Key recent developments include:

Hong Kong has a common law legal system.

Apart from in certain narrow sectors (for example, broadcasting), 100% foreign ownership of a company is generally permitted, and there is no requirement as regards the nationality (or place of incorporation for corporations) of the shareholder. There are no restrictions on foreign shareholders (for example, there is no requirement that a shareholder be resident in Hong Kong) except in certain narrow circumstances.

Additional buyer's stamp duties have been imposed on purchasers of real estate in Hong Kong where such purchasers are not individual Hong Kong permanent residents.

Hong Kong gives effect to various United Nations sanctions. Dealings with the following countries / organisations are subject to regulations issued under the United Nations Sanctions Ordinance:

A complete list of sanctions and regulations is available on the Hong Kong e-Legislation website (see www.elegislation.gov.hk) by referring to the United Nations Sanctions Ordinance (Chapter 537) of the Laws of Hong Kong and its subsidiary regulations.

Funds from profit or capital accounts can be freely repatriated and remitted overseas, and there is no foreign exchange control. However, Hong Kong has stringent anti-money laundering legislation, largely derived from the UK model.

Hong Kong has an increasingly sophisticated and extensive system of targeted tax incentives, designed to attract foreign investment and focus the allocation of capital in certain areas that are regarded as strategic for the city's economy. Broad exemptions from profits tax are available to certain offshore collective investment schemes and private equity funds. There are also specific tax incentive codes for (among others):

Generally, the fiscal and tax administration regimes in Hong Kong are regarded as favourable to foreign investment (see Question 16 to Question 25).

A private limited liability company is probably the most common form of business vehicle used by foreign investors, for the following reasons:

The other common forms of business vehicle used in Hong Kong by foreign companies are:

A private company is incorporated and registered in Hong Kong by filing an incorporation form, together with the articles of association of the company, with the Companies Registry of Hong Kong (Companies Registry) and paying the prescribed incorporation fees.

After filing, the Companies Registry issues a certificate of incorporation certifying the name and the date of incorporation of the company. This process takes about four working days.

Further information about the incorporation of a private company in Hong Kong is available on the Companies Registry's website (www.cr.gov.hk/en/home/index.htm).

The Business Registration Ordinance also requires every person who carries on a business in Hong Kong to apply for business registration within one month of the date of commencement of the business.

A profit and loss account and a balance sheet for the company must be audited by Hong Kong registered auditors and laid before the shareholders at a general meeting within 18 months of incorporation, and then at least once every financial year, and also laid before the shareholders every calendar year, usually in the annual general meeting (AGM). Generally, Hong Kong private companies limited by shares are not required to file their accounts with the Companies Registry.

In addition, companies must file their annual returns with the Companies Registry at least once a year.

A company must also notify the Companies Registry of certain changes concerning the company, for example:

Apart from certain regulated companies (for example, banking, securities or insurance companies), there is no required minimum or maximum share capital.

Shares can be allotted for cash, services or other consideration such as the transfer of property. If a company's articles of association permit, shares can also be issued as redeemable shares.

A private company incorporated in Hong Kong is generally required to hold AGMs, unless the company is exempt from holding or not required to hold them, such as in the case of a single-member company or dormant company. "Annual" refers to a financial year rather than a calendar year.

An AGM of a private company must be held at least once within the nine-month period after the end of the accounting reference period to which the financial year relates. Shareholders are entitled to receive the annual audited accounts and directors' report, which must be presented before them at an AGM. A company can dispense with the holding of an AGM if certain conditions are met.

A private company must have at least one director who is a natural person (at least 18 years of age). Other directors of a private company can either be natural persons or corporations. There is no maximum number of directors. Companies listed on the Stock Exchange of Hong Kong (whether incorporated in Hong Kong or in other jurisdictions) are subject to more detailed requirements on the composition of their boards of directors, and checks and controls on the powers of directors and senior management in the interests of good corporate governance.

A company must also have a company secretary who ordinarily resides in Hong Kong (for natural persons) or has its registered office or a place of business in Hong Kong (for corporations). Company secretaries can be provided by law firms, company secretarial companies or professional firms.

There are no restrictions on foreign managers.

If a director does not comply with his duties he may be liable to civil or criminal proceedings and disqualified from acting as a director. The Companies Ordinance codifies directors' duties of care, which are based mainly on existing case law, and sets out a mixed objective and subjective test for meeting the standard of a director's duty to exercise reasonable care, skill and diligence. Civil consequences for breach of directors' duties remain uncodified.

A parent company is not liable for the debts of its subsidiary (except if it is possible to pierce the corporate veil in exceptional circumstances). Its legal liability is limited to the amount of any unpaid issued share capital.

The main legislation prescribing the minimum rights, benefits and protections for employers and employees in Hong Kong are the:

The parties cannot contract out of these Ordinances. The Ordinances cover all employees in Hong Kong, with limited exceptions. They generally also apply to expatriates working in Hong Kong and employees with an employment contract from Hong Kong who are working abroad.

The parties can choose the governing law of the employment contract, but it must have sufficient connection with the employment or it may be deemed to be an attempt to contract out of the Employment Ordinance. There is case law providing that if a foreign law is chosen, the benefits provided cannot be less than the minimum legal requirements under the equivalent Hong Kong law (that is, the employment benefits provided must be in line with those provided under Hong Kong law) (Cantor Fitzgerald Europe v Boyer [2012] HKCU 478).

Although not required, a written contract is usually entered into. In addition to the express terms which are included in writing in the contract or agreed verbally, a contract of employment also consists of a number of terms implied by legislation (which parties cannot exclude) or by common law (which parties may be able to vary or exclude by express agreement). For example, in the case of employees who fall within the scope of the Employment Ordinance, its mandatory provisions must be observed.

Depending on the particular industry or employer, there may also be trade unions that negotiate workplace agreements between employers and employees. However, if an employee wishes to be bound by such an agreement, he/she must make express provision in the employment contract to this effect.

Foreign employees must obtain a proper Hong Kong visa (for example, an employment, dependant or investment visa) to work in Hong Kong. To qualify for an employment visa, a person must possess skills, knowledge or experience relevant to the job that are unavailable locally. This test can generally be satisfied in the case of an intra-company or intra-group transfer. The applicant also needs to nominate a sponsor, which must be a Hong Kong company or a foreign company registered in Hong Kong. The sponsor is usually the employer company.

It normally takes six weeks for the application to be processed. The government charges a nominal fee for the visa if the application is approved.

There is no statutory provision covering management representation or the right of employees to be consulted regarding corporate transactions. However, if an employer has entered into an applicable industrial agreement with a trade union, then it should observe its consultation/management representation obligations (if any) under the relevant agreement.

Under Hong Kong law, it is unlawful for an employer to dismiss an:

It is also unlawful to dismiss an employee in contravention of any of the various ordinances on discrimination There are currently four different ordinances regulating discrimination in the areas of sex, race, disability, marital status, pregnancy, breastfeeding status and family status.

An employer can terminate an employee's employment at any time by giving notice or payment in lieu (unless prohibited for any of the reasons stated above). However, employers must ensure that employees are terminated only for valid reasons as set out in the Employment Ordinance, and that the minimum notice periods are observed.

In cases of serious misconduct, an employer may terminate an employee without notice or payment in lieu of notice (summary dismissal). However, if the summary dismissal was not justified, the termination will amount to wrongful termination and the employer will be liable to pay the employee their entitlements had they been lawfully terminated (that is, with notice).

The Employment Ordinance sets out a statutory regime governing an employer's obligations in situations of layoff and redundancy. Unless summarily dismissed for good cause, an employee is entitled to notice (or a specific payment in lieu of notice) in such situations.

In addition, employees who have been made redundant or who are laid off are entitled to severance pay if they have been employed for two years or more.

Hong Kong has a territorial system of taxation, which means that an employee is charged salaries tax in Hong Kong on income (which is deemed to include, among other things, bonuses, perquisites and employment-related securities) that arises in or is derived from Hong Kong - from an office, employment or pension. The tax residence of the employee is therefore of limited relevance in terms of domestic taxation.

Generally, if the employment is regarded as Hong Kong employment, all income derived from it is subject to salaries tax, even if some services are rendered outside Hong Kong. However, if the employment is regarded as non-Hong Kong employment, only income that is regarded as arising in or derived from Hong Kong is subject to salaries tax.

There is a general exemption from salaries tax where an employee is not in Hong Kong employment and visits Hong Kong for not more than 60 days in a given year of assessment.

Whether an employment is a Hong Kong employment depends on the specific employment contract, but is usually established by reference to the:

There is no general income tax in Hong Kong.

Salaries tax is broadly speaking charged at progressive rates of up to 17% or at a flat rate of 15%, whichever is lower.

An employee must make pension contributions under the Mandatory Provident Fund Schemes Ordinance. This requires employees to contribute 5% of their relevant income to a mandatory provident fund scheme (which is in effect a pension scheme). The current maximum monthly contribution required is HKD1,500. An employee can make additional voluntary contributions to the scheme. The employee is entitled to tax deductions for his mandatory contributions, subject to an annual cap.

The tax year runs from 1 April to 31 March in the following year. An employee is required to file a tax return at the beginning of each tax year in respect of his/her taxable income in the previous tax year. Salaries tax payments are generally made with reference to the final tax determined for the previous year of assessment, and provisional tax for the following year of assessment, which is computed on an estimated basis.

An employer is required to file an employer's return with the Inland Revenue Department for each employee that is subject to salaries tax:

An employer can be required to undertake additional reporting where certain material changes in an employee's conditions of employment have occurred.

An employer must make mandatory contributions under the Mandatory Provident Fund Schemes Ordinance at the same rate as the employee (see above, Employees). The employer also has the option of making voluntary contributions to the scheme. The employer can claim tax deductions for the mandatory and voluntary contributions made in respect of its employees, provided they do not exceed 15% of the employee's total emoluments.

Hong Kong has a territorial tax system. This means that in general a business vehicle is charged to profits tax if both of the following conditions are met:

Whether profits are Hong Kong-sourced is a practical matter of looking what the taxpayer has done to earn its profits and where it has done it, discounting antecedent or incidental matters. However, the case law governing the source of profits is complex and at times inconsistent. Therefore, each case will turn on its own facts.

Certain receipts are deemed to be chargeable to profits tax irrespective of their source. There is no general income tax on corporations or unincorporated businesses in Hong Kong. Partnerships and trustees are charged to profits tax on essentially the same basis as corporations and individuals.

Generally, the rate of profits tax is 16.5% for corporations and 15% for other taxpayers. This is charged on Hong Kong-sourced profits from a trade, profession or business carried on in Hong Kong, or sums that are deemed chargeable to profits tax by operation of statute. Capital gains are generally not taxable. Hong Kong has a two-tiered tax rate, which, subject to certain conditions, provides for reduced rates of profits tax on the first HKD2 million of taxable profits, currently set at 8.25% for corporations and 7.5% for other taxpayers. Broadly speaking, only one company in a corporate group can avail itself of the two-tiered profits tax rate. Concessionary tax rates are available for certain industries, such as aircraft leasing and corporate treasury centres resident in Hong Kong.

Property tax is charged at the rate of 15% on the assessable value of any land or buildings in Hong Kong. The net assessable value is the rent receivable less:

Companies carrying on a trade or business in Hong Kong can elect to be exempted from property tax and be subject instead to profits tax (see above).

Stamp duty is charged on the following instruments:

An exemption is available for transfers of immovable property or shares between associated companies. Generally, companies are associated if they have a 90% shareholding link, that is, one is the 90% beneficial owner of the issued share capital of the other, or both are 90% beneficially owned by the same third company.

Stamp duty relief is generally available on the transfer of property by virtue of a corporate merger or amalgamation, or on the distribution of property to beneficiaries under a trust.

Special stamp duty is charged on agreements for sale or conveyance on sale of residential property disposed of within 36 months from the date of acquisition by that seller/transferor. This is in addition to any other stamp duty chargeable on such agreements. The seller/transferor and buyer/transferee are jointly and severally liable to pay special stamp duty.

Special stamp duty is currently charged at the following rates on the higher of the transfer consideration or the property value:

Certain agreements for sale of residential property are not chargeable to special stamp duty, including:

Buyer's stamp duty is charged on agreements for sale or conveyance on the sale of residential property, in addition to any other stamp duty chargeable on such instruments, at 15% of the consideration payable or property value if higher, where the buyer is not a Hong Kong permanent resident. The buyer/transferee is liable to pay the buyer's stamp duty.

There is no withholding tax on dividends.

Generally, no tax is charged on dividends received.

There is no withholding tax on interest. Generally, interest paid is not taxable unless it accrues to or is received by a person in connection with a trade or business carried on in Hong Kong. There are certain exemptions, such as interest from bank deposits paid to corporations (other than financial institutions) and individuals. Concessionary rates of profits tax on interest income are available to income paid or payable on certain qualifying debt instruments, or accruing to or received by qualifying corporate treasury centres.

Generally, profits tax is chargeable on payments to non-Hong Kong residents for the use in Hong Kong of certain IP rights. The domestic withholding tax rate is 4.95% for corporations and 4.5% for unincorporated businesses on the gross amount of the IP royalties. Higher rates of 16.5% and 15% respectively apply to royalties derived from associated persons.

Hong Kong generally does not have any thin capitalisation rules. Entities in certain regulated industries are subject to regulatory capital requirements.

Hong Kong does not have a controlled foreign company regime. Certain intra-group arrangements (including the attribution of profits to different members of the same corporate group) can be subject to re-characterisation under general or specific anti-avoidance provisions and/or transfer pricing rules.

Hong Kong has a comprehensive transfer pricing regime based on OECD guidelines. Generally, transactions and arrangements between related parties are expected to be carried out on an arm's length basis. The Hong Kong Inland Revenue Department is empowered to review related party transactions and arrangements not made on an arm's length basis where such a transaction or arrangement gives rise to a tax advantage in Hong Kong. There are limited exemptions from the transfer pricing regime for certain wholly domestic transactions. Transfer pricing applies to profits tax, salaries tax and property tax, but not to stamp duty (see below).

Hong Kong is a free port; however, imports of the following items are taxed (the rate of taxation varies depending on the specific goods concerned):

Hong Kong does not impose export tax.

Hong Kong has comprehensive double tax treaties with Austria, Belarus, Belgium, Brunei, Cambodia, Canada, the Czech Republic, Estonia, Finland , France, Guernsey, Hungary, India, Indonesia, Ireland, Italy, Japan, Jersey, Kuwait, Latvia, Liechtenstein, Luxembourg, Macao (not yet in force), Mainland China, Malaysia, Malta, Mexico, the Netherlands, New Zealand, Pakistan, Portugal, Qatar, Romania, the Russian Federation, Saudi Arabia, South Africa, South Korea, Spain, Switzerland, Thailand, the UAE, the UK and Vietnam.

The Competition Ordinance introduced a cross-sector competition law regime that prohibits "undertakings" (defined as entities, including natural persons, engaging in an economic activity) from engaging in any conduct, including agreements, concerted and unilateral practices, and mergers, that adversely affect competition in Hong Kong.

The Competition Commission is the principal authority responsible for enforcing the Competition Ordinance through enforcement proceedings before the Competition Tribunal. The Communications Authority has concurrent jurisdiction in respect of anti-competitive conduct on the part of undertakings operating in the telecommunications and broadcasting sectors.

The First Conduct Rule of the Competition Ordinance prohibits an undertaking from making or giving effect to an agreement, engaging in a concerted practice, or as a member of an association of undertakings, making or giving effect to a decision of the association, if the object or effect of the agreement, concerted practice or decision is to prevent, restrict or distort competition in Hong Kong.

The Competition Ordinance identifies four specific types of conduct deemed serious anti-competitive conduct (SACC): agreements to fix or maintain prices, allocate customers or markets, restrict or control output and rig bids.

A violation of the First Conduct Rule involving SACC is subject to the full range of enforcement options provided under the Ordinance. In particular, no warning is required before legal proceedings can be brought against the infringing parties. With respect to other activities covered by the First Conduct Rule that do not involve SACC, the Competition Commission is required to issue warning notices to the infringing parties before instigating any legal proceedings.

The Second Conduct Rule of the Competition Ordinance prohibits an undertaking that has a substantial degree of market power in a market from abusing that power by engaging in conduct that has as its object or effect the prevention, restriction or distortion of competition in Hong Kong.

Factors to be considered in determining if an undertaking possesses substantial market power include but are not limited to:

The Competition Ordinance identifies two specific types of conduct that may constitute an abuse of market power:

The Competition Ordinance has extra-territorial reach in that it applies to activities conducted outside Hong Kong if they have the object or effect of preventing, restricting or distorting competition in Hong Kong.

The Competition Tribunal may impose a wide range of civil sanctions on an undertaking found to have contravened the First or Second Conduct Rule, including pecuniary penalties of up to 10% of the total turnover obtained in Hong Kong for each year of infringement, up to a maximum of three years. The Competition Tribunal may also impose sanctions on individuals, including pecuniary penalties for those found to have been involved in a contravention of the First or Second Conduct Rule, and disqualification for directors of up to five years. Criminal sanctions, including fines and imprisonment, are available for obstructing the Competition Commission in exercising its enforcement powers.

The Merger Rule of the Competition Ordinance prohibits mergers and acquisitions that have, or are likely to have, the effect of substantially lessening competition in Hong Kong. The application of the Merger Rule is currently limited to transactions involving a telecommunications carrier licence within the meaning of the Telecommunications Ordinance.

Notification under the merger control regime is voluntary. The Merger Rule applies to direct and indirect mergers and acquisitions and the creation of full-function joint ventures. Foreign-to-foreign transactions are captured by the merger control regime as long as the transaction involves a telecommunications carrier licence holder within the meaning of the Telecommunications Ordinance.

The Communications Authority will ordinarily take the role of the lead authority on matters which fall within its concurrent jurisdiction with the Competition Commission, pursuant to a memorandum of understanding signed between the two agencies.

Definition and legal requirements. A patent protects certain new products, substances, methods or processes. To obtain a patent, an invention must be:

Registration. Registration of a standard patent in Hong Kong has traditionally been based on the re-registration of a designated patent already granted in the UK, the European Patent Office (designating the UK) and the People's Republic of China (PRC). International applications under the Patent Co-operation Treaty covering those countries also qualify.

Alternatively, an applicant can apply for a short-term patent (for products or processes that only have a short commercial life).

Under changes introduced by the Patents (Amendment) Ordinance 2016 and Patents (General) (Amendment) Rules 2019 which came into force on 19 December 2019, Hong Kong now has an "original grant" patent (OGP) system for direct filing of standard patent applications in Hong Kong

The existing system for re-registration of Chinese, UK and European patents in Hong Kong and the short-term patent system will be maintained and will run in parallel with the OGP.

Standard patents applied for under the new OGP system and the existing "re-registration" systems are referred to as standard patents (O) and standard patents (R) respectively.

Standard patent (R) process. The existing re-registration process of a standard patent (R) is a two-stage process:

Standard patent (O) process. Under the OGP system for standard patents (O), it will be possible to file a standard originating patent application directly with the Hong Kong Registrar, either with a claim to priority, or as a first filing, obviating the need for a foreign designated patent application.

A standard originating patent application will be subjected to a substantive examination by local patent examiners in Hong Kong (supervised by the Chinese State Intellectual Property Office) before it will be allowed to proceed to grant. The resulting patent should carry a similar presumption of validity as a corresponding standard patent under the re-registration system.

Short-term patent process. This system will also see important changes. It will still be possible for a short-term patent to claim priority from an earlier filed patent application, or be filed as a stand-alone patent application, without a priority claim. The application can be for the same subject matter as for a standard patent and the requirements for novelty and inventive step will be the same.

However, the new law introduces a post-grant substantive examination procedure that enables either the proprietor of a short-term patent, or a third party having a legitimate interest, to request the Registrar to conduct a substantive examination of the patent. The result of this procedure will be the issuance of a certificate of substantive examination confirming the validity of the patent (including any requested amendments), or the patent may be revoked if it is found to be invalid.

A request for substantive examination, or a certificate of substantive examination, is now a requirement for commencing enforcement proceedings in respect of a short-term patent before the court. The introduction of this substantive examination procedure will facilitate challenging the validity of a short-term patent by third parties and should help to ensure that only short-term patents with a high presumption of validity are the subject of litigation.

The short-term patent system will also be amended to permit a second independent claim. This should enable applicants to obtain more than one species of claim, such as a product claim and a method claim.

Other key changes include:

Enforcement and remedies. A patent allows the patent owner to stop others from using a patented process or using, manufacturing or selling the patented invention without the owner's consent. The remedies available for patent infringement are the same as for trade mark infringement (see below, Trade marks), except that the patent owner can also ask for a declaration that the patent is valid and has been infringed.

Length of protection. A short-term patent confers a maximum term of eight years' protection. Standard patents (O and R) confer a maximum term of 20 years from the filing date. However, if a designated patent is revoked on substantive grounds, then the Hong Kong standard patent must be similarly revoked within the prescribed period.

Patent reform. See above.

Further information about patent registration is set out on the website of the Intellectual Property Department (www.ipd.gov.hk/eng/patents.htm).

Definition and legal requirements. To be registered as a trade mark, a sign must:

A trade mark can consist of words, personal names, designs, letters, characters, numerals or any combination of these (distinctiveness is a key requirement for registration). Sounds, smells or the shape of goods or their packaging can be trade marks.

Protection. An application to register a trade mark is filed at the Hong Kong Trade Marks Registry. Registration of a mark is not essential, but it is generally advisable to make enforcement easier.

Further information about trade mark registration is set out on the website of the Intellectual Property Department (www.ipd.gov.hk/eng/trademarks.htm).

Enforcement and remedies. The owner of a trade mark registration can prevent unauthorised use of a mark that is identical or similar to the registered mark in relation to the same or similar goods or services covered by the registration. The main remedies available for trade mark infringement are:

If the trade mark is not registered, a trade mark owner may still be able to bring a passing off action to prevent third parties from using a conflicting mark if the trade mark owner has built up a reputation and goodwill in r the mark.

Length of protection and renewability. A trade mark registration is valid from the date of application for ten years. Registration can be renewed indefinitely for successive ten-year periods.

Trade mark law reform. The WIPO Protocol relating to the Madrid Agreement Concerning the International Registration of Marks 1989 (Madrid Protocol) is an international arrangement which seeks to facilitate the registration and management of trade marks in different jurisdictions. The arrangement allows trade mark owners to apply for registration in one or more Madrid Protocol member countries or territories by filing a single application and paying one set of fees. Hong Kong is not a member of the Madrid System, although China has been a contracting party since 1995. Following the return of sovereignty over Hong Kong to China in 1997, China gave notice to WIPO that the extension of the Madrid System to the Hong Kong Special Administrative Region would be deferred pending a study and until further notice. Following a consultation at the end of 2014, the Hong Kong Government has announced that it is proceeding with plans to adopt the Madrid Protocol in Hong Kong. The full implementation of the Madrid Protocol in Hong Kong is not expected until 2022 at the earliest, as the Government needs to amend the current legislation and make changes to the IT infrastructure of the Intellectual Property Department.

Definition. A registered design protects the outward visual appearance of a product applied to an article by an industrial process.

To be registered, the design must:

Registration. Applications are filed with the Hong Kong Designs Registry and only undergo a formalities examination before registration. Substantive requirements such as novelty are not considered before grant. A design registration may be challenged if third parties can find the same or similar designs in the public domain before the application date.

Further information about design registration is set out on the website of the Intellectual Property Department (www.ipd.gov.hk/eng/designs.htm).

Enforcement and remedies. The owner of a design registration can prevent the unauthorised manufacture, import, use, sale or hiring of items that look the same as the registered design in Hong Kong. In deciding whether there has been infringement, consideration must be given to whether the substance of the registered design has been taken. The remedies available are the same as for trade marks (see above, Trade marks).

Length of protection and renewability. A design registration is valid for an initial period of five years from the date of filing of the application. On the payment of renewal fees, the registration can be renewed for four further periods of five years, totalling 25 years.

Definition and legal requirements. For unregistered designs, copyright protection is often available as an artistic work, provided the requirements for copyright protection are met (see below, Copyright).

Enforcement and remedies. See below, Copyright.

Length of protection. See below, Copyright.

Definition and legal requirements. Copyright arises automatically when an original work is created and fixed in a material form, and can subsist in:

Protection. It is not necessary or possible to register a copyright work in Hong Kong. However, for copyright to be enforced it is important to show all of the following:

Copyright protection for designs. Copyright protects a registered design for 25 years. It starts from the end of the calendar year in which the articles incorporating the registered design are first marketed, but only if the design has been registered in Hong Kong.

If the design is unregistered, copyright is available for 15 years, starting from the end of the calendar year in which the articles incorporating the unregistered design are first marketed.

Copyright exists automatically at the time of creation of the artistic design drawing.

Enforcement and remedies. Protection for a copyright owner varies according to the type of copyright work. In general, protection is available against acts of:

Such acts can attract both civil and criminal liability.

Hong Kong has wide-ranging and complex provisions for criminal enforcement of copyright, which carry personal criminal liability for directors and partners. The offences include a business end-user offence of possessing an infringing copy of a computer program, film, television drama, or musical sound or visual recording, with a view to its being used in the business.

There are also controversial provisions concerning the copying and distribution of certain printed materials in the course of business. The offence applies only to books, magazines, periodicals and newspapers. It is subject to certain safe harbours, which are prescribed numeric limits for the number of copies that can be made without incurring criminal liability. The formula for calculating the safe harbours is complex.

Criminal penalties for copyright infringement include up to four years' imprisonment and a fine of HKD50,000 per infringing copy, or a fine of HKD500,000 and imprisonment for eight years, depending on the offence.

Length of protection and renewability. The general rule is that copyright lasts for the life of the author plus 50 years. There are variations depending on the type of work.

Copyright reform. Copyright law in Hong Kong has been under review since 2006, when amendments to improve protection in the digital environment were first proposed. The intention was to introduce a technology-neutral electronic communication right for copyright owners and safe harbour provisions for online service providers. A Bill was proposed in 2011 but was not passed due to concern over the legal position relating to parody works and fears that the new law would be a threat to freedom of expression. The Government introduced a new amendment Bill in 2014, taking into account the results of a public consultation on the introduction of a parody exception under copyright law. The Bill proposed to:

However, the Bill has now been shelved indefinitely and it is unclear when the proposed amendments to the law will be introduced.

Passing off is a common law action available to protect a wide range of rights, including trade marks (registered or unregistered), trade names and product or packaging designs, from misrepresentation. The prerequisites for a successful claim are goodwill, misrepresentation and damage. The remedies available are similar to those for trade mark infringement (see above, Question 28).

There are currently no specific laws in force regulating agency, distribution or franchising arrangements in Hong Kong.

See above, Agency.

See above, Agency.

The Electronic Transactions Ordinance provides a legal framework for the conduct of electronic transactions, and grants recognition to contracts in digital form and digital signatures provided they have been issued by a recognised certification authority.

The Unsolicited Electronic Messages Ordinance regulates the sending of unsolicited commercial electronic messages linked to Hong Kong. It is aimed at stopping spam e-mails, text messages, pre-recorded calls and so on that emanate from businesses advertising, promoting or sponsoring goods or services. Criminal liability applies to certain illicit or fraudulent activities. However, person-to-person telemarketing calls are not prohibited.

Advertising in Hong Kong is regulated by the common law, intellectual property laws and consumer protection laws. In addition, certain business sectors are regulated by specific ordinances, regulations and industry codes of practice, including the advertising industry.

Advertising is subject to regulation by the law on misrepresentation, where a party makes a false statement of fact to another party with the object of inducing them into a contract or a legally binding transaction.

A party may be liable for the tort of deceit if it makes a false statement (knowing it to be untrue, or being reckless as to its accuracy), intending another party to act in reliance of it, and the other party does rely on it and suffers loss.

Advertisers must also be aware of the potential legal risks under defamation or malicious falsehood laws if an advertisement contains any material that may be regarded as damaging to the reputation of another.

Trade marks and copyright in Hong Kong are protected under the Copyright Ordinance (Chapter 528 of the Laws of Hong Kong) (CO) and the Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) (TMO) as well as the common law tort of passing off.

Copyright Ordinance. Acts of copyright infringement are defined in the CO and include the following offences that may be relevant to advertising:

Trade Marks Ordinance. Under the TMO, a trade mark owner will be entitled to prevent other traders from using a mark which is identical or similar to their registered mark, in relation to goods or services that are the same as, or similar to, those covered by the registration (where, in the case of a similar mark or goods/services, such use results in a likelihood of confusion), without their consent.

There are certain exceptions to trade mark infringement under the TMO. These include use for the purpose of identifying a competitor's goods or services, provided such use is in accordance with honest practice in industrial and commercial matters.

The common law tort of passing off can be used to protect both registered and unregistered trade marks, trade names, an individual's name or reputation, and the design or look of a product, including its packaging. To establish passing off, it is necessary for the claimant to show that it has a reputation in Hong Kong and a misrepresentation has been made by the defendant causing confusion, resulting in damage or the likelihood of damage to the business or reputation of the claimant.

The main piece of legislation is the Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) (TDO) which prohibits false and misleading trade descriptions of goods, including in advertising. An amendment to the law came into force on 19 July 2013 and extended the application of the TDO. It created new offences relating to advertising, including:

The Unconscionable Contracts Ordinance (Chapter 458 of the Laws of Hong Kong) protects consumers by allowing a court to refuse to enforce, revise, or limit the application of a contract found to be unconscionable, provided at least one of the contracting parties is a consumer. In determining whether a contract is unconscionable, the court can consider certain matters, including whether unfair tactics have been used (which may cover misleading advertising).

Certain industries or products may be subject to specific ordinances or regulations, such as the:

Certain business sectors have formulated their own codes of practice, such as the beauty and pharmaceutical industries in Hong Kong.

There are also numerous codes of practice which specifically regulate or recommend best practice regarding the contents of advertisements in Hong Kong. These include the:

The Association of Accredited Advertising Agents of Hong Kong has its own code of practice to regulate the conduct of its members in advertising. Any member found in contravention or non-compliance with the standards will be penalised in accordance with the relevant rules of the association.

The Personal Data (Privacy) Ordinance (PDPO) sets out the legal principles applicable to the collection of personal data and the processing and retention of such data. There are six main legal principles that a data user must comply with:

As a result of amendments to the PDPO, there is now also a much tighter regime in respect of the use of personal data for direct marketing and transfer of data (see Question 1).

The Consumer Goods Safety Ordinance (CGSO) imposes a duty on manufacturers, importers and suppliers of certain consumer goods to ensure that the goods they supply, and the packaging in which the goods are supplied, are reasonably safe, and that safety warnings are attached to certain goods. Those contravening the CGSO face criminal penalties.

The Sale of Goods Ordinance provides, inter alia, implied conditions that:

There are other ordinances dealing with (among other things), liability relating to specific products, for example the:

Hong Kong does not have a separate cause of action for product liability. A person suffering injury from an unsafe or defective product can claim against the retailer under contract law, or sue the manufacturer or seller for negligence.