News
News //
Submitted by // K Bowers, Partner / Solicitor Advocate; P Yeung, Partner
23 May 2018

 

Not only is it anti-competitive, it's illegal! 

On 9 April 2018, the Competition Commission issued an advisory bulletin on the potential risks that could arise under the Competition Ordinance (Cap 619) in the employment context. 

Employment Marketplace

It is the Competition Commission's view that Hong Kong's free market economy depends on a healthy competitive environment, whereby employees benefit from competitive rivalry in the marketplace (just as consumers do). Competition among employers to hire employees often leads to better employment terms such as higher salaries and better benefits, thereby leading to increased opportunities for employees.

Contravention of the First Conduct Rule

The Competition Commission considered that employers are more likely to breach the First Conduct Rule of the Competition Ordinance. Specifically, the First Conduct Rule prohibits anti-competitive agreements, under which market participants collude with their competitors on key competitive parameters. Employers should therefore refrain from entering into an agreement or engaging in concerted practices regarding terms of employment or hiring of employees.

The Competition Commission has identified the following practices between employers as being at risk of contravening the First Conduct Rule:

(1) Wage-fixing agreements: Employers that have an agreement on any element of compensation for employees are fixing the price of labour. The definition of compensation is not limited to salaries, but also other benefits and allowances that may be offered to employees.

(2) Non-poaching agreements: Employers that have an agreement in relation to the solicitation or hiring of each other's employees. An example given by the Competition Commission is an agreement between employers to refuse to hire each other's employees.

(3) Exchange of sensitive information: The sharing of competitively sensitive information between employers about their intentions regarding employees' compensation or hiring, be it reciprocal or unilateral, and whether done directly or through a third party.

In accordance with the Commission's guidelines, the term "agreement" is defined broadly and can include any arrangement, understanding, promise or undertaking, whether express or implied, written or oral, and whether or not enforceable or intended to be enforceable by legal proceedings.

Contravention of the First Conduct Rule could result in financial penalties (as high as 10% of the company's turnover for a maximum of three years), director disqualification orders, or other sanctions.

Practical considerations

To ensure compliance with the Competition Ordinance, employers should independently determine their hiring and compensation policies. Human Resources personnel should avoid communicating with other employers in this regard or coming to any form of an agreement or understanding that would restrict competition amongst the employers. They should also avoid sharing any kind of information as to their future intentions with respect to salaries and benefits. Information in relation to employment practices, compensation and benefits should be kept entirely confidential.

The Competition Commission encourages all parties to report suspected anti-competitive arrangements related to employment. 


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; and financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

› read more
› minimize

 

Howse Williams Bowers ("HWB"), a leading Hong Kong independent law firm, acted as the legal adviser to the sole sponsor and the underwriters in relation to the approximately HK$66.0 million share offer and listing of Elegance Commercial and Financial Printing Group Limited (Stock Code: 8391) ("Elegance") on GEM of the Stock Exchange. VBG Capital Limited acted as the sole sponsor while VBG Capital Limited and Quasar Securities Co., Limited acted as the joint lead managers. The shares commenced trading on GEM of the Hong Kong Stock Exchange on 11 May 2018.

Elegance is an established printing service provider which principally provides commercial printing and financial printing services in Hong Kong. It ranked second among commercial printing service providers in Hong Kong in terms of revenue for the year ended 31 March 2017.

The HWB team, led by partner Chia Ching Tan, had lead responsibility in the verification process, legal documentation, corporate and regulatory issues and general transaction management.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; intellectual property; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 
› read more
› minimize
News //
Submitted by // H Rogers, COO
02 May 2018


HWB is delighted to announce that Patricia Yeung and Eviana Leung became partners of the firm with effect from 1 May 2018.

Patricia Yeung: Patricia has focused on employment law since qualifying as a solicitor. Patricia advises employers and employees on all aspects of employment law, with an emphasis on contentious matters (particularly in the financial services sector). She is ranked by Legal 500 as a Next Generation Lawyer (2017) and by Chambers Asia as an Associate to Watch (2015-2017). Patricia is also listed in the Labour and Employment section of Who's Who Legal (2017-2018).


Patricia Yeung
T +852 2803 3748
F +852 2803 3608


Eviana Leung: Eviana has experience in both contentious and non-contentious maritime, commercial, contractual and international trade matters with a particular emphasis on marine policy coverage disputes. She acts for more than 10 marine liability insurers and is known within the marine insurance circle as a solution-driven lawyer who provides sound practical advice. 

Eviana Leung
T +852 2803 3687
F +852 2803 3608

 

Patricia and Eviana's promotion brings the total number of HWB partners to 25. The firm also has 4 senior consultants. Total headcount is approximately 180.

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; and financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 

› read more
› minimize
News //
Submitted by // K Bowers, Partner / Solicitor Advocate; P Yeung, Senior Associate
16 April 2018

 

With Great Power Comes Great Responsibility...

Background

A de facto director is someone who acts as a director of a company, but who has not been formally appointed as one. Acting as a director (despite not being appointed as one) comes with the responsibility of complying with various directors' duties, under both common law and Hong Kong legislation. These duties include acting in the best interests of the company, exercising care, skill and diligence in making decisions, avoiding conflicts of interest with the company, and not gaining any personal advantages or benefits by virtue of his/her position as a director.

In the recent case of South China Media Ltd and Others v Kwok, Yee Ning and Others [2018] HKCU 580, a senior employee was found to have acted as a de facto director of the plaintiff company as a result of her position and responsibilities within the company. Consequently, the employee was held to be in breach of the fiduciary duties which she owed to the company by diverting business opportunities away from the company and making unauthorised use of the company's resources.

South China Media Ltd and Others v Kwok, Yee Ning and Others

Kwok was employed by the second plaintiff, SCM Management, as its "advertising director". She was primarily responsible for a magazine published by the third plaintiff, Whiz Kids.

The Court held that although Kwok was not formally appointed as a director of Whiz Kids, she was a de facto director as she had assumed the powers and functions of a director. The Court applied the objective test by looking at what the individual had actually done to assess whether she had assumed the responsibilities of a director and disregarded the individual's personal motivation and belief. The Court placed emphasis on Kwok's authority to negotiate and enter into contracts with clients, as well as the fact that she was held out as a "director" to clients (given her title of "advertising director") in concluding that she had acted as a de facto director of Whiz Kids.

As a de facto director, Kwok owed fiduciary duties to Whiz Kids, which included a duty not to usurp or divert business opportunities to another person or company with whom she is associated. Kwok was found to have diverted business opportunities to a company controlled by her husband, by providing him with a copy of a draft contract which he had used to make a similar offer to a mutual target client on behalf of his company.

Kwok was also found to have breached her duties of loyalty and fidelity to the company by allowing unauthorised use of the Whiz Kids name and logo by her husband's company. As a result of this conduct, Kwok was found to have placed herself in a position of conflict, acted for the benefit of a third party without the informed consent of her principal, and failed to act with single-minded loyalty to Whiz Kids - all duties which are owed by a director to a company.

In addition to breaching her fiduciary duties, Kwok was also found to have breached her post-termination restrictive covenants. The Court rejected Kwok's argument that the non-solicitation and non-competition clauses that formed part of the terms of her employment were too unreasonable, too wide, or too restrictive. The restrictions ran for a period of 12 months from the date of termination of Kwok's employment and were held to be no greater than were reasonably necessary to protect the group's legitimate business interests.

Kwok's husband and his companies were also held liable for dishonest assistance and procuring Kwok's breach of contract. Kwok's husband was aware of Kwok's position and responsibility with regard to Whiz Kids and should have known that it would be unlawful for a senior employee of the company to divert business opportunities to a competitor. The Court held that at the very least, Kwok's husband "…closed his eyes and ears; and deliberately refrained from asking questions about Kwok's misconduct". Kwok's husband's knowledge was imputed to his company. The defendants were ordered to pay Whiz Kids equitable compensation and SCM Management damages with interest.

Comment

Senior employees (who are not formally appointed as a director of a company) should be aware of the risk of being liable as de facto directors once they assume the full responsibilities and authorities of a director.

Whilst there is no one definitive test for a de facto director, the Courts will consider the position, function, and responsibilities of an employee in making a determination. Liability cannot be avoided by demonstrating that the employee truly believed, in good faith, that he or she was not acting as a director. Employees should therefore ensure that their role and functions are clearly defined and should not deviate from this in practice. They should also refrain from holding themselves out to clients and other third parties as "directors".

Employers should also be aware of this risk, and make sure to clearly define the role and functions of each employee. They should also ascertain whether their directors and officers liability insurance policies cover shadow and de facto directors.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; and financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

› read more
› minimize