employee officer or director of a company.  Immediately upon arrest, the arrested person must be taken to the enforcement agency’s station or office for detention and the suspect should be interviewed under caution at the station.  Section 8 of the BORO and common law provides for a privilege against self-incrimination and a right to remain silent when questioned under caution.  There are a few exceptions notably an order/notice issued under section 13 of the POBO.

7.8        Under what circumstances can the government demand that a third person submit to questioning? In what forum can the questioning take place?

Except in rare exceptional circumstances, (e.g. section 13 of the POBO above), an enforcement agency cannot demand to question a third party who is not a suspect under arrest.

7.9        What protections can a person assert upon being questioned by the government? Is there a right to be represented by an attorney during questioning? Is there a right or privilege against self-incrimination that may be asserted? If a right to assert the privilege against self-incrimination exists, can the assertion of the right result in an inference of guilt at trial?

The privilege against self-incrimination protects a suspect from having to answer questions.  If a suspect answers questions through threat, inducement or oppression, the answers are inadmissible as evidence against him.

Persons in custody are entitled to consult a lawyer privately of their choosing and to a lawyer’s representation during questioning.

No adverse inference may be drawn at trial from the accused exercising the right to silence.


8. Initiation of Prosecutions / Deferred Prosecution / Civil Dispositions

8.1        How are criminal cases initiated?

The investigating authority at the conclusion of the investigation will charge the suspect with an indictable offence or lay an information  of a summary offence.  The suspect, now the defendant, is either bailed or summoned to appear before the Magistrate.

8.2        What rules or guidelines govern the government’s decision to charge an entity or individual with a crime?

The Prosecution Code provides that there must be both sufficient evidence to support the charge and that the prosecution is in the public interest.  Factors to consider include the nature and seriousness of the offence, any delay, whether the offence is trivial or technical, the suspect’s culpability, his criminal history and other personal circumstances, any cooperation in the investigation, restitution, remorse, and the prevalence of the offence and need for deterrence.

8.3        Can a defendant and the government agree to resolve a criminal investigation through pretrial diversion or an agreement to defer prosecution? If so, please describe any rules or guidelines governing whether pretrial diversion or deferred prosecution agreements are available to dispose of criminal investigations.

Neither pre-trial diversion nor agreement to defer prosecution are provided for in Hong Kong.  The DOJ will consider agreeing to bind over a defendant to keep the peace in minor cases of first time offenders, particularly young offenders and where convictions will lead to disproportionate consequences.  A bind over is an undertaking by the defendant to be of good behaviour, it is not a criminal conviction.  Where a defendant faces multiple charges, the DOJ and the Court may agree that upon a guilty plea entered to the more serious charge that the less serious charge is not dealt with and remains on the court file.

8.4        If deferred prosecution or non-prosecution agreements are available to dispose of criminal investigations in your jurisdiction, must any aspects of these agreements be judicially approved? If so, please describe the factors which courts consider when reviewing deferred prosecution or non-prosecution agreements.

This does not apply in Hong Kong.

8.5        In addition to, or instead of, any criminal disposition to an investigation, can a defendant be subject to any civil penalties or remedies? If so, please describe the circumstances under which civil penalties or remedies may apply.

The criminal courts in Hong Kong have the power to make compensation orders and forfeiture orders.  There are provisions for mandatory restitution following convictions for corruption and bribery and certain election-related offences.  A criminal conviction and disposal does not adversely affect civil remedies and penalties against the defendant.  In most money laundering and commercial fraud cases the DOJ will institute civil restraint proceedings to freeze and forfeit the defendant’s assets.


9. Burden of Proof

9.1        For each element of the business crimes identified above in Section 3, which party has the burden of proof? Which party has the burden of proof with respect to any affirmative defences?

In order to secure a conviction, the prosecution generally has to prove each element of a particular offence beyond a reasonable doubt, or “to a moral certainty”.  In other words, the standard is met only if it is beyond dispute that any reasonable alternative is possible.

The defence has the duty to prove any affirmative defence on the balance of probabilities, or “more probable than not”.  In other words, the standard is met if the proposition is more likely to be true than not true.

9.2        What is the standard of proof that the party with the burden must satisfy?

The prosecution must prove each element of a charge beyond a reasonable doubt.  On the rare occasion that the defendant has something he is obliged to prove (see question 9.1 above), the standard of proof is on a balance of probabilities.

9.3        In a criminal trial, who is the arbiter of fact? Who determines whether the party has satisfied its burden of proof?

In the Magistrates Court and in the District Court, the Magistrate or Judge is the arbiter of both fact and law.  In the CFI, the Jury is the arbitrator of fact.  In all courts the arbiter of fact decides whether a party satisfies the burden of proof.


10. Conspiracy / Aiding and Abetting

10.1      Can a person who conspires with or assists another to commit a business crime be liable? If so, what is the nature of the liability and what are the elements of the offence?

Agreeing to pursue a course of conduct that will involve the commission of an offence is itself an offence by section 159A(1) of the Crimes Ordinance.  It is not necessary to show that the offence occurred or even that it was possible. 

Victims and intended victims, spouses and persons under 10 years old are excepted from liability.  Conspiracy to defraud remains an offence at common law. 

Persons who aid, abet, counsel or procure the commission of an offence are guilty of that offence by section 89 of the CPO.  These are not separate offences, unlike conspiracy.


11. Common Defences

11.1      Is it a defence to a criminal charge that the defendant did not have the requisite intent to commit the crime? If so, who has the burden of proof with respect to intent?

A defendant must have the requisite intent to commit a crime.  Intention or “mens rea” will be defined in the particulars of the offence.  On some occasions, an offence does not set out a mental element or requisite intent (known as “strict” or “absolute” liability offences).  The prosecution has the duty to prove beyond reasonable doubt every element of the offence which will usually include the defendant‘s requisite state of mind.  The test is usually “subjective” as to what the defendant actually intended to do and not what a “reasonable man” would have thought in his situation.  Many summary offences of a regulatory nature are offences of strict or absolute liability.

11.2      Is it a defence to a criminal charge that the defendant was ignorant of the law, i.e., that he did not know that his conduct was unlawful? If so, what are the elements of this defence, and who has the burden of proof with respect to the defendant’s knowledge of the law?

Ignorance of the law is not a defence.

11.3      Is it a defence to a criminal charge that the defendant was ignorant of the facts, i.e., that he did not know that he had engaged in conduct that he knew was unlawful? If so, what are the elements of this defence, and who has the burden of proof with respect to the defendant’s knowledge of the facts?

A defendant’s honest and reasonable mistake of fact may negate the requisite state of mind.  The burden of proof will depend upon the definition of the offence, but usually will fall upon the defence to prove on a balance of probabilities.


12. Voluntary Disclosure Obligations

12.1      If a person or entity becomes aware that a crime has been committed, must the person or entity report the crime to the government? Can the person or entity be liable for failing to report the crime to the government? Can the person or entity receive leniency or “credit” for voluntary disclosure?

There is no general positive obligation to report crimes.  However, section 25A of the Organized and Serious Crimes Ordinance (Cap. 455) OSCO imposes an obligation when a person knows or suspects that a transaction involving property represents the proceeds of an indictable offence, or was or is intended to be used in connection with an indictable offence, he shall as soon as it is reasonable for him to do so report it to the Joint Financial Intelligence Unit (“JFIU”).  Failing to do so is a criminal offence. 

Voluntary disclosure is a strong mitigating factor when the court considers sentencing a defendant.  The defendant may be granted immunity from prosecution in assisting the prosecution at the discretion of the DOJ.

In breaches which may lead to SFC disciplinary, civil and MMT proceedings, voluntary disclosure is usually seen as a form of cooperation, thus reducing the sanctions to be imposed by the SFC.


13. Cooperation Provisions / Leniency

13.1      If a person or entity voluntarily discloses criminal conduct to the government or cooperates in a government criminal investigation of the person or entity, can the person or entity request leniency or “credit” from the government? If so, what rules or guidelines govern the government’s ability to offer leniency or “credit” in exchange for voluntary disclosures or cooperation?

Leniency in sentence is at the sole discretion of the Court.  The DOJ may grant immunity from prosecution in exchange for the person giving evidence against a co-accused. The enforcement agency will write to the Court requesting a reduced sentence where the defendant has given evidence or valuable information that has led to a conviction arrest or other positive result.  The fact that a person self-reports his criminal conduct or cooperates with the authorities in a government criminal investigation will also operate as a powerful mitigating factor.    

According to section 15(1) of CPO, the prosecutor is not bound to prosecute if he is of the opinion that the interests of public justice do not require his interference. Paragraph 5.9 of the Prosecution Code further provides that the prosecutor may not prosecute a suspect who has made admissions, demonstrated remorse, compensated a victim and/or cooperated with authorities in the prosecution of others.  As to the form of leniency, paragraphs 11.1 and 11.3 of the Prosecution Code provide that the cooperating accomplice will ordinarily receive a discount on their sentence to reflect the nature and extent of his or her cooperation and in exceptional circumstance, a witness who testifies to the involvement of others in criminal offending may be granted immunity from prosecution.

For breaches of the SFO, the SFC has wide discretion to decide between initiating criminal proceedings and disciplinary sanctions.  Therefore, voluntary disclosure and cooperation are often recommended to avoid criminal prosecution.         

If the offender is claiming leniency for information given about other suspects and there is concern for safety, details of the assistance will be given to the court in camera.

13.2      Describe the extent of cooperation, including the steps that an entity would take, that is generally required of entities seeking leniency in your jurisdiction, and describe the favourable treatment generally received.

Co-operation is provided by admissions and disclosure of evidence made about the investigation and other criminal activity and offering to give evidence against others. There is no formal procedure. An offer will be made to the investigating authority or the authority will invite cooperation.

An admission followed by a guilty plea at the earliest opportunity will generally speaking, receive a one-third discount to the prison sentence or fine the court would have imposed if convicted after trial.  A delayed guilty plea may attract a lesser discount in sentence of between one-quarter and one-fifth.  A further discount on sentence is provided of up to one half of the sentence imposed after trial for assistance provided to the authorities.


14. Plea Bargaining

14.1      Can a defendant voluntarily decline to contest criminal charges in exchange for a conviction on reduced charges, or in exchange for an agreed-upon sentence?

A defendant can invite the prosecution to resolve a criminal matter by agreeing to plead guilty to only some or to lesser charges than those laid.  The DOJ has full discretion as to whether to accept the offer or not.

Sentencing is at the exclusive discretion of the Magistrate or Judge.  The Court cannot be compelled to impose an agreed sentence.

14.2      Please describe any rules or guidelines governing the government’s ability to plea bargain with a defendant. Must any aspects of the plea bargain be approved by the court?

The Prosecution Code provides in considering the appropriateness of a charge that three tests must be satisfied: (i) there is admissible evidence available to prove the charges to which pleas have been offered; (ii) the charges adequately reflect the criminality of the conduct alleged against the accused; and (iii) the charges give to the court adequate scope to impose penalties appropriate to address that criminality.

In all cases where negotiations are under way, the prosecutor should consult where appropriate with the investigator in charge of the case and any victim of crime, and inform them of the action being contemplated and of the reasons for it.  The prosecutor must receive their views and take them reasonably into account when decisions are being made.

The court is not involved in the process.  The DOJ has exclusive discretion on the prosecution of each charge before the Court and the Court has no power to refuse.  Sentencing is determined by the court.


15. Elements of a Corporate Sentence

15.1      After the court determines that a defendant is guilty of a crime, are there any rules or guidelines governing the court’s imposition of a sentence on the defendant? Please describe the sentencing process.

The courts are fixed with a common duty to impose an appropriate sentence for the offences which have been admitted or proved.  The courts have proper regard to principle and policy in sentencing a defendant.  It is an overall assessment of the available evidence and circumstances of the case.

The court usually considers the maximum penalty for the offence and determines whether there is a statutory minimum or mandatory sentence. Then the court considers whether there is any tariff or sentencing guidelines laid down by the CA or the CFA in previous similar cases. The court takes into account any  aggravating and  mitigating factor in the commission of the offence.

The defendant’s personal circumstances are  considered.  A clear record,  a  guilty plea, and assistance are strong mitigating factors and result in discounted sentences as described in question 13.2 above.

The court has wide discretion to consider different factors and principles when imposing the appropriate sentence on a defendant.

15.2      Before imposing a sentence on a corporation, must the court determine whether the sentence satisfies any elements? If so, please describe those elements.

The same principles and practice set out in question 15.1 above apply.


16. Appeals

16.1      Is a guilty or a non-guilty verdict appealable by either the defendant or the government?

A defendant can appeal a guilty verdict after trial on a point of law or fact.  The prosecution has no right of appeal per se but can challenge an acquittal on a point of law by way of “case stated”.

16.2      Is a criminal sentence following a guilty verdict appealable? If so, which party may appeal?

The defence may appeal on grounds that the sentence is manifestly excessive or wrong in principle.  The prosecution can apply for review of a sentence that is manifestly excessive or inadequate, or that is not authorised by law.

16.3      What is the appellate court’s standard of review?

Appeals are a right so far as a question of law is involved, though leave or a certificate from the court below is required where the appeal is grounded in a question of fact or mixed law and act.  There are three statutory grounds of appeal against conviction: (1) the conviction is unsafe or unsatisfactory; (2) the court erred on a question of law; or (3) there was a material irregularity in the course of the trial.  Most appeals are brought under the first head.  Appeals to the CFA are heard on points of law of great and general importance or that the appellant has been done a grave and substantial injustice.

16.4      If the appellate court upholds the appeal, what powers does it have to remedy any injustice by the trial court?

If the CA or the CFA allows an appeal against conviction, the conviction will be quashed.  The appellant court can order a retrial and remit the case back to the lower court or order that an acquittal  be entered in the court below.

On sentencing, the appellate court can reduce or increase a sentence or impose an alternative sentence, e.g, replacing a prison sentence with a community service order. 

The appellate court has the power to award costs to the successful party both for costs on appeal and in the lower court.


The authors would like to thank Peter Tang and Joshua Baker for their invaluable assistance in the preparation of this chapter.