OLN Law

Test Blog

CEDB Released a Public Consultation Paper on Updating Hong Kong’s Copyright Regime on 24 November

by

The Commerce and Economic Development Bureau of the Government of Hong Kong just released on 24 November 2021 a public consultation paper on updating Hong Kong’s copyright regime. 

This is brilliant news to copyright owners and fingers crossed with the passage of the new legislation! If you may wonder the meaning behind, the current Copyright Ordinance enacted in 1997 is considered badly obsolete and can barely cope with the rapid advancements and innovations in technology. Despite the Government’s deliberation to update the legislation initiated since 2006 with public consultations conducted,  two serious attempts to amend the Ordinance (The Copyright (Amendment) Bill 2011 and The Copyright (Amendment) Bill 2014) did not succeed due to filibustering by some members asserting the view that freedom of creativity or expression could possibly be compromised under the proposed legislative provisions.

The consultation paper described the legislative proposals in the 2014 Bill to be the result of years of deliberations of the Government, Legislative Council, copyright owners, online service providers and copyright users, representing the consensus and balance of interests of different stakeholders to enhance protection for copyright in the digital environment and combat large scale online piracy – which should be materialized without further delay.  

Key legislative proposals based on the 2014 Bill

A. Communication right – introduction of technology-neutral exclusive communication right for copyright owners to communicate their works to the public through any mode of electronic transmission in line with the international practice

B. Criminal liability – criminal sanctions introduced against infringers making unauthorised communication of copyright works to the public for profit or reward and with prejudice caused to the copyright owners

C. New copyright exceptions – for the education sector, libraries, museums, archives, temporary reproduction of copyright works by OSPs, and media shifting; and new fair dealing exceptions for the purposes of parody, satire, caricature and pastiche, commenting on current events, and use of quotation to facilitate expression of opinions or discussions in the online and traditional environment

D. Safe harbour provisions – limiting OSP’s liability for copyright infringements on their service platforms caused by subscribers as an incentive for OSPs to cooperate with copyright owners to combat online piracy

E. Additional damages in civil cases – empowering the court to award additional damages according to the circumstances with additional factors to assess including the unreasonable conduct of an infringer and likelihood of widespread circulation of infringing copies

Issues inviting public views

1. Should Hong Kong continue to maintain the current exhaustive approach by setting out all copyright exceptions based on specific purposes or circumstances?

2. Should Hong Kong introduce provisions to restrict the use of contracts to exclude or limit the application of statutory copyright exceptions? (currently is non-interference approach to contractual arrangements between owners and users)

3. Should Hong Kong introduce specific provisions to govern illicit streaming devices used for accessing unauthorized contents on the Internet, including set-top boxes and Apps? (Government’s current position is not to)

4. Should Hong Kong introduce a copyright-specific judicial site blocking mechanism? (Government’s current position is not to)

Issues to be considered for future legislative amendments
  • Extension of copyright term of protection
  • Introduction of specific copyright exceptions for text and data mining
  • AI and copyright

The consultation period is 3 months from 24 November 2021. We are more than happy to convey your thoughts to the Bureau or share our thoughts on issues you may have on copyright protection or circumstances that may put you at the risk of infringing someone else’s copyright.

Sports Law in Hong Kong: Oldham, Li & Nie Contributes to The Legal 500 Comparative Guide

by

Hong Kong: Sports Law


(This article was published in the 2nd Edition of the Legal 500: Sports Law Comparative Guide)

This country-specific Q&A provides an overview of sports laws and regulations applicable in Hong Kong.

1.Do you have a specific sport tribunal in your country to decide sports-related domestic issues for one or more disciplines? Are there any other sports-specific alternative dispute resolutions in your country, i.e. mediation, conciliation, or sports ombuds instance? Are there cases that can or cannot be submitted to a specific sports tribunal or cannot be subject to arbitration (e.g. labor disputes)?

Hong Kong SAR does not maintain a specific sports court or permanent specialized sports tribunal with exclusive jurisdiction over domestic athletic disputes. Historically, sports disputes —encompassing disciplinary sanctions, athlete selection grievances, governing body oversight, and commercial agreements were addressed through internal administrative procedures established by individual National Sports Associations (NSAs), ad-hoc private arbitration, or ordinary civil litigation before the Hong Kong Courts.

A major structural transformation occurred following the Chief Executive’s Policy Address in 2024, which established an executive mandate to build a dedicated sports dispute resolution system and promote specialized sports arbitration. To operationalize this directive, the Department of Justice (DoJ) formed the Advisory Committee on Sports Dispute Resolution. Subsequently, the DoJ launched a two-year Pilot Scheme on Sports Dispute Resolution in December 2025.

Under this scheme, institutional administration is led by the Asian–African Legal Consultative Organization (AALCO) Hong Kong Regional Arbitration Centre, partnered with the eBRAM International Online Dispute Resolution Centre as the technology infrastructure provider. The Pilot Scheme offers specialized mediation and arbitration procedures designed for both commercial and non-commercial sports conflicts under a “mediation first, arbitration next” model. To ensure equitable access for amateur athletes and local sports bodies, the HKSAR Government provides targeted financial subsidies of up to HK$60,000 per eligible non-commercial dispute.

Arbitrability Limitations and Public Forum Jurisdiction

The arbitrability of sports disputes in Hong Kong is governed by the Arbitration Ordinance (Cap. 609) alongside common law principles. While contractual claims, intellectual property licensing, commercial sponsorships, and athlete selection grievances are fully arbitrable, clear legal boundaries limit the jurisdiction of sports arbitration panels: –

(a) Employment and Labour Claims:
Statutory employment entitlements under the Employment Ordinance (Cap. 57) fall under the primary jurisdiction of the Labour Tribunal. While contractual claims between professional athletes and clubs can be submitted to arbitration where a valid arbitration clause exists, statutory employee rights under Hong Kong law cannot be ousted or waived by institutional sports arbitration agreements.

(b) Judicial Review and Public Law:
Decisions of NSAs performing public functions, exercising monopoly administrative power, or managing public subventions remain subject to the supervisory jurisdiction of the High Court of Hong Kong via judicial review under Order 53 of the Rules of the High Court (Cap. 4A).

(c) Criminal Offenses and Integrity Breaches:
Allegations of corruption, illegal gambling, match-fixing, or physical assault fall strictly within the domain of public law enforcement, specifically the Independent Commission Against Corruption (ICAC) and the Hong Kong Police Force, and are tried in ordinary criminal Courts.

2. How is Sports law codified in your country? Is there a specific Statute or Code? Are there national sports authorities, independent agencies, or government ministries responsible for oversight?

Hong Kong sports law is not unified within a single codified statute or sports code. The regulatory landscape relies on a multi-layered framework combining general common law principles (contract, tort, and equity) with specific legislative enactments: –

Statutory LegislationCore Application in Sports Law
Prevention of Bribery Ordinance (Cap. 201)Statutory prohibition of active and passive corruption, bribery, and match-fixing
Gambling Ordinance (Cap. 148)Regulation of sports betting monopolies and criminal prohibition of unauthorized sports bookmaking
Companies Ordinance (Cap. 622)Incorporation, governance standards, and director fiduciary duties for NSAs structured as companies limited by guarantee
Societies Ordinance (Cap. 151)Registration and oversight of unincorporated community sports clubs and associations
Amusement Game Centres Ordinance (Cap. 435)Licensing oversight and statutory exemption frameworks for commercial esports venues

Executive Oversight and Government Authorities

Culture, Sports and Tourism Bureau (CSTB): Formulates macro-level policies, drives major infrastructure investments (such as the Kai Tak Sports Park), and oversees public sports subventions.

Leisure and Cultural Services Department (LCSD): Manages public sporting facilities, allocates venue resources to local clubs, and distributes operational subventions to recognized sports bodies.

Sports Federation & Olympic Committee of Hong Kong, China (SF&OC): Functions as the officially recognized National Olympic Committee (NOC). It retains exclusive authority over Hong Kong’s representation at international multi-sport competitions and exercises supervisory governance over affiliated NSAs.

Hong Kong Sports Institute (HKSI): Functions as the government’s elite sports training delivery agent. HKSI receives dedicated government subventions through the Elite Sport Development Fund to deliver elite training, centralized sports medicine, housing, and financial support under the Sports Scholarship Scheme (including Elite Training Grants – ETG).

Corporate Governance Reform

The SF&OC promulgated the Code of Governance for National Sports Associations. The Code mandates structural standards across board turnover, selection criteria transparency, conflict of interest management, and financial audits. Implementation of the Code by the end of 2026 is established as a prerequisite for NSAs seeking continued government funding subventions and LCSD facility allocations.

Additionally, the Sports Governance and Integrity Alliance (SGIA) was launched in August 2025 as a joint institutional initiative between the SF&OC, ICAC, The Hong Kong Jockey Club (HKJC), and The Hong Kong Chartered Governance Institute (HKCGI) to provide governance training, capacity building, and evaluation across local NSAs.

3. Advertising and marketing in sport: which are the limitations foreseen in your country, for instance in relation to alcohol, tobacco or betting advertising on or around sports infrastructure, on official clothing, etc.?

Tobacco: Under the Smoking (Public Health) Ordinance (Cap. 371), there is a strict, comprehensive statutory prohibition against all forms of tobacco advertising and commercial sponsorship. Displaying tobacco trademarks or branding on official athlete sportswear, venue perimeter boards, or event collateral is an offense.

Alcohol: There is no absolute statutory ban on alcohol marketing. However, alcohol promotions are constrained by the Broadcasting Codes enforced by the Communications Authority, which restricts broadcast timings and prohibit advertisements that target minors or suggest alcohol consumption enhances physical stamina or sports performance.  Event organizers and venue operators commonly impose contractual restrictions barring alcohol marketing in youth-oriented competitions.

Betting: The Gambling Ordinance (Cap. 148) heavily restricts gambling marketing. Only the statutory monopoly holder, the Hong Kong Jockey Club (HKJC), may promote authorized betting activities (horse racing, football, and lotteries), subject to strict license conditions prohibiting youth targeting and requiring mandatory responsible-gambling disclosures.

Crackdown on Offshore Gambling Promotion

Law enforcement strictly applies Section 16B of the Gambling Ordinance (Cap. 148), which criminalizes “knowingly promoting or facilitating bookmaking or betting with a bookmaker”. Under Hong Kong law, foreign gambling licenses (e.g., from Curacao or the Philippines) offer no legal protection. Influencers or athletes who post hyper-links, promotional codes, or embedded story tags linking followers to offshore gambling sites may commit an offence if they are located within Hong Kong at the time of publication.

Under Section 16B(3) of the Gambling Ordinance (Cap. 148), promoting or facilitating illegal bookmaking carries a maximum penalty on indictment of 7 years’ imprisonment and a fine of HK$5,000,000. Bettors who place wagers with promoted offshore bookmakers face prosecution under Section 8 of Cap. 148, carrying penalties of up to 9 months’ imprisonment and a fine of HK$50,000.

“M” Mark Sponsorship Framework

Major international sports events that held in Hong Kong can apply for official endorsement and public financial support under the “M” Mark System, managed by the Major Sports Events Committee (MSEC) under the CSTB. Grant agreements incorporate enforceable key performance indicators and contractual conditions regarding marquee athlete participation. Where event organizers fail to meet core obligations, the HKSAR Government enforces contractual remedies, including public subsidy clawbacks, funding deductions, or formal revocation of “M” Mark status.

4. Match-fixing: How is match-fixing and other forms of match manipulation combated in your country? Has your country ratified the Macolin Convention? What is the role of the sports betting industry in your country and is it subject to any specific state regulations?

Hong Kong does not maintain a standalone “match manipulation” statute. Instead, match-fixing is prosecuted aggressively under two primary criminal enactments:

(1) Prevention of Bribery Ordinance (Cap. 201), Section 9: Criminalizes private-sector bribery, making it an offence for any agent (athlete, referee, coach, or club official) to solicit or accept an advantage to manipulate a match or breach their duties to their club or association.

(2) Gambling Ordinance (Cap. 148), Section 16: Criminalizes cheating at gambling or conspiracy to cheat at gambling in connection with sports fixtures.

The Independent Commission Against Corruption (ICAC) maintains dedicated investigative task forces targeting corruption in domestic leagues. In parallel, NSAs impose internal disciplinary sanctions under their own competition regulations, including provisional suspensions, fines, points deductions, and lifetime bans from all affiliated football or sporting activity.

Macolin Convention

Hong Kong is not a direct signatory to the Council of Europe’s Macolin Convention, but its domestic anti-corruption and anti-gambling enforcement measures closely align with international integrity standards.

The Role and Regulation of the Sports Betting Industry

The sports betting market in Hong Kong is subject to a strict statutory monopoly framework governed by the Gambling Ordinance (Cap. 148) and the Betting Duty Ordinance (Cap. 108).

(1) Statutory Monopoly: Authorized sports betting is restricted exclusively to licensed subsidiaries of The Hong Kong Jockey Club (HKJC) (specifically horse race betting under Division 2A and football betting under Division 3 of the Betting Duty Ordinance (Cap. 108)).

(2) Prohibition of Unlicensed Bookmaking: Operating private betting operations, acting as an unauthorized bookmaker, or accepting offshore wagers within Hong Kong is criminalized under Section 7 of the Gambling Ordinance Cap. 148, punishable by up to 7 years’ imprisonment and a HK$5,000,000 fine.

(3) Revenue Allocation: HKJC operates as a non-profit entity; net betting proceeds are heavily taxed under Betting Duty Ordinance (Cap. 108) and directed toward public charitable trusts and community development schemes.

Case Authority: HKSAR v. Brian Fok & Ors (ESCC 438/2024)

The recent judicial authority illustrating match-fixing enforcement is ICAC Operation “Green Grass”, resulting in the prosecution and sentencing of professional footballers in HKSAR v. Brian Fok Bun-yan & Ors (ESCC 438/2024).

Defendants included former Hong Kong Football Club and Happy Valley defender Brian Fok Bun-yan, Central & Western District Recreation and Sports Association defender Luciano Silva da Silva, and betting agent Waheed Mohammad. Fok offered bribes of HK$10,000 to HK$30,000 per match to teammates to manipulate HK Premier League match outcomes, while conspiring with betting agents to manipulate corner kicks and goals in First Division matches to profit from illegal betting websites.

The ICAC successfully secured convictions under Section 9(2)(a) of the Prevention of Bribery Ordinance (Cap. 201) for offering advantages to agents, and Section 16(1)(a) of the Gambling Ordinance (Cap. 148) (read with Section 159A of the Crimes Ordinance, Cap. 200) for conspiracy to cheat at gambling.

5. Is there an institution safeguarding the integrity across sports in your country, e.g. ethics and doping violations or abuse cases? Which rules does such an institution apply?

Anti-Doping Framework:
Anti-doping enforcement is led by the Hong Kong Anti-Doping Committee (HKADC), an independent body operating under the auspices of the SF&OC. The HKADC enforces rules fully aligned with the World Anti-Doping Agency (WADA) Code and associated International Standards. Anti-Doping Rule Violations (ADRVs) are adjudicated before independent disciplinary panels, with final rights of appeal lying to the Court of Arbitration for Sport (CAS) in Lausanne.

Safeguarding Minors and Abuse Prevention: The SF&OC requires all affiliated NSAs to adopt its Child Safeguarding Policy and Policy and Guidelines on Prevention of Sexual Harassment. These rules mandate: –

(1) Clear reporting channels for physical, psychological, or sexual misconduct;

(2) Mandatory appointment of designated safeguarding officers within associations;

(3) Integration with the government’s Sexual Conviction Record Check (SCRC) scheme operated by the Hong Kong Police Force, requiring mandatory background screening for coaches, trainers, and staff working with minors; and

(4) Mandatory referral of criminal abuse allegations to the Hong Kong Police Force under general child protection criminal laws and the Protection of Children and Juveniles Ordinance (Cap. 213).

6. How is corruption in sport regulated in your country? Is corruption between private individuals subject to criminal or civil liability and are there any sport specific corruption regulations?

Corruption in sport is governed principally under the Prevention of Bribery Ordinance (Cap. 201): –

(1) Private Sector Bribery (Section 9): Applies to private entities, professional sports clubs, players, coaches, and match officials. Under Section 9, it is a criminal offense for an agent (e.g., a player, referee, or administrator) to solicit or accept an advantage without the principal’s (e.g., club’s or federation’s) permission in connection with their professional duties.

While there are no statutory sport-specific corruption codes, NSAs apply internal disciplinary bylaws that sanction offenders with lifetime competition bans and fines.

Criminal and Civil Liability: Corrupt arrangements, match manipulation, or illegal betting kickbacks are prosecuted by the ICAC, resulting in custodial sentences and statutory fines.

Civil Liability: Beyond criminal prosecution, private parties and sports organizations may sue erring athletes, coaches, or administrators in civil court for recovering illicit profits or damages if they can prove that the breaches and financial loss were caused by the corrupt conduct.

7. How is fan behavior regulated by law (for example banning orders, criminal penalties for violence, specific laws addressing measures against violence at sporting events etc.)?

Hong Kong does not maintain a standalone sports spectator violence statute. Instead, fan behaviour is regulated through venue terms of entry, administrative banning orders, and general criminal legislation:

Venue Control & Banning Orders:

Stadium operators and event organizers enforce ticketing conditions, venue rules, and ejectment rights. Venue-specific regulations, such as the Stadia Regulation (Cap. 132BY) (enacted under Section 105D of the Public Health and Municipal Services Ordinance, Cap. 132), empower stadium managers to designate alcohol-free zones (s. 10D), conduct security searches, prohibit pyrotechnics, and enforce formal banning orders against disruptive spectators.

National Anthem Protection:

The National Anthem Ordinance (Cap. 646) strictly criminalizes public and intentional insults, desecration, or derogatory conduct directed at the national anthem, a provision highly relevant to spectator behaviour at international sporting fixtures.

General Criminal Penalties:

Acts of spectator violence, pitch invasion, public disorder, or property damage are prosecuted under general criminal statutes, including the Public Order Ordinance (Cap. 245) (unlawful assembly and riot), the Summary Offences Ordinance (Cap. 228), the Crimes Ordinance (Cap. 200), and the Offences Against the Person Ordinance (Cap. 212).

8. What legal frameworks exist around the ownership and governance of professional sports clubs (e.g. foreign ownership restrictions, fan ownership models, licensing requirements)?

Sports organizations and clubs in Hong Kong incorporate under one of three main statutory frameworks:

(1) Companies Limited by Guarantee (Companies Ordinance, Cap. 622): The standard corporate form for non-profit sports governing bodies and NSAs. Dividend distributions to members are prohibited, and liability is limited to a nominal guarantee (e.g., HK$100).

(2) Companies Limited by Shares (Companies Ordinance, Cap. 622): Utilized by commercial sports enterprises and professional clubs (e.g., professional football clubs). This framework permits share capital structures, equity investment, profit distribution, and corporate ownership transfers.

(3) Unincorporated Societies (Societies Ordinance, Cap. 151): Commonly used for community-level amateur sports clubs. Societies lack separate corporate personality, making office-bearers personally liable for organizational debts.

Foreign Ownership Restrictions

Hong Kong maintains an open capital investment regime. There are no statutory restrictions prohibiting foreign individuals or foreign corporate entities from acquiring equity, controlling stakes, or voting rights in local professional sports clubs. Foreign investors must comply with routine corporate filing under Cap. 622, anti-money laundering requirements, and league-specific club licensing rules.

9. Do you observe an increase in multi-sport ownership in your country, either across various sports or within one sport or sports discipline?

While commercial multi-club ownership models across international football leagues (e.g., City Football Group) are less prevalent natively within Hong Kong, multi-sport organizational structures have a long and prominent history in the territory through traditional athletic associations operating multiple competitive sports divisions under a single institutional umbrella: –

(1) South China Athletic Association (SCAA): Established as a premier multi-sport organization, maintaining active, top-tier divisions across football, basketball, bowling, swimming, fencing, and martial arts.

(2) Eastern Sports Club (Eastern Athletic Association): Operates professional franchises in both football (competing in the Hong Kong Premier League) and basketball (competing in the Hong Kong First Division and regional competitions such as the ASEAN Basketball League – ABL)

(3) Hong Kong Football Club (HKFC): Operates extensive, highly structured competitive sports sections under one membership umbrella, including football, rugby, hockey, lawn bowls, squash, netball, and tennis.

10. Are there any mandatory national provisions, apart from regulations of international sports governing bodies, which regulate athlete representation in your jurisdiction and are there specific limitations to the representation of athletes, such as e.g. provisions regarding dual representation, caps on agent commissions, regulations on the protection of minor athletes?

Hong Kong does not maintain a dedicated statutory licensing regime or agency act regulating sports intermediaries. The relationship between an athlete and an agent is governed by general contract law, agency principles, and common law fiduciary doctrines:

Fiduciary Duties:

Agents owe strict duties of loyalty, full disclosure, and good faith. Secret commissions or undisclosed financial kickbacks violate common law principles and constitute criminal offenses under Section 9 of the Prevention of Bribery Ordinance (Cap. 201).

Dual Representation:

Acting for both an athlete and an acquiring club in the same transaction is legally enforceable under Hong Kong law only where the agent obtains prior, fully informed written consent from both principal parties.

International Codes & Caps:

Agents operating in Hong Kong must comply with international federation codes where applicable (e.g., FIFA Football Agent Regulations – FFAR).

Protection of Minor Athletes:

Governed by common law rules regarding a minor’s capacity to enter binding contracts (enforceable against a minor only if proved to be for necessary goods/services or a beneficial contract of service), supplemented by federation regulations requiring written parental consent for minor representation agreements.

11. Are there national statutory frameworks, apart from regulations of international sports governing bodies, or cases concerning the participation of transgender athletes in competitive sport in your country? How is the issue currently regulated and/or debated?

Hong Kong does not have a specific statutory framework governing the participation of transgender athletes in competitive sports.

Landmark Authority: Q & Tse v Commissioner of Registration [2023] HKCFA 4

The landmark Court of Final Appeal ruling in Q & Tse v Commissioner of Registration [2023] HKCFA 4 addressed transgender rights in Hong Kong. The CFA held that the government’s policy requiring transgender men to undergo full, invasive sex reassignment surgery (including phalloplasty and hysterectomy) as a mandatory prerequisite for amending gender markers on Hong Kong Identity Cards (HKID) was unconstitutional. The Court ruled that such a requirement violated Article 14 of the Hong Kong Bill of Rights (right to privacy and bodily integrity). Crucially, the CFA recognized that medical gender affirmation does not strictly require full, irreversible surgical procedures to achieve administrative recognition.

While Q & Tse established important constitutional principles regarding identity card markers, the judgment did not directly alter competitive sports eligibility rules. In Hong Kong, sports eligibility remains regulated on a sport-by-sport basis by individual NSAs, which generally adopt a scientific, medical, and testosterone-threshold criteria promulgated by their respective International Federations (IFs) and the International Olympic Committee (IOC). All personal data collected during eligibility screening is protected under the Personal Data (Privacy) Ordinance (Cap. 486).

12. What is the legal framework for e-sports in your jurisdiction? Is there a specific Statute or Code in your country or motions to implement such?

Esports operates within Hong Kong’s general commercial, technology, and intellectual property legal frameworks, as there is no standalone esports statute.

Venue Licensing & Statutory Exemptions:

Commercial esports venues were historically caught under the strict arcade licensing regime of the Amusement Game Centres Ordinance (Cap. 435).  To support sector growth, the Home Affairs Department issued the Guidance Notes on Application for Exemption of Electronic Sports Venues from Licence Requirements under the AGCO. Venues meeting specific hardware, tournament, and operational criteria can secure formal statutory exemptions from traditional arcade restrictions.

Public Entertainment Licensing:

Live esports events hosted before public audiences require public entertainment licenses under the Places of Public Entertainment Ordinance (Cap. 172).

Esports Betting:

Regulated under the Gambling Ordinance (Cap. 148), which classifies real-money esports wagering as event betting. Real-money esports betting conducted outside authorized HKJC operations constitutes illegal bookmaking.

13. Which has been the leading sports law case of the past year in your country?

One of the recent leading sports law case in Hong Kong SAR will be Law Chin Pang & Others v. The Karatedo Federation of Hong Kong, China Limited (HCA 529/2017, HCA 987/2019, and HCA 988/2019; [2025] HKCFI 1345).  The judgment handed down on 2 April 2025 by the High Court of Hong Kong (Court of First Instance, Hon H. Au-Yeung J) represents a watershed precedent regarding National Sports Association (NSA) governance, administrative fairness, public law accountability, and the protection of athlete rights.

Factual Background

Three Hong Kong karate athletes, Law Chin Pang (a full-time Elite Athlete), Lo Sum Man, and She Ching (junior squad athletes)—who sought to transfer their dojo or karate society affiliations.  Upon transferring dojos, the defendant, The Karatedo Federation of Hong Kong, China Limited, the sole recognized governing body for karate in Hong Kong and the National Sports Association for Karate —enforced its internal “Freezing Period” Policy.

Under this Policy, any representative or elite athlete who transferred between affiliated dojos was subjected to an automatic 4-month suspension (“freezing period”) before they could re-apply to join the national squad. As a direct result, the Federation requested the Hong Kong Sports Institute (HKSI) to terminate or suspend my clients’ Elite Athlete status, monthly Elite Training Grants (ETG), subsidized hostel housing, meal allowances, and centralized coaching access. This mandatory suspension deprived athletes of essential training resources, selection points, and international qualification pathways (including Olympic qualification opportunities).

Court’s Findings

Following a multi-day trial, the High Court ruled entirely in favour of the athletes, declaring the Federation’s “Freezing Period” Policy void and unenforceable: –

  1. Ultra Vires and Failure of Purpose:

The Court held that the Policy was ultra vires because it was directly contrary to the Federation’s object clause under its Memorandum of Association—namely, to promote and develop the true art and spirit of Karatedo in Hong Kong. The Court found that the true purpose of the Policy was not the promotion of martial arts or filial respect, but rather an unjustified restraint on athlete mobility designed to protect dojo decision-makers.

  1. Breach of Implied Contractual Term:

The Court further held that under the Federation’s Articles of Association, there was an implied term that the Federation would not act unreasonably, capriciously, or arbitrarily toward its members.  The Court found the enactment and enforcement of the Policy to be unreasonable and capricious, constituting a breach of contract.

  1. Breach of Public Policy and Natural Justice: Public Function & Common Law Restraint of Trade:

Relying on English administrative law authorities, such as the UK Jockey Club jurisprudence (R v Disciplinary Committee of the Jockey Club, ex p Aga Khan 1 WLR 909; Nagle v Feilden 2 QB 633) and domestic authority Hong Kong Rifle Association v Hong Kong Shooting Association 5 HKLRD 500, the High Court affirmed that as a monopolistic body performing the public function of recommending athletes for state-funded elite training schemes, the Federation owed a public duty not to act arbitrarily or in restraint of trade.  The Court criticized the Policy for automatically penalizing athletes without providing any hearing or right to be heard.

Industry Impact and Precedential Value

This decision establishes a legal standard holding NSAs strictly accountable to public law standards of fairness, natural justice, and reasonableness when exercising monopolistic authority over athlete careers.  The ruling directly reinforced governance reforms, serving as a primary catalyst for the Sports Federation and Olympic Committee of Hong Kong, China (SF&OC) Code of Governance for National Sports Associations and emphasizing the necessity for independent sports dispute resolution mechanisms across Hong Kong SAR.

14. What other sports law topic(s) would you highlight as being very current and relevant in your country?

  1. Implementation of the SF&OC Code of Governance: Local NSAs are actively revising internal bylaws, board turnover rules, and athlete selection criteria to achieve full compliance with the Code of Governance prior to the late-2026 deadline to preserve eligibility for government funding subventions.
  2. Operationalization of the Sports Dispute Resolution Pilot Scheme: Active implementation under the DoJ’s Pilot Scheme (administered by AALCO HK Regional Arbitration Centre and eBRAM) provides an expedited, subsidized online mediation and arbitration pathway tailored to domestic sports conflicts.
  3. NSA Membership Tiering Reforms and Facility Access Reforms: Following public scrutiny regarding access restrictions in local federations (exemplified by the Hong Kong China Swimming Association review), NSAs are reforming membership structures to ensure that affiliated clubs across all tiers (Full, Affiliate, Competition) enjoy equitable competition pathways and public facility (e.g., LCSD swimming lane) allocations.
  4. Greater Bay Area (GBA) Sports Integration: Cross-border sports collaboration, joint event hosting (such as co-hosting the 15th National Games alongside Guangdong and Macao), and regional talent movement continue to expand the commercial and legal dimensions of Hong Kong’s sports industry.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Asialaw 2026 Rankings Recognise Oldham, Li & Nie’s Practices and Partners

by

Oldham, Li & Nie has again been recognised in the asialaw 2026 rankings, with recommendations across several practice areas and industry sectors. The firm’s Partners also received six individual recognitions.

Alongside these rankings, our firm has been shortlisted in two categories at the asialaw Awards 2026.

Asialaw 2026 Highly Recommended Firm
Practice Area Rankings

Asialaw 2026 recognises OLN in the following practice areas:

Industry Sector Recognition

The firm is also recommended in the following industry sectors:

  • Insurance – Recommended
  • Technology and Telecommunications – Recommended
Individual Lawyer Recognitions

OLN’s partners received six individual recognitions:

  • Gordon Oldham – Senior Statesman in Dispute Resolution
  • Richard Healy – Notable Practitioner in Dispute Resolution
  • Tracy Yip – Distinguished Practitioner in Corporate and M&A
  • Vera Sung – Distinguished Practitioner in Intellectual Property
  • Anna Chan – Distinguished Practitioner in Tax and Private Client
  • Victor Ng – Notable Practitioner in Corporate and M&A

We thank our clients and peers for their feedback and continued support, and congratulate our colleagues on their recognition.

For the complete rankings and individual recognitions, visit OLN’s asialaw profile.

Asialaw Awards 2026 Shortlist

OLN has also been shortlisted in two categories at the asialaw Awards 2026:

  • Oldham, Li & Nie – Hong Kong SAR Law Firm of the Year
  • Anna Chan – Hong Kong SAR Female Lawyer of the Year

View the asialaw Awards 2026 shortlist.

About Asialaw

Asialaw provides independent research and analysis of regional and domestic law firms and lawyers across Asia. Now in its 31st edition, the guide covers 20 jurisdictions and 28 practice areas and industry sectors. Its research draws on firm submissions, client feedback, peer reviews and market intelligence.

Learn more about asialaw and its research.

Form 5472 Reporting: What Hong Kong-Owned U.S. Businesses Need to Know

by

For Hong Kong families, investing in the United States can provide access to attractive For Hong Kong businesses with U.S. subsidiaries or other U.S. entities, Form 5472 reporting may extend well beyond the company’s direct Hong Kong owner. Related companies, family members, affiliated entities, and businesses under common control can potentially come into the analysis. Understanding these relationships is an important part of meeting U.S. reporting obligations and avoiding substantial penalties.

Hong Kong companies expanding into the United States often focus first on operational matters – establishing a U.S. entity, opening bank accounts, hiring employees, entering contracts, or acquiring assets.

But establishing a U.S. presence can also create important federal tax reporting obligations.

One of these is IRS Form 5472, an information return that can apply when a U.S. corporation is at least 25% foreign owned and has reportable transactions with foreign related parties during the tax year. Certain foreign-owned U.S. disregarded entities are also subject to Form 5472 reporting under special rules. The penalties for not filing are severe. Even though the form is relatively short, the penalty is $25,000 per year, per form, for each non filing violation.

For a U.S. company owned by a Hong Kong business or individual, determining who must be reported is not always as simple as identifying the shareholder listed on the company’s records.

U.S. tax rules can extend the analysis to a much broader network of related individuals and businesses.

Form 5472 and Hong Kong Business Groups

At first glance, the ownership structure might appear straightforward: the Hong Kong parent owns the U.S. company, so the parent is the foreign owner relevant to the Form 5472 analysis.

But the reporting analysis may not end there.

If the Hong Kong parent also owns businesses elsewhere in Asia or other jurisdictions, those affiliates may qualify as related parties. Depending on the ownership structure, transactions between the U.S. company and those entities can potentially trigger additional reporting.

This becomes particularly important for Hong Kong-headquartered groups with multiple subsidiaries, holding companies, or family-owned entities.

A separate Form 5472 is generally required for each reportable related party with which the reporting corporation had reportable transactions. As a result, identifying the complete related-party network is a fundamental part of the compliance process.

Who Can Be a Related Party?

One category involves a person or entity that directly or indirectly owns at least 25% of the U.S. company’s stock by vote or value. The analysis considers the relevant ownership interests rather than simply looking at the name appearing on a shareholder register.

Another category covers relationships defined under various provisions of U.S. tax law. Depending on the circumstances, these rules can capture relationships involving:

  • Family members
  • Corporations and their controlling shareholders
  • Companies belonging to the same controlled group
  • Partnerships under common ownership
  • Trusts, beneficiaries, grantors, and other trust relationships
  • Estates and their beneficiaries
  • Other entities connected through specified ownership relationships

For Hong Kong family-owned businesses, these rules can be especially important because business interests may be spread among family members, holding companies, trusts, and affiliated entities.

The analysis therefore needs to look beyond the U.S. company itself and consider its relationship with its 25% foreign shareholder and the broader ownership structure.

Why Sister Companies Can Create Reporting Issues

One of the easier relationships to overlook involves sister companies. Suppose a Hong Kong parent company owns a U.S. subsidiary as well as operating companies in Hong Kong, Mainland China, Singapore, or other markets.

Those Asian companies may have no direct ownership interest in the U.S. subsidiary. The U.S. company may not own them either.

Nevertheless, the companies may still be related for U.S. tax purposes because they are connected through their common parent.

This matters when transactions occur between the U.S. business and its overseas affiliates.

For example, the U.S. company might pay a Hong Kong affiliate for management services, purchase products from another group company, receive financing from its parent, or reimburse expenses incurred by an overseas affiliate.

Transactions of this nature should be reviewed as part of the Form 5472 analysis.

For a Hong Kong business group with several overseas entities, what initially appears to be a filing involving one foreign shareholder can therefore become a broader reporting exercise.

Formal Ownership Is Not Always the End of the Analysis

Another potential mistake is assuming that related-party status depends entirely on formal share ownership.

U.S. tax rules can look beyond legal form when determining whether common control exists. Depending on the applicable rule and circumstances, direct and indirect control, the economic relationship between businesses, and the way parties act in practice can become relevant.

This means a Hong Kong-owned U.S. business should not necessarily conclude that no related-party relationship exists simply because an overseas company does not appear on its ownership chart.

The substance of the relationship may need to be considered alongside the formal corporate structure.

Constructive Ownership Can Change the Result

Constructive ownership, sometimes called attribution, adds another layer to the analysis.

Under applicable U.S. tax rules, a person can sometimes be treated as owning shares that are legally held by certain family members or related entities.

As a result, someone who appears to own less than 25% of a U.S. company based solely on direct ownership could potentially meet the relevant threshold after the attribution rules are applied.

This issue deserves particular attention in family-owned Hong Kong businesses. For example, shares in a family enterprise may be divided among siblings or held through several family-controlled companies. Looking at each person’s direct percentage separately may not provide the complete answer under U.S. constructive ownership rules.

Ownership should therefore be analyzed under the applicable U.S. attribution provisions before concluding that a shareholder falls below the Form 5472 threshold.

Transactions Between the U.S. Company and Hong Kong Affiliates

Identifying the related parties is only part of the process. The business must also determine whether it had reportable transactions with those parties during the relevant tax year.

For a Hong Kong-owned U.S. company, transactions requiring review may include payments or transfers involving:

  • Sales and purchases of inventory or other property
  • Management or administrative services
  • Consulting and professional services
  • Royalties and licensing arrangements
  • Interest and financing
  • Loans or advances
  • Rent and leasing arrangements
  • Capital contributions
  • Distributions
  • Expense reimbursements
  • Other monetary and nonmonetary transactions

Intercompany activity that may seem routine from an operational perspective can still have U.S. reporting implications.

This is one reason Form 5472 compliance should be coordinated with the group’s accounting and transfer-pricing processes rather than addressed only when the U.S. tax return is being prepared.

Why Accurate Reporting Matters

Form 5472 carries significant penalties for noncompliance. A failure to file a required Form 5472, filing a substantially incomplete form, or failing to maintain required records can result in a substantial monetary penalty. Additional penalties may apply when a failure continues after notification by the IRS.

Where several related parties should have been reported, the exposure can increase because reporting requirements are evaluated separately.

For Hong Kong groups with numerous affiliates, this makes it particularly important to identify all potentially relevant entities before preparing the U.S. company’s annual filing.

Common Form 5472 Mistakes for Hong Kong-Owned Businesses

Several practical steps can reduce the risk of incomplete reporting:

  1. Look beyond the Hong Kong parent. Map the wider corporate group, including sister companies and other entities under common ownership or control.Review family ownership. For privately held and family-owned Hong Kong businesses, determine whether attribution rules alter the apparent ownership percentages.
  2. Consider existing trusts and holding companies. If shares are held through trusts, investment vehicles, or intermediate holding companies, the ownership analysis may require additional steps.
  3. Review intercompany transactions throughout the year. Payments between the U.S. entity and Hong Kong or other overseas affiliates should be identified and categorized rather than reconstructed at the last minute.
  4. Do not rely solely on the organization chart. Formal legal ownership is important, but it may not resolve every question concerning related-party status or control.
  5. Coordinate U.S. and Hong Kong finance teams. The information needed for Form 5472 may sit with accountants or finance personnel in Hong Kong rather than with the U.S. subsidiary.

A Practical Example

Consider a Hong Kong family that owns HK Holdings Ltd., which in turn owns a U.S. operating company.

HK Holdings also controls businesses in Hong Kong and Mainland China. During the year, the U.S. company purchases products from the Hong Kong affiliate, pays management fees to its parent, and receives an intercompany loan from another group entity.

It would be a mistake to review only the direct ownership of the U.S. company.

The broader group structure and each intercompany transaction need to be considered to determine which entities qualify as related parties and which transactions are reportable on Form 5472.

For larger Hong Kong groups, this exercise may need to extend across multiple levels of ownership and several jurisdictions.

Form 5472 FAQs for Hong Kong Businesses

1. Does a Hong Kong company with a U.S. subsidiary need to file Form 5472?

Potentially. Form 5472 generally applies to a 25% foreign-owned U.S. corporation that has reportable transactions with a foreign related party during the tax year. Special reporting rules can also apply to certain foreign-owned U.S. disregarded entities. The specific facts and entity classification should be reviewed.

2. Do transactions between a U.S. subsidiary and its Hong Kong parent need to be reported?

They may. Transactions between a U.S. reporting corporation and its foreign parent can fall within Form 5472’s reporting requirements. The nature and amount of the transactions should be reviewed under the applicable rules.

3. Can other companies owned by the Hong Kong parent be related parties?

Yes. Sister companies and other businesses within the same controlled group may qualify as related parties even when they do not directly own shares in the U.S. company.

4. Can family ownership affect Form 5472?

Yes. U.S. constructive ownership rules can attribute certain ownership interests between family members and through entities. This can affect whether a person is treated as meeting the relevant ownership threshold.

5. Does each foreign related party require a separate Form 5472?

Generally, a reporting corporation files a separate Form 5472 for each related party with which it had reportable transactions during the tax year. This makes identifying the complete related-party network particularly important for businesses belonging to larger international groups.

6. What are the penalites for not filing Form 5472?

Standard penalties are $25,000 per year, per form.

Review the Structure Before Filing

For Hong Kong businesses operating in the United States, Form 5472 compliance should not begin and end with the direct shareholder.

If you have questions about Form 5472 reporting for a Hong Kong-owned U.S. business, OLN’s US Tax Advisory Services team can help assess your ownership structure, related-party relationships, and U.S. reporting obligations. Contact us for guidance.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Investing in the U.S.: What Hong Kong Families Should Know

by

For Hong Kong families, investing in the United States can provide access to attractive markets, diversification opportunities, and long-term wealth-building potential. But before capital is committed, it is important to consider how the investment will be owned and managed. The legal and tax structure chosen at the outset can significantly affect U.S. taxation, reporting obligations, liability, succession planning, and future flexibility.

For families and investors based in Hong Kong, a U.S. investment is rarely just a question of identifying the right asset. Whether the opportunity involves real estate, an operating business, private equity, or an investment portfolio, the way the investment is structured can be just as important as the investment itself.

This is particularly relevant for families whose assets, businesses, and family members may span Hong Kong, the United States, Mainland China, and other jurisdictions.

Decisions made before a transaction closes can have consequences for years – or even generations. A structure that appears straightforward today could create unexpected tax exposure, administrative requirements, or succession challenges later.

Start With the Ownership Strategy

There is no single structure that works for every investor entering the U.S. market. The appropriate approach depends on the investor’s circumstances, objectives, existing holdings, and connections to different jurisdictions.

Before selecting an entity or ownership arrangement, families should generally consider factors such as:

  • Hong Kong and other relevant tax residency considerations
  • The type and purpose of the U.S. investment
  • Long-term family and succession objectives
  • Potential exposure to U.S. estate tax
  • Existing trusts, companies, or family holding structures
  • Financing arrangements
  • The location and residency of family members and beneficiaries
  • Plans to sell, transfer, or pass the investment to future generations

These considerations are interconnected. A structure that is efficient for one family may be unnecessarily complicated – or potentially disadvantageous – for another.

Common Ways to Structure U.S. Investments

1. Limited Liability Companies (LLCs)

LLCs are frequently considered when international investors acquire U.S. assets or establish business operations. Depending on the circumstances, they can provide liability protection, management flexibility, and relatively straightforward ownership arrangements.

However, Hong Kong investors should not consider the U.S. treatment of an LLC in isolation. The way an entity is characterized and treated in other relevant jurisdictions may differ from its treatment under U.S. law.

This becomes particularly important for internationally mobile families or those with assets and family members in several countries. The analysis should therefore consider the broader cross-border implications before an LLC is established.

2. Corporations

A corporation may be appropriate for certain U.S. business investments, particularly where a company expects to grow, bring in additional investors, or establish substantial operations.

Corporate structures can offer practical advantages from an operational and governance perspective, but they may also introduce additional tax and compliance considerations.

Hong Kong investors should therefore evaluate the benefits of a corporate structure in the context of both the U.S. investment and their wider international arrangements.

3. Trusts

Trusts can play an important role for Hong Kong families concerned with preserving and transferring wealth across generations.

Depending on the family’s circumstances and applicable laws, trusts may support succession planning, asset protection, family governance, and estate planning objectives.

For Hong Kong families with beneficiaries, trustees, settlors, or assets located in different jurisdictions, however, trust planning can become particularly complex. U.S. rules governing trusts may interact with the family’s existing structures and the laws of other jurisdictions in ways that are not immediately apparent. This may be true even if the U.S. involvement is by beneficiaries that do not yet have transactions with the trust.

4. Partnerships and Joint Ventures

Partnership and joint venture arrangements can be useful when several family members, investors, or business partners want to participate in the same U.S. opportunity.

This may be particularly relevant to Hong Kong investors pursuing U.S. real estate, private business, or other investment opportunities alongside family members or investment partners.

These structures can offer considerable flexibility, but issues such as management authority, allocation of profits and losses, reporting responsibilities, transfer rights, and exit provisions should generally be addressed from the outset.

Don’t Underestimate U.S. Compliance Requirements

Completing the investment is only the beginning. Once an investor owns assets or conducts business in the United States, a range of U.S. reporting and compliance obligations may apply.

Depending on the structure and circumstances, these can include:

  • U.S. federal income tax returns
  • State-level tax filings
  • Information reporting requirements
  • Applicable ownership or disclosure requirements
  • Trust-related reporting
  • Entity filings and maintenance
  • Other cross-border reporting obligations

Missing an applicable filing can result in penalties, additional professional costs, and unnecessary administrative difficulties.

A common challenge for international families is that their advisors may be located in different jurisdictions. A Hong Kong accountant, U.S. attorney, wealth advisor, trustee, and other professionals may each be providing advice from a different perspective.

Each recommendation may make sense independently while creating unintended consequences when combined with the family’s wider international structure.

Coordinating Hong Kong and U.S. Planning

For Hong Kong families investing in the United States, coordination between advisors can be particularly important.

A typical transaction may involve U.S. attorneys and accountants alongside Hong Kong legal, tax, trust, banking, or wealth management professionals. Families with connections to additional jurisdictions may require an even broader advisory team.

For example, an ownership structure selected for a U.S. real estate investment could affect the family’s estate planning. Financing arrangements could influence how an investment is held or eventually transferred. An existing family trust or holding company could create considerations that would not arise for an individual investor.

When these issues are identified before a transaction is completed, families generally have more options for addressing them. Discovering them after closing can make restructuring considerably more difficult and expensive.

Why Planning Before the Investment Matters

Ideally, cross-border planning should begin before purchase agreements are finalized, entities are established, or investment funds are transferred from Hong Kong or elsewhere.

Early planning gives families an opportunity to consider the investment from several perspectives at once. It can help them:

  • Choose an appropriate ownership structure
  • Identify potential U.S. and cross-border tax consequences
  • Coordinate personal, family, and business objectives
  • Prepare for ongoing U.S. reporting and compliance
  • Understand relevant options considering the U.S. and Hong Kong do not have a Tax Treaty
  • Integrate the investment with existing family structures
  • Reduce unnecessary administrative complexity
  • Preserve flexibility for a future sale, transfer, or succession

The objective is not simply to complete a U.S. transaction efficiently. It is to establish a framework that continues to make sense as the investment -and the family’s circumstances – evolve.

Think Beyond the Initial U.S. Investment

For many Hong Kong families, an investment in the United States forms part of a much broader international wealth strategy.

A U.S. property acquisition may eventually become part of a family’s long-term investment portfolio. An initial business investment could lead to additional U.S. operations or acquisitions. A trust or holding structure established today may influence how wealth is managed and transferred to the next generation.

International mobility also matters. Children may study or live in the United States, family members may relocate, and business interests may expand into new jurisdictions. Changes of this kind can affect planning assumptions that were appropriate when an investment was first made.

Effective cross-border planning therefore looks beyond the immediate transaction.

Families should consider how a prospective U.S. investment fits with their existing assets, business interests, family arrangements, succession objectives, and overall global footprint.

Frequently Asked Questions for Hong Kong Investors

1. What is the best structure for a Hong Kong investor buying assets in the U.S.?

There is no universally preferable structure. The appropriate choice depends on factors including the nature of the investment, the investor’s tax residence, existing companies or trusts, financing requirements, succession objectives, and the jurisdictions with which the family has connections, and keeping in mind there is no Tax Treaty between the U.S. and Hong Kong.

2. Should a Hong Kong family use an LLC or a trust for a U.S. investment?

The two structures serve different purposes. An LLC may be useful for liability protection, management, and ownership flexibility, while a trust may have a greater role in succession, wealth preservation, and estate planning. Depending on the circumstances, more than one entity or structure may form part of the overall arrangement.

3. Do Hong Kong investors have U.S. tax and reporting obligations?

Potentially, yes. The requirements depend on the type of investment, ownership structure, activities conducted in the United States, and other circumstances. Obligations can include federal and state tax filings, information returns, trust reporting, entity filings, and other applicable disclosures. Additionally, without a proper structure, U.S. assets could be subject ot the estate tax.

4. Why should Hong Kong investors plan before transferring funds to the U.S.?

Decisions about ownership and structure can be considerably easier to implement before an investment is completed. Reviewing the U.S. tax, legal, succession, and compliance implications in advance can help avoid unnecessary restructuring and preserve greater flexibility later.

5. Why is cross-border coordination particularly important for Hong Kong families?

Hong Kong families may have assets, companies, trusts, beneficiaries, or family members across several jurisdictions. A decision that works well from a U.S. perspective may have different consequences elsewhere. Coordinating U.S. and Hong Kong advisors – and advisors in any other relevant jurisdictions – helps ensure that the investment is considered as part of the family’s overall wealth and succession strategy. OLN has a dedicated US Tax Advisory Services practice in Hong Kong. Contact us for guidance.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

The End of the “418 Rule”: What Employers in Hong Kong Need to Know About the New “417/468” Continuous Contract Requirement

by

Introduction

For decades, whether an employee was regarded as employed under a “continuous contract” under the Employment Ordinance (Cap. 57) (“EO”) depended on the “418 rule”: the employee had to be employed continuously by the same employer for four weeks or more and work at least 18 hours in each week. Continuous contract status matters because it is the gateway to important statutory protections and benefits, including paid annual leave, statutory holiday pay, sickness allowance, maternity and paternity leave, severance payment and long service payment.

With effect from 18 January 2026, the “418 rule” has been replaced by a more flexible “417/468” framework. Under the new requirement, an employee will be regarded as employed under a “continuous contract” if they have been employed continuously by the same employer for four weeks or more and either: (i) worked at least 17 hours in each week; or (ii) where they worked less than 17 hours in any week, worked 68 hours or more in the four-week period comprising that week and the three weeks immediately preceding it. This article explains the new threshold, why the rolling four-week calculation matters, and which industries and working arrangements are likely to be most affected.

“Continuous Contract”

The practical concept and threshold of a “continuous contract” is fundamental to Hong Kong employment law. By virtue of satisfying this threshold, employees access a broad array of statutory protections and entitlements, subject in each case to the employee satisfying the applicable eligibility conditions for that particular benefit, including:-

  • Annual leave and statutory holidays;
  • Sickness allowance and maternity/paternity leave;
  • Severance payment and long service payment; and
  • Protection against unreasonable dismissal.

The New “Continuous Contract” Threshold: From “418” to “417/468”

A comparison of the old and new requirements is as follows:-

Definition of “continuous contract” under “418 rule”
(effective before 18 January 2026)		Definition of “continuous contract” under new “417/468 rule”
(effective on or after 18 January 2026)
Employee works 18 or more hours per week for four consecutive weeks.Employee works at least 17 hours in each week for four or more consecutive weeks; OR 
Where the employee works less than 17 hours in any week, the employee works 68 hours or more in the four-week period comprising that week and the three weeks immediately preceding that week. The 468 limb does not apply during the first three weeks of a new employment.

In particular, under “468 rule”, rather than measuring hours on a week-by-week basis, it looks at an employee’s aggregate working hours across a rolling four-week window. This makes it far harder for employers to sidestep the threshold by varying rosters from week to week. For illustration, an employee whose hours fluctuate between 10 and 22 hours per week may well qualify, even if they never consistently exceed 17 hours in any given week.

In particular, the “468 rule” is significant because it moves the analysis beyond a simple week-by-week threshold. Where an employee works less than 17 hours in a given week, employers must look at the employee’s aggregate working hours across that week and the three immediately preceding weeks. This makes fluctuating rosters more important: a shorter week will not necessarily prevent continuous contract status if the rolling four-week total reaches 68 hours, although the assessment remains fact-sensitive and the 468 limb will not assist during the first three weeks of a new employment.

Crucially, under section 3(2) of the EO, the burden of proving that an employment contract is not a continuous contract lies with the employer in the event of a dispute.

Impact on the Employment Landscape

The practical ramifications of this amendment are significant and broad-reaching.

Part-time, casual, seasonal and variable-hours workers are likely to be the primary beneficiaries. The sectors most directly affected are those with heavy reliance on shift-based or fluctuating staffing, including retail, catering, hospitality, food and beverage, entertainment, logistics, events and promotional work. Platform or gig-style arrangements may also require closer review where the underlying relationship is, in substance, employment rather than genuine self-employment.

Meanwhile, employers face a corresponding increase in compliance and administration obligations. Businesses that previously relied on the 18-hour weekly threshold, or rostered staff close to that threshold, should reassess their workforce structures, contracts, payroll rules and timekeeping systems. Key areas of review include:-

  • Employees newly qualifying as continuous contract employees may become entitled to statutory benefits, requiring payroll and benefits recalculation.
  • Employment contracts, staff handbooks and rostering policies that refer to the old “418 rule” or assume a fixed 18-hour weekly threshold should be reviewed and updated.
  • Given the combined “417/468” framework, employers should track both weekly hours and rolling four-week totals, and maintain robust timekeeping and payroll records to determine eligibility and support the employer’s position in any dispute.
  • Severance and long service exposure: As more workers qualify as continuous contract employees, employer exposure to severance payment and long service payment claims, as well as holiday, sickness and leave-related costs, may increase.

How can OLN help?

The replacement of the “418 rule” with the new “417/468” continuous contract requirement represents one of the most significant expansions of statutory employment protection in Hong Kong in recent years. For businesses with part-time, casual, seasonal, event-based or variable-hours staff, the implications are immediate and wide-ranging.

Our team at OLN can assist with workforce audits to identify employees who now qualify, or may soon qualify, as continuous contract employees; review and update employment contracts, staff handbooks and rostering practices to reflect the new threshold; and advise on statutory entitlements, payroll administration, record-keeping and dispute risk under the amended framework.

Should you have any questions, please feel free to contact us.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or legal advice of any kind to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

The Rise of the Employer of Record in Hong Kong and How Businesses Can Leverage It

by

Introduction

Hong Kong’s employment landscape is changing. The recent amendment to the Employment Ordinance (Cap. 57) (“EO”), which introduces a broader continuous contract threshold from 18 January 2026, is one of several developments that should prompt businesses to take a closer look at how they structure and manage their workforce. For many, that review may well lead them to an increasingly familiar solution: the Employer of Record.

The Employer of Record (“EOR”) model is not new, but its profile in Hong Kong has grown considerably in recent years. Fuelled by the rise of cross-border hiring, more flexible workforce models, and a steady expansion of statutory employment obligations, more businesses are turning to EOR arrangements to simplify the way they engage workers. The appeal is understandable. There are, however, risks that businesses should plan against.

The EOR Model

An EOR is a third-party entity that formally acts as the employer on record of workers on behalf of a client company. In a typical EOR arrangement, the EOR signs the employment contract and handles payroll, MPF enrolment and contributions, employer tax reporting and other employment administration, while the client company retains day-to-day operational control over the workers’ activities.

The tripartite EOR structure is, in essence, as follows:

  • The EOR employs the workers on paper and manages agreed compliance obligations;
  • The client company directs the workers’ daily tasks and business activities; and
  • The employees are formally contracted to the EOR but functionally serve the client.

The EOR model has found particular appeal among businesses seeking to expand into new markets without the delay and cost of establishing a local entity, as well as multinationals looking to centralise employment administration across jurisdictions.

The Benefits of EOR

In light of the new continuous contract framework, EOR arrangements offer a number of practical attractions for Hong Kong businesses.

  1. The EOR can take responsibility for monitoring evolving statutory requirements and managing outsourced compliance processes so that employment contracts, payroll systems and benefits structures reflect the applicable law.
  2. Businesses can engage talent quickly, without setting up a local entity and without having to build the full local employment administration infrastructure themselves. This can reduce costs and increase efficiency.
  3. The administrative burden on internal HR departments is also reduced. Payroll calculations, MPF enrolment and contributions, employer reporting to the Inland Revenue Department (“IRD”) under the salaries tax regime, and statutory leave tracking can all handled by the EOR.
  4. Companies considering a Hong Kong presence can hire locally on a trial basis through an EOR before committing to a formal corporate structure, allowing them to conduct market testing before committing capital and labour for the long term.

Key EOR Risks to Consider

Despite its commercial appeal, the EOR model carries meaningful legal and operational risks that businesses should evaluate carefully before proceeding.

1. Risk of Being Deemed the True Employer

Under Hong Kong law, the question of who is the “employer” for the purposes of the EO may turn on the substance of the relationship, not merely the label assigned to it. The courts and tribunals may examine the reality of the arrangement. If the client company:

  • exercises substantial control over the worker’s day-to-day activities;
  • provides the worker’s equipment, workspace, and tools;
  • integrates the worker into its own organisational structure; or
  • fails to maintain a meaningful distinction between its own staff and the EOR-engaged worker,

there is a risk that the client company may be found to be the worker’s true employer, depending on the facts, notwithstanding the contractual position with the EOR. This could expose the client to EO-related liabilities, including obligations relating to severance payment, statutory holiday pay, annual leave, sickness allowance and claims for unreasonable dismissal.

2. Employment Agency Regulations

The EOR model, if not properly structured, may also raise employment agency licensing issues. Employment agencies are regulated under the  EO and the Employment Agency Regulations (Cap. 57A), and employment agencies must generally be licensed by the Labour Department. An EOR that functions essentially as a broker, by introducing or placing workers with client companies without genuinely acting as the substantive employer, may risk being treated as an unlicensed employment agency, with attendant regulatory and criminal exposure.

3. MPF and Salaries Tax Obligations

Even where an EOR arrangement is properly structured, client companies should satisfy themselves that the EOR is enrolling eligible employees in an MPF scheme within the statutory framework, making timely and correct MPF contributions, and filing accurate employer returns and related IR56 forms with the IRD. The statutory obligation to make MPF contributions sits with the employer of record, but reputational and operational risks can flow back to the client if an EOR defaults on these obligations.

4. Permanent Establishment Risk

For overseas companies engaging workers in Hong Kong through an EOR, there may also be Hong Kong profits tax risk if the worker’s activities constitute a permanent establishment in Hong Kong or otherwise result in Hong Kong sourced profit for Profits Tax purposes, particularly if they involve entering into contracts on the company’s behalf. Businesses should take advice on this risk before deploying an EOR arrangement, particularly where the engaged workers exercise significant commercial discretion.

5. Continuity of Employment and the “417/468 Rule”

Under the new framework, businesses that rotate EOR-engaged workers through consecutive contracts must be vigilant. From 18 January 2026, an employee is regarded as employed under a continuous contract if the employee has been continuously employed by the same employer for four weeks or more and either works at least 17 hours in each week or, where the employee works less than 17 hours in a week, has worked 68 hours or more in the four-week period comprising that week and the preceding three weeks. The “468 Rule” does not apply to the first three weeks of a new employment, and attempts to structure arrangements to avoid statutory entitlements may create additional legal and reputational risk.

How can OLN help?

OLN has extensive experience advising businesses, from market entrants to established multinationals, on the full spectrum of employment issues in Hong Kong. Whether you are considering an EOR arrangement for the first time, reviewing an existing structure for compliance risk, or navigating the implications of the new continuous contract framework, our team can help you assess your exposure and structure your workforce arrangements on a sound legal footing.

Should you have any questions, please feel free to contact us.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or legal advice of any kind to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.