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平安三宝的各项要求

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与其他发达的城市一样，香港也正面临人口老化的问题。截至2021年，香港人口的年龄中位数为46.3岁1。根據政府統計處的人口推算，65歲及以上的長者人數佔全港人口的比例，將會由2022年的20.8%，逐步增长至2028年的25.3%，并进一步攀升至2069年35.1%2。持续上升的长者数目，意味着社会对各项安老及医疗服务的需求也将会进一步增加。

有见及此，政府一直致力向大众推广生死教育，力求打破围绕死亡的禁忌，协助大众以积极的态度看待死亡，并了解更多有关「平安三宝」的细节和重要性，即遗嘱、持久授权书(EPOA)、和预设医疗指示 (AD)。

「平安三宝」分别为:-

  • 遗嘱（俗称「平安纸」）：遗嘱的执行主要受《遗嘱条例》（第30章）所规限。遗嘱的订立旨在按照立遗嘱人的指示，分配其身故后所遗留的资产。
  • 持久授权书 (EPOA)：EPOA的执行、登记、权力范围均受《持久授权书条例》（第501章）所规限。EPOA 的訂立主要依照授權人的意願，指定一名或多名受權人在其失去精神行爲能力時，管理其財政事務。
  • 预设医疗指示 (AD)：虽然现时没有具体的法例规定AD的执行和权力范围。不过，医院管理局 （医管局）已发布了一份建议的AD表格格式，并为其辖下的临床医生公布了相关的指引。AD的订立旨在解决病人是否接受维持生命治疗。

为推广「平安三宝」的使用，政府已每年资助及举办有关生死教育的讲座，其中包括有关「平安三宝」的专题讲座。香港公共图书馆每年均与团体合办有关生死教育的讲座，当中也包括就「平安三宝」的主题3。而社会创新及创业发展基金（社创基金）也会资助有关生死教育和「平安三宝」的相关项目4。籍此希望能够预早备妥各方规划，让长者及其家人们能作更好的安排。

尽管「平安三宝」的概念已在社会上广为流传，但须注意的是，在实质操作上，三者的执行、登记要求和涵盖的事务范围皆不尽相同。若大众无法正确理解相关的法律要求，便很容易引起不必要的争议以及麻烦。

因此，我们希望通过下列表格，一表阐述三者的分别，协助大众进一步了解：

 遗嘱
（又称为平安纸） 		持久授权书预设医疗指示
表格形式没有法律指定的范本，但律师草拟的遗嘱将会考虑更多重要细节，例如更多后备安排以防止无人执行或承继遗产。有指定法律规定样本 没有法律规定，可以用医管局的指示文本
生效  当立遗嘱人过世的时候授权书中 指明的生效日期（一般为受权人有理由相信授权人正在失去精神行为能力的日期）当两名医生（病人的主诊医生和另外一名医生）诊断病人处于下列任何一种情况：
1. 病人的病情到了末期；
2. 病人处于持续植物人状况或不可逆转的昏迷状况；或
3. 病人处于其他晚期不可逆转的生存受限疾病  
财产事务执行人会按遗嘱的指示把遗产分配受权人可以动用授权人的资产去：
• 维持授权人的生活；
• 预防授权人的财产损失；
• 照顾受权人或其他人士的需要（如该些人士为授权人应合理地提供所需的人士）；及
• 向与授权人的亲属或有关连的人作出有限的季节性馈赠		不适用
范围以及限制立遗嘱人亦可指定自己丧礼的安排• 授权人可随意对授予受权人的权限附加任何限制
• 不牵涉授权人健康和福利相关的事宜		决定病者会否接受维持生命治疗。
注意：医生和院方都不能执行安乐死，也不会执行非法指示。
签署時的精神状态神智清醒，有精神行为能力，自愿作此指示，知道文书的性质和后果
签署要求  两位独立见证人面前签署。证人不必是律师一名医生以及律师面前签署（可同时在医生以及律师面前签署或在医生面前签署后，28天内在律师面前签署）
 
1. 注册医生
• 必须核证及信纳授权人在签署持久授权书时，「是精神上有能力行事的」
 
2. 律师
• 必须核证「授权人看似是精神上有能力行事的」		两个独立见证人面前签署：

1. 首名见证人
• 必须为注册医生，可选用一名不是其主诊医生或没有诊治过该作出者的医生

2. 第二名见证人
• 必须年满18岁
• 确认首名见证人已经解释指示的性质和后果

 
见证人的独立性  见证人不得为遗嘱上的受益人，否则见证人不会获得遗嘱上的馈赠见证的医生和律师不得为：
• 受权人
• 受权人的配偶；
• 与授权人有血缘或姻亲关系的人；或
• 与受权人有血缘或姻亲关系的人		两名见证人不得为下述文书的受益人：
• 签署人的遗嘱；或
• 签署人所持有的任何保险单；或
• 签署人订立的任何其他文书。
执行人/受权人的签署要求  执行人并不需要正式签署确认自己的委任。因此，一般建议立遗嘱人应先跟执行人商议好受权人需要在见证人面前签署确认不适用
注册要求  当遗嘱人离世后，当执行人需要安排遗嘱承办时，执行人需要向法庭存档遗嘱的正本如受权人相信授权人精神上无能力行事或正变为精神上无能力行事，必须尽快把有关的持久授权书拿到高等法院注册。
 
授权人可选择是否希望自己或他人收到该持久授权书注册的通知，以防止受权人滥用行使权。
 
其中一项有关授权人应否注册持久授权书的考虑是，一旦注册，该持久授权书的订立，以及授权人及受权人的名字将成为公开资讯。  		没有注册要求，但建议把正本的存放告知相熟的人，并把副本发给相熟的人。
撤销一般而言，遗嘱不会被撤销，除非：
• 立遗嘱人在签署遗嘱后，缔结婚姻；
• 立遗嘱人签署另一份遗嘱，借以撤销早前的另一有效的遗嘱；
• 立遗嘱人以有效地签立遗嘱的同样方式签立的遗嘱撤销书；或
• 立遗嘱人有意撤销该遗嘱的情况下，自行或使他人在其面前依其指示将该遗嘱毁灭		授权人在精神上仍有能力行事时，或在其康复后，可以主动撤销持久授权书；否则，持久授权书只会在有限的理由下被撤销，如：
 
• 受权人破产；
• 受权人或授权人死亡；以及
• 根据法院命令或指示		以书面方式制定   

如有疑问，烦请联系本行长者法律服务团队共同主管律师胡海伦律师和本行律师袁向凡律师。

1 政府统计处：<《香港人口趋势1991-2021》现已出版 [2022年12月29日]>，香港特别行政区政府统计处网页，2022年12月29日，https://www.censtatd.gov.hk/en/press_release_detail.html?id=5338，2024年6月24日读取。

2 香港特别行政区新闻：<立法会六题：应对人口老化的措施>，香港特别行政区政府网页，2023年3月22日，https://www.info.gov.hk/gia/general/202303/22/P2023032200177.htm，2024年6月24日读取。

3 香港特别行政区新闻：<立法会六题：订立「平安三宝」>，香港特别行政区政府网页，2023年6月28日，https://www.info.gov.hk/gia/general/202306/28/P2023062800356.htm，2024年6月24日读取。

4 香港特别行政区新闻：<立法会六题：订立「平安三宝」>，香港特别行政区政府网页，2023年6月28日，https://www.info.gov.hk/gia/general/202306/28/P2023062800356.htm，2024年6月24日读取。

免责声明：本文仅供参考。本文中的任何内容均不得诠释为香港法律建议或向任何人提供的任何与此相关的法律建议。对于任何人因本文所含的内容而造成的任何损失和/或损害，高李严律师行不承担任何责任。

Ten Common Handwritten Will Mistakes

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Handwritten wills i.e., holographic wills are valid in Hong Kong and in most jurisdictions around the world. Perhaps the most famous holographic will was that of Napoleon Bonaparte, who seemingly had plenty of time on his hands while exiled on the island of St Helena in 1821. He wrote a whopping five long pages and numerous codicils by hand, which was the requirement under French law for a valid will, in the absence of a notary. After praising his loved ones and lashing out at each of his political enemies, he bequeathed to over 7,500 beneficiaries the contents of his entire estate, down to a pair of slippers. The beneficiaries were not only his immediate family members but everyone from his General Montholon (2 million francs) to regular soldiers (100 francs each) in his army. It took the executors of his will 40 years to complete their tasks. 

Handwriting your own will is likely to be easier than the task that Napoleon undertook, but here are some of the more common (but not all of the) pitfalls to avoid:

1. Not appointing a willing executor

There will be no one to execute your wishes in this instance and this will lead to administrative delays. The beneficiary entitled to your residuary estate has first priority to apply to be your executor by virtue of rule 19 of the Non Contentious Probate Rules in Hong Kong where there is no named executor willing to take on this role. Your residuary estate is the whole sum of your estate after deduction of your debts, taxes, funeral, legal and administrative expenses and distribution of your cash and specific gifts to your beneficiaries.

2. Being too specific or not being specific enough

You may bequeath your Rolex Explorer II watch to your son but you own two Rolex watches at the time of your death, none of which is the Explorer II. You may state clearly “I bequeath my grand piano to my cousin.” but it transpires that you have three cousins (who coincidentally all play the piano up to grade 8 level) at the time of your death. These are examples of gifts that are too specific or not specific enough.

3. Not updating your will 

If you marry, divorce, enter into a committed relationship or any combination thereof, there may be significant impacts on the validity of parts of your will. Some committed relationships that may be recognised under overseas laws are not recognised in Hong Kong. It is important to review your will at regular intervals in order to take stock of significant changes in your relationships and assets.

4. Writing only one will when you have substantial assets in another jurisdiction

The legal concept of domicile may be different from your birthplace, nationality and/or jurisdiction where you have permanent residency. Your domicile at the time of death affects your will. You may write a will in Hong Kong that can be overridden due to laws in another jurisdiction that do not allow you to leave out certain beneficiaries, for instance. It is important to consider the laws of the countries where your substantial assets are located.

5. Writing wills in every jurisdiction you have assets in but inadvertently revoking some of the wills

You may have carefully considered all your worldly assets and handwritten your wills in accordance with where your assets are located. One common pitfall is not making reference to your other international wills, such that your last will and testament referring to your assets in Canada may inadvertently revoke your prior last will and testament referring to the distribution of your assets in Hong Kong.

6. Improper execution of the will

In Hong Kong, two witnesses are required when you sign your will. They and their spouses may not be your beneficiaries. Your executor may be a witness to your will but again, this executor should not be a beneficiary if such executor is to be a witness to your will. In the absence of proper execution, the court must be satisfied that there is no reasonable doubt your purported will satisfies your testamentary wishes.    

7. Forgetting to appoint guardians including temporary guardians for your minor children

If both parents pass away, minor children without appointed guardians will become wards of the Social Welfare Department. It is important to consider appointing temporary guardians who reside in Hong Kong in the event that permanent guardians are overseas, again to avoid having children becoming wards of the Social Welfare Department during the time it takes permanent guardians to arrive in Hong Kong.

8. Forgetting to include back up beneficiaries, executors and guardians

No one knows with certainty when their time will come. It is entirely possible to outlive one’s beneficiaries, executors and/or appointed guardians, especially the longer that one lives. Some care needs to be taken to think through some possible alternatives in the event that these persons predecease you or refuse to act as your executor or as guardians of your children.

9. Keeping the will in your own safety deposit box at the bank

This is a very safe place to keep your will but is it too safe? In Hong Kong, singly and jointly held safety deposit boxes require a “Certificate for Necessity of Inspection of Bank Deposit Box”  issued by the Home Affairs Department before a deceased’s safety deposit box may be inspected. A bank official and two public officers authorised by the Secretary for Home Affairs must be present during the inspection. Keeping one’s will in one’s own bank safety deposit box (even jointly held) leads to administrative delay and this should be weighed against the security afforded by a bank safekeeping your will.

10. Not signing your will

Many people take the time to carefully put together a will and then trip up on the final step – they omit to sign the will properly or put off signing the will. This may be due to any number of reasons – not prioritising this important final step (life often gets in the way) or even due to an inability to find witnesses for the will. Unfortunately, an unsigned will is an invalid will.

The legal requirements for a validly written will are both easy and difficult to fulfill – easy in the sense that a handwritten will showing intention and capacity signed by an adult which is properly witnessed is a legal document in Hong Kong, yet difficult because there are some common pitfalls that many a do-it-yourselfer has failed to avoid.

Beat Napoleon Bonaparte and have your will professionally drafted. To celebrate the inauguration of our groundbreaking Elder Law Practice (the first of its kind in Hong Kong), we are proud to relaunch our hugely popular FreeWill initiative, an opportunity for Hong Kongers to have their wills prepared for a nominal donation to a registered charity. To find out more, visit our FreeWill campaign page.

Disclaimer: This article is for reference only. Nothing herein shall be construed as legal advice, whether generally or for any specific 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.

Handling Second-layer Recipients in Fraud Cases – Defence Concerning Underground Banking (地下錢莊/地下钱庄)

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Introduction

In typical fraud cases, victims would find it difficult to trace the defrauded money because often case, the first-layer fraudsters would have dissipated fund elsewhere in a nano second, leaving their own bank balance with close to nothing. Victims therefore have to also sue the second-layer recipients to recover the lost fund. The fund transfers from the victims to the second-layer recipients, however, are not a direct one. Problem arises if the second-lawyer recipients come forth and defend the claim by arguing that they are equally innocent and their receipt of money was deriving from legitimate underlying transactions with the first-layer fraudsters.  

One of the most often cited defence by PRC second-layer recipients is that they engage service of Underground Banking (地下錢莊/地下钱庄) whereby they send money to a stranger in the PRC and in return obtain money from another stranger in Hong Kong. This explains why they would receive money from certain person not even their acquaintance as this is essentially the modus operandi of Underground Banking. It could be entirely credible that these second-layer recipients do not know the first-layer fraudsters personally (notwithstanding that they do transact with them) and that these second-layer recipients are truly irrelevant to the fraud scheme. In light of the prevalence of email and identity scam these years, such fact pattern and defence has become a common occurrence. Does that then mean that the victims’ claims against these second-layer recipients would be defeated?

As the Mainland practices foreign currency control, it is not uncommon for individuals in the Mainland to use underground banking for their outward remittance needs. While commonly used, such practice is inherently illegal under the relevant PRC administrative regulations and administrative measures on foreign exchange. Victims facing such defence raised by the second-layer recipients may therefore counter-argue in response that the use of underground banking itself constitutes an “illegality” and thus should not be given effect.

The Case Laws

OLN acted for the victim in the fraud claim Taihei Dengyo Kaisha Ltd v. Zhao Yizhe and another [2024] HKDC 222. The Plaintiff was a victim of an elaborate email scam, whereby after its funds were induced to be deposited into a fraudster’s account (first layer bank account), part of the funds were then dissipated from the first layer bank account to the second-layer recipient (i.e. 1st Defendant in the present case)). To recover the funds, the Plaintiff started a civil claim against the 1st Defendant based on the different causes of action including unjust enrichment and tracing.

In response to the Plaintiff’s unjust enrichment claim and tracing claim, the 1st Defendant raised the aforesaid defence concerning the use of Underground Banking, arguing that she received the funds due to her purchase of HKD with RMB through an exchange agent in the Mainland, and such constituted (1) defence of bona fide purchaser and (2) defence of change of position.

In the Plaintiff’s application for summary judgment against the 1st Defendant, the District Court has confirmed that in analyzing the issue of illegality, a distinction has to be made between domestic illegality and foreign illegality, and that the Court has different approach in handling the two types of illegality.

In view of the frequency of litigation in Hong Kong involving cross-border elements, especially regarding PRC law, this is a much welcome decision in confirming the Court’s readiness to grant judgment at summary stage where the defence concerns a transaction illegal under PRC law, and should discourage unmeritorious defences going to trial.

Summary Judgment

The District Court confirms that in respect of foreign illegality, the Court of Final Appeal decision in Ryder Industries Ltd v Chan Shui Woo [2015] 18 HKCFAR 544 (“Ryder”) is the highest authority in Hong Kong on how it affects the enforceability of contracts.

In respect of foreign illegality, the Court’s task is to identify which type of illegality the case falls within as follows:

  • Type 1: the contract is unenforceable under its proper law (whether chosen by the parties or otherwise)
  • Type 2: the performance of the contract requires or necessarily involves conduct which is illegal under the laws of the place where it is required to be performed
  • Type 3: the contract could have been performed in a legal manner but the real objective and intention of the parties at the time of concluding the contract necessitates them to perform by some act which is illegal by foreign law
  • Type 4: the actual performance of a contract may violate foreign laws, even though not required or initially intended, but nonetheless lead to the unenforceability of the contract before a Hong Kong court, regardless of its proper law

Following Ryder, if the transaction is identified as a Type 1, Type 2 or Type 3 case, the contract will not be given effect. If, on the other hand, it is a Type 4 case, the Court should make a judgment as to whether comity should require it to give effect to the contract or deny its enforcement by evaluating the seriousness of the illegality and the important policies which may underlie the impugned foreign law.

The Court found that as the 1st Defendant’s purchase of Hong Kong Dollars through the agent “necessarily” contravened PRC law as the very essence of the transactions was to circumvent PRC currency exchange controls, the transactions fall squarely within the Type 2 case. The Court was required to refuse enforcement of the contract, and the defence of change of position and bona fide purchaser would not therefore be available.

The Court also acknowledged that despite the issue of foreign illegality being a complicated and developing area of law, as Hong Kong case authorities have fairly established that it is illegal under PRC law to engage underground banking and there is no material dispute on the PRC law in the present case, the Court failed to see what utility can be gained for the restitution claim to go to trial.

The Court therefore granted summary judgment in favour of the Plaintiff against the 1st Defendant for the unjust enrichment claim for the amount of the sums received and a declaration that the 1st Defendant held the sums received on trust and/or constructive trust.

Key Takeaways

  • Regarding the issue of illegality, a distinction has to be made between domestic illegality and foreign illegality, as the Court would adopt different approaches regarding the enforceability of the underlying transaction.
  • Although foreign illegality remains a complicated and developing area of law, where Hong Kong case authorities have fairly established the relevant foreign illegality in issue and there is no material dispute regarding the foreign illegality in question, the Court may still be prepared to grant judgment at the summary stage.
  • Aside from a litigation standpoint, for individuals residing in Mainland who have outward remittance needs, whilst using underground banking or money exchange (地下錢莊/地下钱庄) may seem convenient, it is nonetheless an illegal practice in Mainland. More importantly, it carries the risk that there is no safeguard regarding the source of funds, and the funds received may well stem from innocent parties and be clawed back through legal proceedings.

Anna Chan, Kacy Lam and Dexter Yuen acted for the Plaintiff.

The full Judgment can be viewed here.

Oldham, Li & Nie Partner Wins the Private Client Lawyer of the Year at the 2024 Asia Legal Awards

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We are delighted to announce that our partner and head of Private Client practice, Anna Chan, won the Private Client Lawyer of the Year at the 2024 Asia Legal Awards ceremony.

Anna received this prestigious title in recognition of her deep knowledge and expertise to guide clients through even the most complex contentious and non-contentious matters.

Anna Chan, OLN Partner, wins Private Client Lawyer of the Year at the 2024 Asia Legal Awards

The results were announced on 14 March 2024 at a ceremony in Singapore attended by Anna Chan and Martin Tse, Senior Associate.

In addition, Anna Chan was shortlisted in Litigator of the Year and Oldham, Li & Nie in Boutique Law Firm of the Year categories.

The Asia Legal Awards, hosted by Law.com International, a leading global media platform, honours the most outstanding legal practitioners, firms and transactions in Asia.

To learn more about Asia Legal Awards, see the complete lists of this year’s winners.

Budget 2024/25: Updates on Stamp Duty on Property Transactions in Hong Kong

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In the 2024/25 Budget (the “Budget”) delivered by the Financial Secretary of the HKSAR on 28 February 2024, a number of tax measures were proposed. Most notably, all demand-side management measures for residential properties have been cancelled with immediate effect, meaning that no (i) Special Stamp Duty (“SSD”), (ii) Buyer’s Stamp Duty (“BSD”) or (iii) Ad Valorem Stamp Duty (“AVD”) at 7.5% under Part 1 of Scale 1 of Head 1(1A), First Schedule of the Stamp Duty Ordinance (Cap. 117) (“SDO”) needs to be paid for any residential property transactions starting from 28 February 2024.

Property market in 2023

As illustrated in the Budget, insofar as a residential property is concerned, the market sentiment has become very cautious since the middle of 2023 in view of the rising interest rates and uncertainties in the external environment. In 2023, residential flat prices fell by 7% and the number of residential property transactions declined by 5% to a low level of around 43,000.

Cancellation of all “spicy measures”

It is under the backdrop of the property market’s weak performance that all “spicy measures”, including the SSD, BSD and AVD at 7.5% under Part 1 of Scale 1 were cancelled with immediate effect on 28 February 2024.
However, residential property purchasers would still have to pay AVD at the rate under Part I Scale 1 but such rate has been amended to be same as those of AVD under Scale 2 of Head 1(1A), First Schedule of the SDO (i.e., the rate for the sale and purchase of non-residential property on or after 26 November 2020) with effect from 28 February 2024, by way of the Public Revenue Protection (Stamp Duty) Order 2024 as discussed below.
In other words, for residential property transactions, AVD ranging from HK$100 to 4.25% of the stated consideration or the value of the property (whichever is higher) will be levied. The AVD rates immediately before and after 28 February 2024 are set out below:

Rate at Part 1 of Scale 1 from 25 October 2023 to 27 February 2024: Flat rate of 7.5%

Rate at Part 1 of Scale 1 on or after 28 February 2024:

Amount or value of the consideration or value of the property (whichever is higher)Rate at Part 1 of Scale 1
ExceedsDoes not exceed
 HK$3,000,000HK$100  
HK$3,000,000HK$3,528,240HK$100 + 10% of excess over HK$3,000,000
HK$3,528,240HK$4,500,0001.5%  
HK$4,500,000HK$4,935,480HK$67,500 + 10% of excess over HK$4,500,000
HK$4,935,480HK$6,000,0002.25%  
HK$6,000,000HK$6,642,860HK$135,000 + 10% of excess over HK$6,000,000
HK$6,642,860HK$9,000,0003.00%  
HK$9,000,000HK$10,080,000HK$270,000 + 10% of excess over HK$9,000,000
HK$10,080,000HK$20,000,0003.75%  
HK$20,000,000HK$21,739,120HK$750,000 + 10% of excess over HK$20,000,000
HK$21,739,120 4.25%  

Procedurally speaking, the Government will introduce the Stamp Duty (Amendment) Bill 2024 (the “Bill”) to the Legislative Council following the delivery of the Budget. In the meantime, to enable property purchasers to benefit from the said measures as soon as possible, the Chief Executive has exercised his statutory power to make the Public Revenue Protection (Stamp Duty) Order 2024 (the “Order”) under the Public Revenue Protection Ordinance (Cap. 120) to give full force and effect of law to the Bill before its enactment as long as the Order remains in force.

Potential impacts on the property market

All “spicy measures”, which aimed at curbing speculation and stabilizing housing prices, often deterred potential buyers due to the high additional costs involved in property transactions. With the removal of the “spicy measures”, we anticipate that the residential property market will experience a surge in activity. With the potential buyers having higher affordability, it is expected that the demand for residential flats will increase and property prices will potentially be driven up in the short term.

In particular, given that the BSD (which targeted purchasers who are non-Hong Kong permanent residents) is now removed, more foreign and Chinese investors might be attracted to invest in Hong Kong residential properties. Moreover, the abolishment of the SSD (which targeted reselling of residential properties within 24 months of acquisition) is likely to further stimulate the local second-hand property market.

Holding residential properties by corporate vehicles

One point to note is that the removal of “spicy measures” might prompt some potential purchasers (in particular, properties on the expensive end of the spectrum) to purchase residential properties through limited companies which are established for the sole purpose of holding the properties. When it comes to selling the properties, instead of selling the properties directly, property owners can sell the entire shares of the companies which hold the properties, to the purchasers.

The obvious advantage of using this strategy is that the stamp duty for the sale and purchase of shares of a limited company in Hong Kong is currently only 0.2% of the stated consideration or the value of the company (which essentially is the value of the property when the property is the only asset of the company), whichever the higher.

For example, if an individual decides to purchase a residential property valued at HK$7,000,000 after 28 February 2024, the calculations of stamp duty payable under different situations are as follows:

  • If the purchaser purchases the residential property directly, the stamp duty payable would be HK$7,000,000 x 3% = HK$210,000
  • If the residential property is held by the seller through a limited company whose only asset is the property, and the purchaser acquires the entire shares of the company, the stamp duty payable would be HK$7,000,000 x 0.2% = HK$14,000

Although the savings in stamp duty can be quite considerable by using the abovementioned strategy, it should be noted that:

  • Transfer of shares in a limited company involves more complicated procedures as compared to ordinary property transactions. Most notably, lawyers will be more heavily engaged in such equity transactions for procedures such as (i) due diligence to ensure that the company has not, amongst others, incurred any liabilities, and (ii) drafting the share purchase agreement including various representations, warranties and indemnity, to protect the interest of the purchaser. Hence, the associated legal fees would most likely be higher than that incurred in an ordinary property transaction.
  • After acquiring the company, the purchaser would have to pay annual maintenance costs to the company secretary and accountant for, among others, filing annual returns, convening annual general meetings, preparing audited accounts and doing tax filings to fulfill the statutory requirements.
  • Owing to legal complexity and risks as explained in point (1) above, banks usually do not offer mortgages for property transactions camouflaged by share transfers. Purchasers therefore need to be prepared to pay 100% of the purchase price of the company/property by the time the transaction is completed. A bridging loan might be required in the circumstances.

In view of the high associated costs that may be incurred in a share purchase transaction as discussed above, normally speaking, only residential properties of a relatively high value will justify the use of a limited company to hold the property.

If you have any question regarding the topic discussed above, please contact our partner Victor Ng at victor.ng@oln-law.com or our senior associate Barbara Kwong at barbara.kwong@oln-law.com for further assistance.

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.

Oldham, Li & Nie is Ranked in Chambers Greater China Region 2024 Guide

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The newly released 2024 edition of Chambers Greater China Region Guide acknowledged Oldham, Li & Nie in Corporate/M&A and Family/Matrimonial practice areas. Additionally, the Guide has spotlighted four of our lawyers as leading figures in the region’s legal landscape.

Chambers Greater China Region 2024 ranked firm Oldham, Li & Nie

Comments from clients include:

  • “Oldham, Li & Nie are extremely professional and reliable. Their lawyers are worldly, knowledgeable and respectful.”
  • “They are able to give practical advice by considering the circumstances of our company and our company’s primary commercial objectives.”
  • “They are highly professional and well organised. They are very efficient and speedy with their work.”

The four Odham, Li & Nie lawyers recognized among the premier lawyers in the Greater China region are:

To view the OLN’s full rankings, visit our profile on 2024 Chambers Greater China Region.

About Chambers Greater China Region Guide

Chambers and Partners interview every year thousands of lawyers, clients and third-party experts to evaluate law firms’ and lawyers’ reputation and expertise in all four jurisdictions of the Greater China Region: PRC, Hong Kong, Macau, and Taiwan. The Chambers Greater China Region rankings assess various factors, including technical legal skills, professionalism, customer service, and business acumen of the leading lawyers across the region.