1 Hogan Lovells
Hong Kong Corporate and Regulatory Insights
January 2021
Contents
Equity Capital Markets 3
• The Stock Exchange of Hong Kong Limited (SEHK) publishes results of latest review of issuers' annual report disclosure.
• SEHK publishes revised Listing e-Forms and guidelines for Main Board and GEM issuers and new applicants.
• The Listing Committee of SEHK (Listing Committee) takes disciplinary action against Sandmartin International Holdings Limited (Stock Code: 482) and eight of its current and former directors for breaches.
• SEHK publishes Listing Newsletter.
• The Listing Committee criticizes Xinming China Holdings Limited (Stock Code: 2699) and its executive director Mr. Chen Cheng Shou for breaches.
Financial Services Regulation 8
• Inland Revenue (Amendement) (Tax Concessions for Carried Interest) Bill 2021 gazetted.
• Report on "AML/CFT Regtech: Case Studies and Insights."
• Mutual recognition of funds (MRF) between Thailand and Hong Kong.
• Consultation conclusions on the Insurance (Special Purpose Business) Rules.
• Profits tax concessions for insurance-related businesses to commence on 19 March 2021.
• Revised form for application for approval to become an Executive Officer of a Registered Institution under section 71C of the Banking Ordinance (Cap. 155).
• Prescribed scenarios for long term insurance business in relation to Guideline on Enterprise Risk Management (GL21).
• Self-assessment of compliance with the Code of Banking Practice 2020.
• Applications for new insurance intermediaries licenses by deemed licensees.
• The Process Review Panel in relation to the regulation of Mandatory Provident Fund Intermediaries publishes 2020 Annual Report.
Data Protection 133
• Privacy Commissioner urges users to carefully consider new terms of use in instant messaging apps.
Hogan Lovells
Hong Kong Corporate and Regulatory Insights January 2021 2
• Privacy Commissioner reports on work of the Privacy Commissioner for Personal Data in 2020.
Contacts 15
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Equity Capital Markets
The Stock Exchange of Hong Kong such needs in a timely manner. Where Limited (SEHK) publishes results of there are material changes in the reporting items, issuers should develop appropriate latest review of issuers' annual report and supportable estimates for these items, disclosure document key judgments made, and consider retaining experts if necessary. SEHK published a report on the findings and They should also engage in early recommendations from its annual review of discussions with their auditors and agree in issuers' annual reports for the financial years advance the timing, form, and approach of ending between 1 January and 31 December the assessment of these estimates as early 2019. as practicable. As part of its strategic technology-empowered • Continuing connected transactions – initiatives, SEHK has recently introduced Independent nonexecutive directors artificial intelligence, including machine (INEDs) play an important role in learning, pattern recognition, and natural providing checks and balances over the learning processing, to assist in reviewing issuers' corporate affairs, business issuers' annual reports and their compliance operations and transactions, and in with the Rules Governing the Listing of particular, in the monitoring of continuing Securities on the Stock Exchange of Hong Kong connected transactions (CCTs). Issuers Limited (Listing Rules) governing annual should have in place appropriate internal report disclosure vetting. controls and mechanisms to monitor and SEHK has made the following assist INEDs in overseeing their CCTs, and recommendations to issuers: their INEDs should review the appropriateness of these internal control • Disclosure on the impact of the procedures. COVID-19 pandemic in issuers' business review and Management • Material intangible assets – Issuers Discussion and Analysis (MD&A) should perform proper analysis and section – Issuers should disclose in their carefully consider the impact of the next annual reports (i) the effect of the COVID-19 pandemic on impairment tests COVID-19 pandemic on their operations, and update the assumptions used to reflect and the relevant risks or uncertainties that the latest available information and will materially affect their future evidence. performance; (ii) quantitative measures of • Material level three financial assets – the financial or operational impact of the Issuers should develop robust disclosure on COVID-19 pandemic; (iii) assessments of level three fair value measurements, in the liquidity positions and working capital particular providing the qualitative and sufficiency with reference to their quantitative information to the extent operations and capital commitments; and necessary for an understanding of the (iv) measures to manage the impact of the valuation techniques and the underlying COVID-19 pandemic. unobservable inputs. • Financial statements with auditors' Click here to view the report. modified opinion – Issuers should continuously review their liquidity HKEx, 29 January 2021 positions and funding needs, and formulate and implement action plans to address
Hong Kong Corporate and Regulatory Insights January 2021 4
and SEHK publishes revised Listing e- Acknowledgem ent Forms and guidelines for Main Board DU004G Director's ✓ ✓ Declaration, Undertaking and Growth Enterprise Market (GEM) and Acknowledgem issuers and new applicants ent (PRC issuer) DU005G Supervisor's ✓ ✓ The revised Listing e-Forms for Main Board declaration, undertaking issuers (MB), GEM issuers (GEM), and new and acknowledgem applicants (NA) are as follows: ent in respect of an issuer Content MB GEM NA incorporated e-Forms in the PRC CF006 Size Tests for ✓ ✓ FF004 (see above) ✓ ✓ ✓ Notifiable FF201G Application ✓ Transactions Form – Equity and Connected Securities (of Transactions an issuer part of whose share FF004 Contact details ✓ ✓ ✓ capital is form for already listed) Director/ FFD001M Formal ✓ Supervisor/ Application Authorised (for Equity Representative Securities) s/ Company Secretary/ Compliance Officer HKEx, 23 January 2021 SE001 Sponsor ✓ Engagement Notification The Listing Committee of SEHK M103 Main Board – ✓ IPO – Form A1 – Listing (Listing Committee) takes disciplinary Application Form (for action against Sandmartin Equity Securities & Debt International Holdings Limited (stock Securities) G103 GEM Board – ✓ code: 482) and eight of its current and IPO – Form 5A – Listing former directors for breaches Application Form (Equity Securities of an The Listing Committee censures: issuer no part of whose share capital is Company already listed) Guidelines M103 (see above) ✓ • Sandmartin International Holdings G103 (see above) ✓ CF006 (see above) ✓ ✓ Limited (Company) for failing to announce CF093 Trading ✓ ✓ Arrangement a connected transaction in a timely manner Form pursuant to Rules 14.34, and 14A.35 of the DU003M Declaration ✓ ✓ and Listing Rules, and for disclosing inaccurate, Undertaking with regard to incomplete, misleading, and/or deceptive Directors DU004M Declaration ✓ ✓ information in announcements and and Undertaking circulars pursuant to Rule 2.12(2) of the with regard to Directors of an Listing Rules. issuer incorporated in the PRC Relevant Directors DU005M Declaration ✓ ✓ and Undertaking • Mr. Hung Tsung Chin (Mr. Hung), with regard to Supervisors of executive director (ED) of the Company, an issuer incorporated and Ms. Chen Mei Huei (Ms. Chen), former in the PRC DU003G Director's ✓ ✓ ED of the Company, for failing to (i) fulfill Declaration, Undertaking their fiduciary duties expected of them of
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their knowledge and experience and MyHD holding their office within the Company under Rule 3.08(f) of the Listing Rules, and MyHD is owned by a friend and business (ii) comply to the best of their abilities with associate of Mr. Hung and Ms. Chen. The the Listing Rules, and (iii) use their best Company acquired MyHD and made a series of endeavors to procure the Company's loans to MyHD. MyHD became a 51 percent compliance with the Listing Rules owned subsidiary of the Company when certain pursuant to their Declaration and loans were capitalized. However, the Company Undertaking with regard to Directors failed to announce the acquisition, which is a (Undertaking). connected transaction, in a timely manner.
• Mr. Liao Wen I Tiger (Mr. Liao), former ED Emiratinvest of the Company, for failing to (i) cooperate Emiratinvest is solely owned by a former non- with SEHK's investigation and (ii) use his executive director of the Company, who is also best endeavors to procure the Company's a sibling of the owner of MyHD. Emiratinvest compliance with the Listing Rules pursuant became a connected person of the Company to his Undertaking. when MyHD became a subsidiary of the And criticizes: Company, due to the sibling relationship between the owners. The Company made a • Mr. Frank Karl-Jeinz Fischer (Mr. Fischer), series of loans to Emiratinvest but failed to former ED of the Company, for failing to (i) announce the loans in a timely manner. use his best endeavors to procure the Company's compliance with the Listing In addition, Emiratinvest owns 80 percent of Rules in respect of independent third party Simple Media Network Pvt Ltd. (Simple disclosures and (ii) ensure that the Media). Mr. Hung's son and daughter-in-law Company had adequate and effective were directors of Simple Media, which also internal control pursuant to his makes Simple Media a connected party to the Undertaking. Company.
• Mr. Chen Wei Chun (Mr. Chen), ED of the The Company disclosed in subsequent Company, Mr. Wu Chia Ming (Mr. Wu), announcements that (a) "to the best knowledge independent non-executive director of the Company, [Emiratinvest] is not related (INED) of the Company, Mr. Han Chien to [MyHD]"and (b) "Emiratinvest is an Shan (Mr. Han), former INED of the independent third party not connected with the Company, and Mr. Lee Chien Kuo Thomas Group." The Company further disclosed in a (Mr. Lee), former INED of the Company, circular in respect of expected sales that "as for failing to use their best endeavors to advised by the management of Emiratinvest, ensure that the Company had adequate and Simple Media plans to place order of 55,000 effective internal control pursuant to their units to 80,000 units of set-top-box in the sum Undertakings. of US$1.1 million to US$1.6 million from the Group in the second half of 2017." This case involves the Company's relationship and transactions with MyHD Media FZ LLC Such disclosures were inaccurate because Mr. (MyHD) and Emiratinvest Limited Hung and Ms. Chen were aware of the sibling (Emiratinvest). relationship between the owners of MrHD and Emiratinvest. Mr. Hung, Ms. Chen, and Mr. Fischer were also aware of the positions held by Mr. Hung's son and daughter-in-law within
Hong Kong Corporate and Regulatory Insights January 2021 6
Simple Media. Mr. Hung, Ms. Chen, and Mr. • Mr. Hung, Mr. Chen, and Mr. Wu to attend Fischer failed to appreciate the importance of 26 hours of training on regulatory and legal such relationships with connected party topics including Listing Rule compliance implications, and failed to report such and directors' duties. relationships to the Company. • As a prerequisite of any future Further, Mr. Hung and Ms. Chen failed to appointments as director of any listed ensure that certain figures relating to expected company, Ms. Chen, Mr. Fischer, Mr. Han, sales used in the circular were accurate and up- and Mr. Lee to attend 26 hours of training to-date. They were both aware that no set-top on regulatory and legal topics including boxes had been sold by the Company to Simple Listing Rule compliance and directors' Media in 2016 or in 2017 and that the expected duties. figure of 55,000 to 80,000 units had been provided by Emiratinvest six months before Click here to view the statement of disciplinary the publication of the circular. The Company action. actually only sold 100 units of set-top boxes to HKEx, 22 January 2021 Simple Media for the whole of 2017. SEHK publishes Listing Newsletter As a result, Mr. Hung and Ms. Chen failed to discharge their directors' duties and SEHK published the second issue of the Listing Undertakings to comply with the Listing Rules Newsletter (Newsletter). The Newsletter covers to the best of their ability. Mr. Hung, Ms. Chen, various topics, including SEHK's efforts in and Mr. Fischer failed to use their best digitalizing the initial public offering endeavors to procure the Company's settlement process (such as e-listing forms and compliance with the Listing Rules. new listing subscriptions through electronic channels only), market consultation to raise The Listing Committee also found that the the profit requirement for entry into the Main Relevant Directors failed to take an active role Board, and the implementation of artificial in implementing, reviewing, and monitoring intelligence to review disclosures in issuers' the effectiveness of the Company's internal annual reports. control procedures and placed excessive reliance upon the company secretary for Click here to view the Newsletter. Listing Rule compliance. HKEx, 14 January 2021 Directors are expected to be familiar with the connected transactions provisions of the The Listing Committee criticizes Listing Rules, including the identification of Xinming China Holdings Limited (stock connected parties. These rules are designed to code: 2699) and its executive director protect the investing public, safeguard minority shareholders, and to dispel any Mr. Chen Cheng Shou for breaches conflict or perception of conflict in respect of The Listing Committee criticizes: transactions entered into by the Company. • Xinming China Holdings Limited The Listing Committee further directed: (Company) for failing to comply with the • The Company to retain an independent announcement, reporting, circular, and professional adviser to review and make shareholders' approval requirements recommendations to improve the applicable to a major transaction carried Company's internal controls. out by its subsidiary pursuant to Rules
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14.34, 14.38A, 14.40 and 14.41 of the Listing Rules.
• Mr. Chen Cheng Shou (Mr. Chen), executive director, chairman, and chief executive officer of the Company, for failing to fulfil his fiduciary duties expected of him of his knowledge and experience and holding his office within the Company under Rule 3.08(f) of the Listing Rules, and failing to comply to the best of his ability with the Listing Rules and to use his best endeavors to procure the Company's compliance with the Listing Rules pursuant to his Declaration and Undertaking with regard to Directors.
This case involves Mr. Chen, on behalf of a subsidiary of the Company, entering into a guarantee agreement with an independent third party. Following the guarantee agreement, Mr. Chen on behalf of the relevant subsidiary entered into seven pledge contracts with a bank to facilitate the independent third party's application for a letter of credit. By reason of the failure of the independent third party to settle the payments as agreed, the pledge contracts were terminated. The pledge contracts constituted a major transaction.
Mr. Chen entered into the pledge contracts without notification to or authority form the board of directors of the Company. He did not take steps to ensure the Company would comply with the applicable procedural requirements under the Listing Rules after the pledge contracts were entered into. Further, the pledge contracts exposed the Company to substantial financial risk and Mr. Chen did not take adequate steps to safeguard the assets of the relevant subsidiary that were pledged.
Click here to view the statement of disciplinary action.
HKEx, 8 January 2021
Hong Kong Corporate and Regulatory Insights January 2021 8
Financial Services Regulation
Inland Revenue (Amendment) (Tax banking sector. The report comprises examples Concessions for Carried Interest) Bill of how banks of different sizes and business scopes used AML/CFT Regtech, and aims to 2021 (the Bill) gazetted help identify an adoption process that is The Bill was published in the Gazette on 29 applicable to the particular circumstances of an January 2021. The purpose of the Bill is to institution. amend the Inland Revenue Ordinance (Cap. Stored Value Facility (SVF) licensees and 112) to provide tax concessions for carried Authorised Institutions (AIs) are encouraged interest distributed by eligible private equity to study the report and draw insights from the (PE) funds which operate in Hong Kong. use of AML/CFT Regtech as a way to enhance According to the Financial Services and effectiveness and efficiency in light of evolving Treasury Bureau (FSTB), the proposed tax risks, and to develop appropriate approaches to concessions for carried interest in the Bill are the wider use of technology in their conduct of expected to attract more PE funds to operate business and risk management. and be managed in Hong Kong, and at the same Click here to view the HKMA circular to SVF time to boost more investment management licensees and here to view the HKMA circular and related activities which will create business to AIs. opportunities in relation to professional services. Click here to view the report.
Broadly speaking, carried interest refers to a HKMA, 21 January 2021 return linked to the performance of an investment of a PE fund, typically upon the Mutual recognition of funds (MRF) disposal of the investment after it has been held between Thailand and Hong Kong for a period of time. For tax concessions under the Bill to apply, qualifying carried interest The Securities and Futures Commission (SFC) recipients must provide investment and the Securities and Exchange Commission management services in Hong Kong and fulfill of Thailand entered into the Memorandum of substantial activities requirements, and carried Understanding concerning Mutual interest must arise from eligible transactions in Recognition of Covered Funds and Covered private companies and be distributed by a fund Management Companies and related certified by the Hong Kong Monetary Authority cooperation (MOU) on 20 January 2021, which (HKMA) or the Innovation and Technology is subject to amendment from time to time. The Venture Fund Corporation set up by the MOU allows eligible Hong Kong and Thai government. public funds to be distributed in each other's market through a streamlined process. Click here to view the FSTB news. The MOU establishes a framework for FSTB, 29 January 2021 exchange of information, regular dialogue, as well as regulatory cooperation in relation to the Report on "AML/CFT Regtech: Case cross-border offering of eligible Hong Kong Studies and Insights" and Thai funds. The two regulators have also agreed to expedite the approval process of local The HKMA issued a report that promotes feeder funds which invest in MRF-eligible Thai regulatory technology (Regtech) adoption in or Hong Kong master funds and to clarify how the anti-money laundering and counter- they may be operated in a streamlined manner. financing of terrorism (AML/CFT) area in the
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The cooperation arrangements set out in the IA, 19 January 2021; FSTB, 15 January 2021 MOU have already come into effect since 20 January 2021, except for the mutual Profits tax concessions for insurance- recognition of funds scheme which is expected related businesses to commence on 19 to be implemented within six to twelve months March 2021 from 20 January 2021. The Inland Revenue (Amendment) (Profits Tax Click here to view the SFC circular and here to Concessions for Insurance-related Business) view the annex to the circular. Ordinance 2020 (the Ordinance), which was SFC, 20 January 2021 enacted in July 2020, reduces the profits tax rate by 50 percent for all general reinsurance Consultation conclusions on the business of direct insurers, selected general Insurance (Special Purpose Business) insurance business of direct insurers, and selected insurance brokerage business. For the Rules (SPB Rules) purpose of effecting the profits tax concessions, the government gazetted the following The Insurance Authority (IA) published subsidiary legislations on 15 January 2021: consultation conclusions on the draft SPB Rules in respect of restrictions on the sale of • The Inland Revenue (Amendment) insurance-linked securities (ILS) issued in (Profits Tax Concessions for Insurance- Hong Kong. related Businesses) Ordinance 2020 (Commencement) Notice, which The draft SPB Rules impose restrictions on the appoints 19 March 2021 to be the date sale of ILS, which are useful and effective risk for the ordinance to become effective. management tools that enable insurers and reinsurers to offload insured risks to the capital • The Inland Revenue (Profits Tax markets by way of securitization but unsuitable Concessions for Insurance-related for ordinary retail investors. The said Businesses) (Threshold Requirements) restrictions include the requirement to spell Notice, which prescribes threshold out the scope of eligible ILS investors, a requirements for determining whether minimum investment sum, and penalties for the relevant activities of the specified contraventions of sales restrictions. insurance-related business are, or are arranged to be, conducted in Hong Respondents of the public consultation were Kong. generally supportive of the draft SPB Rules but proposed a lower minimum investment sum to Click here to view the FSTB news. facilitate market development, maintain liquidity in the secondary market, and make FSTB, 15 January 2021 Hong Kong a competitive ILS domicile. Considering the response received, the IA Revised form for application for proposes to change the threshold to approval to become an Executive US$250,000. Officer (EO) of a Registered Institution Click here to view the IA circular, here to view under section 71C of the Banking the consultation conclusions, and here to view Ordinance (Cap. 155) the consultation paper. The HKMA has recently revised the application Click here to view the FSTB news. form and supplemental forms (collectively,
Hong Kong Corporate and Regulatory Insights January 2021 10
Application Form) for consent to become an the next ORSA Report and may revise some of EO of a Registered Institution with a view to the scenarios in the future having regard to enhance the efficiency of the application market conditions. process. The Prescribed Scenarios are designed for a The information requested in the revised long term insurer to consider in its ORSA Application Form remains largely the same as Report the risk to its capital position of those in the old form. Major changes include: multiple severe events or stresses happening at the same time, and the management actions it • A new feature that requests applicants would take in such extreme events or stresses. to indicate their acceptance of certain The IA may request insurers to test scenarios in standard condition(s) which would be addition to the Prescribed Scenarios. Details of attached to a consent being applied for the Prescribed Scenarios, namely the market where given circumstances apply. risk scenario, life insurance risk scenario, market risk with life insurance risk scenario • A new requirement for applicants who and compound scenario, together with the intend to apply for conditional reporting and other relevant requirements, are exemption(s) from taking relevant local set out in the appendix to the circular. regulatory framework paper(s) under paragraph 10 of Appendix E to the Click here to view the IA circular and here to "Guidelines on Competence" issued by view the appendix to the circular. the SFC to enclose a letter of undertaking. IA, 11 January 2021 The HKMA also reminded AIs to provide Self-assessment of compliance with complete, relevant, and accurate information, the Code of Banking Practice 2020 and specifically to refer to the relevant SFC guidelines and statutes when completing the (Code) Application Form. The HKMA will continue to The HKMA published a circular on 11 January accept the old form until 11 February 2021, 2021 to remind AIs to submit electronically the after which any application will have to be annual self-assessment of compliance with the made with the Application Form. Code by 30 April 2021, covering the period Click here to view the HKMA circular. from 1 January 2020 to 31 December 2020. The electronic file of the reporting template IA, 12 January 2021 and submission instructions will be sent to AIs via the HKMA's Submission Through Prescribed scenarios for long term Electronic Transmission system (also known as insurance business (Prescribed the STET system). Scenarios) in relation to Guideline on The reporting requirements specified in the Enterprise Risk Management (GL21) reporting template are the same as those from last year. AIs are required to commission their The Prescribed Scenarios in relation to GL21 internal audit department, compliance were published on 11 January 2021, which shall department, or other equivalent unit to be adopted for the first Own Risk and Solvency conduct the self-assessment and issue a self- Assessment (ORSA) Report that is required for assessment report. The self-assessment report the financial year ended 31 December 2021. should be approved and signed by the chief The IA will review the Prescribed Scenarios for executive of the AI. Where an instance of
11 Hogan Lovells
noncompliance is identified that is a The Process Review Panel in relation to recurrence of similar instances identified in the regulation of Mandatory Provident previous exercises, a full account should be provided. Fund Intermediaries (PRP) publishes 2020 Annual Report Click here to view the HKMA circular and here to view the annex to the circular. The PRP published its 2020 Annual Report which covered work of the PRP from 1 May HKMA, 11 January 2021 2019 to 30 April 2020. The PRP is an independent panel established by the Chief Applications for new insurance Executive of Hong Kong, which is tasked to intermediaries licenses by deemed review and advise the Mandatory Provident licensees Fund Schemes Authority (MPFA) on the adequacy and consistency of its internal Since 23 September 2019, the IA has taken over procedures and operational guidelines the regulation of insurance intermediaries. governing the actions taken and operational Under the new regime, all insurance agents and decisions made by the MPFA and its staff in the brokers are required to be licensed with the IA. performance of its regulatory functions in Insurance agents and brokers who were relation to the regulation of Mandatory previously registered with the self-regulatory Provident Fund (MPF) intermediaries and bodies prior to 23 September 2019 are associated matters. Its work focuses on considered "deemed licensees" for a period of procedural propriety in the regulatory regime three years, until 22 September 2022 rather than the merits of the MPFA's decisions (Transitional Period). During the Transitional and actions. Period, each deemed licensee needs to apply for a new license from the IA if they wish to The PRP reviewed the follow-up actions continue to carry on regulated activities after undertaken by the MPFA in light of the PRP's 22 September 2022. Further details can be recommendations made in the previous year. It found in our August issue of the Hong Kong also reviewed 5 out of 13 closed conduct cases Corporate Insights. relating to allegations against MPF intermediaries including inadequate internal On 8 January 2021, the IA officially announced control, failure to provide necessary in a circular the launch of the licence information clearly and accurately to the client, application process for deemed licensees. The and unauthorized transfer of MPF account IA explained in the circular that it expects information or collection of such information significant progress to be made in processing by impersonating a client. The PRP made licence applications during the course of 2021. observations and recommendations to the It is expected that in early 2022, the IA will MPFA as follows: announce a cut-off date and if an application is not submitted by an intermediary by the cut-off • To set up and make available to the date, the IA will not be able to guarantee the industry a defined set of guidelines to processing of such licence application before determine the type of actions and level of 22 September 2022. penalties based on the severity and nature of the substantiated allegations, and to list Click here to view the IA circular. the relevant factors that will be considered when making decisions in relation to these IA, 8 January 2021 actions and penalties.
Hong Kong Corporate and Regulatory Insights January 2021 12
• To streamline the clearance process for revising draft reports and issuing reminder letters and closure letters to improve overall efficiency in case handling.
• To devise ways to speed up investigation findings, devote further efforts to improving key performance indicators (KPIs) by developing internal operating protocols and special communication protocols, and to keep a formal record of reasons why KPIs were not met in cases.
Click here to view the FSTB news and here to view the 2020 Annual Report.
FSTB, 6 January 2021
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Data Protection
Privacy Commissioner reports on work inadvertent disclosure, and accidental erasure of the PCPD in 2020 of personal data, etc. Survey results The Privacy Commissioner for Personal Data (PCPD) reported on work of the office of the The PCPD commissioned the Social Science PCPD in 2020 and released the results of a Research Centre of the University of Hong survey to gauge attitudes and views of the Kong to conduct a survey to gauge public public and organizations on the protection of awareness on the protection of personal data personal data privacy in a media briefing held privacy. on 28 January 2021. The survey found that:
Summing up 2020, the PCPD said "2020 was a • The public were prudent in protecting year fraught with challenges. To address the their personal data, 80 percent of personal data privacy issues arising from the respondents are aware of their privacy COVID-19 pandemic, the PCPD had striven to settings on social media accounts, of provide comprehensive views, opinions or which 80 percent checks their privacy guidance to our stakeholders in a timely settings. manner." Doxxing • Out of the population that installs instant messaging apps on their mobile The handling of doxxing cases continued to be phones, a large majority were aware an important task for the PCPD in 2020. Over that the apps had access to the contact 1,190 cases were handled, of which around information on their phone, a large 1,000 cases were discovered in 2020. The majority of this population considers PCPD stresses, "It is saddening to see the harm this privacy invasive, and 34 percent caused by doxxing. Other than being morally considers this a serious invasion of wrong, doxxing acts may also lead to serious privacy. legal consequences." In 2020, five defendants were convicted of doxxing offenses, two of • Respondents show support for whom were sentenced to immediate amendments to the PDPO to introduce imprisonment for contravention of the administrative fines and a mandatory Personal Data (Privacy) Ordinance (Cap. 486) data breach notification. (PDPO). Looking forward, the PCPD will continue to Going forward, the PCPD will step up its take a multi-pronged approach, to enhance publicity and educational efforts, and continue enforcement and strengthen cooperation with to conduct proactive online patrols and educational institutions. The PCPD will also collaborate with the Hong Kong police to work with the Hong Kong government to combat doxxing behavior. The PCPD has set up formulate concrete proposals in amending the a hotline to answer enquiries and complaints PDPO, and will strive to provide necessary relating to doxxing. input to the government in the legislative Data breach incidents amendment exercise. In 2020, the PCPD received 103 personal data Click here to read the media statement. breach notifications from organizations. These PCPD, 28 January 2021 involved hacking, system misconfiguration, unauthorized access, loss of documents,
Hong Kong Corporate and Regulatory Insights January 2021 14
Privacy Commissioner urges users to with the messaging app's parent company and carefully consider new terms of use in its subsidiary to help operate, provide, improve, understand, customize, support and instant messaging apps market its services and related products. The PCPD noted that a widely used instant According to the messaging app's messaging app in Hong Kong had recently announcement, the information which will be announced changes to its Terms of Service and shared include: Privacy Policy (the Terms). Users will need to • Account registration information (i.e. agree to share certain information with the users' phone number). parent company of the messaging app and its subsidiaries, otherwise they cannot continue • Transaction data. using the app. • Service-related data. The PCPD is concerned that the data to be shared includes a substantial amount of • Information on how users interact with personal data, and urges users to be aware of others (including businesses) when the changes in the Terms. The PCPD reminds using their services. users to carefully consider the new Terms and take note of the type of data which will be • Users' mobile device information. shared and how they will be used. • Users' IP address. The PCPD said users should "consider, in particular, whether they are willing to transfer • Other information to be collected as their personal data to companies associated identified in the Privacy Policy or with the messaging app for storage and use. If obtained upon notice to users or based users choose not to give their consent, they on users' consent. should make preparations to back up their data." • Information about users provided by Given the wide usage of the messaging app by third parties, third party service the general public in Hong Kong, the PCPD providers and/or other associated appeals to the messaging app to, amongst other companies. things: Following the original media statement • Clearly explain to users the released by the PDPO on 11 January 2021, the arrangement for sharing of personal PCPD released a follow-up statement on 16 data, the type of personal data involved, January 2021 noting that the instant and how the data will be used. messaging app had announced to extend the deadline for users to accept to its new Terms • Extend the period for to allow users from 8 February 2021 to 15 May 2021. The ample time to consider the new Terms. PCPD welcome the new arrangement as it allows users more time to consider the new • Consider providing practical alternative Terms. to users who do not agree to the new Click here to view the media statement dated 11 Terms so they can continue using the January 2021, and click here to view the media service of the messaging app. statement dated 16 January 2021. According to the updates announced by the PCPD, 16 January 2021 messaging app, user information will be shared
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Contacts
Mark Parsons Laurence Davidson Partner, Hong Kong Partner, Hong Kong T +852 2840 5033 T +852 2840 5034 [email protected] [email protected]
Sammy Li Andrew McGinty Partner, Hong Kong Partner, Hong Kong T +852 2840 5656 T +852 2840 5004 [email protected] [email protected]
Stephanie Tang Nelson Tang Head of Private Equity – Greater China, Partner, Hong Kong Hong Kong T +852 2840 5621 T +852 2840 5026 [email protected] [email protected]
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